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COO Job Description: Roles, Responsibilities, and Revenue

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November 11, 2021

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If your enterprise could benefit from a little operational expertise, consider hiring a COO (Chief Operating Officer)

A COO is second in command in most enterprises and reports to the individual who presides over the entire company--the CEO. A COO's job is to streamline operating procedures, thereby boosting efficiency. 

COOs are predominantly found in operationally intensive enterprises, such as airlines and automobile manufacturing companies. 

Responsibilities of a COO 

Most executive positions come with responsibilities that are pretty much the same across enterprises. However, that's not the case with the COO. More than any other member of management, a COO's tasks widely vary depending on the needs of the CEO and the organization. 

However, some duties performed by COOs are universal in almost every company. For example, in most industries, the COO's primary responsibility is operations management. This means overseeing the internal operations of an organization to ensure everything runs smoothly. 

Another function COOs serve in most enterprises is as a sounding board for the CEO. For instance, the CEO might come up with what they think is a brilliant idea and ask the COO for their honest opinion of its impact. 

Another responsibility of a COO in many organizations is finding ways to reduce costs, which maximizes value for the shareholders. To do that, they look for glaring inefficiencies in procedures, policies, and systems. 

Sometimes, a company experiences a scarcity of resources. This could be due to an interruption in the supply chain or some other issue. When that happens, it often falls to the COO to make the tough decisions about which parts of the enterprise get the lion's share of the assets. 

A COO is frequently given the task of carrying out initiatives created by the CEO. To do that, they'll meet with the various department heads to decide how to best translate the nebulous vision of the CEO into a concrete reality. They'll assign team members to complete various parts of the project to ensure everything gets done. 

The decline of the COO's role  

The COO has historically been the number two person on the C-suite team. Additionally, the individual assuming this role has long been looked upon as the probable successor to the CEO. However, the percentage of companies with a COO has steadily declined in recent years. 

A few high-profile corporations such as Twitter and McDonald's have even eliminated the COO role entirely when the person holding this position resigned or retired. In other organizations, former COOs chose not to find a replacement for themselves when they were promoted to CEO.

Here are some reasons for the role's decline: 

Technology has boosted leadership productivity 

One reason for the decline is that a dizzying array of technological tools and processes allow CEOs to have greater organizational oversight without having to put in more hours. This is all part of the well-touted and pervasive digital transformation that, unfortunately, often doesn't bring about the much-ballyhooed change. However, in the case of CEOs being able to lead their enterprises more effectively, it appears to be true. 

This fundamental alteration in the way things are done includes the growing number of platforms that provide chief executives with instantaneous customized financial and operating information, including key performance metrics. 

Chairman and CEO functions being split

Another factor contributing to the COO title becoming increasingly not used is the growing common practice of splitting up the CEO and chairman functions into two separate roles. 

This gives CEOs more time to run their businesses because they're not spending as much time dealing with the board. It also makes hiring a COO not necessary in many cases. 

Boards expect CEOs to be more hands-on 

Because of a series of financial crises and scandals, boards are demanding that CEOs become more hands-on, so they stay closer to the beating heart of the business. In some companies, this means eliminating the COO position. 

The trend towards flatter organizations 

Yet another reason for the increasing disappearance of the COO role in companies is the trend towards having flatter organizations. Businesses are moving from a more top-down approach to one that's increasingly collaborative. 

This means that the CEO and COO are no longer issuing edicts from on high. Instead, there's a more distributive model of sharing and decision-making. Doing this also helps make members of the C-suite more accountable for their successes and failures. 

Because the business uses more of a horizontal business model, this often negates the need for a COO.  

Companies with no COO or more than one 

Because an increasing number of companies are operating without a COO, the CEO either takes on more responsibilities. Or the tasks usually undertaken by a COO are done by other members of the C-suite. 

On the other hand, some companies might have two COOs. For example, having one to oversee each business line or division in an enterprise. This happened in Lehman Brothers In 2002 when Bradley Jack and Joseph Gregory became the co-CEOs of the corporation. 

The resurgence of the COO

Although the role of COO has been in significant decline over the last decade, there are reasons to suspect that the position will soon start making a resurgence. One reason is as organizations become increasingly complex, it's becoming more challenging for a single individual to have enough proficiencies to oversee an entire company.

Also, studies are starting to show a direct positive correlation between a company's performance and having a COO on board. 

Reasons for having a COO 

Reassure stakeholders

Having a COO helps reassure stakeholders that there is a succession plan in place. Let's say the sitting CEO has made it abundantly clear that they will resign soon. In that case, having a COO be part of the hierarchical structure gives the board time to groom the candidate for their eventual duties. 

According to an Accenture study, approximately 50% of COOs see themselves as the "heir apparent." The study also found that one in nine COOs moved into the CEO role within a year of the chief executive leaving the company. 

Frees up CEO to focus on strategy 

Sometimes, the CEO needs to temporarily walk away from day-to-day duties and focus more on big-picture concerns. This may be due to the enterprise doing some major restructuring or moving into entirely new markets. 

The CEO needs someone to keep the company on track while they do that. Often, this responsibility falls to the COO. 

Creates a more comprehensive set of talents 

A CEO might be a gifted leader but may lack specific operational competencies the organization needs to remain viable. In situations like these, the board might choose a COO that complements the CEO's capabilities to create a more comprehensive set of talents. 

Challenges faced by COOs 

A savvy COO that recognizes the following obstacles in the way of their success can make a smoother transition to their new role: 

Not being granted a grace period 

Because they've already been working at the enterprise, all too many board members, colleagues, and other stakeholders expect the former COO to hit the ground running when they become CEO. However, they usually need time to get acclimated to their new role. 

Finding time to manage the board of directors 

Many COOs who become CEOs are often shocked to find out how time-consuming dealing with the board of directors can be. Nevertheless, they must find a way to fit this crucial duty into their busy schedules. 

Being in the public eye 

Many COOs have grown accustomed to working quietly behind the scenes. When they become CEO, they are often overwhelmed by the pressure of being suddenly thrust into the spotlight. 

Why building a relationship of trust is essential 

A CEO needs a COO they can trust. This means the CEO must have complete confidence that the COO isn't gunning for their job, can effectively carry out work assignments, and shares their vision. 

The CEO must be comfortable sharing vital information with the COO, including changes in the enterprise's strategic direction. The COO must also be at ease in giving the CEO status updates. Also, the CEO mustn't undermine the COO by constantly reversing their decisions. 

Besides having an excellent working relationship with the CEO, the COO should build a healthy relationship with the directors. This can go a long way towards reassuring the board they have what it takes to become CEO one day. 

Hiring your next COO with Hunt Club 

If you need to hire a COO for your startup, enlist the experts at Hunt Club. 

We have the proprietary processes, extensive referral networks, and keen expertise you need to fill your talent pipeline with high-caliber candidates.

Reach out to us today!

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