Role & Responsibility of a COO UMD Online Degree

What is the meaning of chief operating officer

If we want to explain the difference between CEO and COO in one sentence, we’d say that CEOs are in charge of where the company is going, while COOs are in charge of how the company will get there. In other words, the CEO has a vision for the company and the COO executes it. But, this doesn’t mean that the CEO spends their time in vague plans or that the COO only has a transactional role. Small companies might not have a COO at all, while the CEO could be the founder of the company (or one of the founders) or the chair of the board. As companies grow and have more complicated procedures, they might need to hire a COO to advise the CEO and manage all internal operations. At the World Bank, the president outranks the other executives including the CEO and chief economist.

What is the meaning of chief operating officer

COOs take the CEO’s vision for the company and turn it into an executable business plan. They oversee all operations and ensure that teams work toward achieving the business goals. CEOs formulate business objectives and make strategic decisions (e.g. expansion in a new market or development of a new product). A COO is second in command to the CEO, who is the top executive at a company. While the CEO is responsible for an organization’s long-term success, the COO is usually responsible for the day-to-day operations. Therefore, a COO’s success hinges on their relationship with the CEO.

Relationship with board of directors

However, with the right skills, characteristics and education, professionals can become successful COOs and enable the prosperous operations of their employer organization. A COO is a member of the C-suite, a term that describes a company’s senior executives, including the CEO and chief financial officer (CFO), who often work collaboratively. COOs are found in various industries including business, government and healthcare. While a COO’s responsibilities vary based on the industry they’re in, their basic duties usually include overseeing an organization’s daily operations.

  • ] also urge the COO to develop his or her own voice, independent of the CEO.
  • On their part, COOs will make strategic decisions and establish company procedures once they get input from CEOs regarding bigger picture plans and shareholders’ perspectives.
  • In some businesses, for example, the COO may be more involved with the development of operations strategy and maintaining the company’s financial health.
  • It benefits the CEO to allow such a relationship to form because it reflects confidence and fosters transparency.
  • Bob Iger was president and COO from 2000 to 2005, when he succeeded Eisner as CEO.
  • Consequently, COOs often design operations strategies, communicate policies to employees, and help human resources (HR) build out core teams.

The salary of a COO will vary greatly depending on a variety of factors, including the company they work for, their experience, and their contract. According to PayScale, as of 2023, the average COO salary is $139,156. With the company falling apart, Dell decided to bring on people with experience. He chose people older than him who had the managerial chops to turn things around.

Managing Business Operations: Top Responsibilities

Also, because they’re traditionally responsible for directing multiple departments, COOs must be resourceful problem solvers and must possess strong leadership skills. Educationally, COOs typically hold bachelor’s degrees at a minimum, while often also holding Master’s in Business Administration (MBA) degrees and other certifications. A new company will have very different needs than a company that has been around for 100 years and has a large market share in its industry. Depending on the company, its needs, its cycle stage, and its unique characteristics, the specific type of COO required to help it realize its goals will vary. Overall, however, the COO supports and complements the role of the CEO. As TechTarget contributor Margaret Rouse explains, the COO functions similarly to the role of U.S. vice president, in that the role of president is highly dependent upon the vice president.

What is the meaning of chief operating officer

Because the role and responsibilities of a COO can change according to the goal of the CEO and executive team, the compensation for the role is similarly flexible. But, if we compare the CEO vs COO, we’ll find that their roles and responsibilities are not always clear. Let’s dig into their similarities and differences by starting with a definition of CEO and COO. Learn how other members of the executive management team, like chief information officers are evolving. The various types of chief operating officers reflect the individual’s leadership style. Either way, the position is used as a training and testing ground for the next CEO.

chief operating officer (COO)

Additionally, if they are looking to be the next CEO, it allows them to develop credibility with the board. Researchers advise the COO to go beyond simply presenting at board meetings, to ensure they are developing strong one-on-one relationships with each board director.[31] Researchers[who? ] also urge the COO to develop his or her own voice, independent of the CEO. In some corporations, the COO is known by other terms, such as “executive vice president of operations,” “chief operations officer,” or “operations director.”

  • And, as Bennet’s and Miles’ Seven Types of COOs show, there are different routes that the role of COO can take.
  • A COO is usually voted in by shareholders or appointed by the board of directors.
  • This freed up modern CEOs to perform some of the duties formerly given to their COOs, making COOs unnecessary.
  • The CEO (Chief Executive Officer) is the highest-ranking individual in a company, responsible for formulating business objectives and making strategic decisions.
  • These different types of COO roles also help us to understand how the responsibilities of this professional can change from business to business, depending on the operational and functional needs of the organization.

Though he did not have the title of COO (he was vice chair), he did the job of COO and was Dell’s mentor and right-hand man. It sells database software, cloud technology, management systems, and a variety of other products. Oracle had been performing well as a company but then hit a growth cap and couldn’t increase annual revenue past $1 billion for a period of time. Where the CEO is typically outward-facing, the COO is typically inward-facing, in charge of internal operations and communications. And while the CEO devises business strategy, it is the COO who oversees its implementation.

Key qualifications for a COO

In a similar vein to the COO, the title of corporate president as a separate position (as opposed to being combined with a “C-suite” designation, such as “president and CEO” or “president and COO”) is also loosely defined. Because the COO role can vary according to the internal structure and needs of the organization as well as the work of the CEO and other senior executives, responsibilities are not the same for COOs from company to company. The environment and working hours of a COO can vary, similar to the responsibilities that can come with the role, and will depend on the needs of the business. COOs can operate in large, enterprise-level organizations, but are also important in smaller companies. The Balance points out that most COOs work more than 40 hours per week, and may even need to work late into the evenings or on weekends to support the company’s operations. Some management experts have said the COO position is in declining in importance because of C-suite changes such as fewer CEOs serving as the chairman of the board of directors for companies.

In this way, the COO often represents a bridge between C-level executives and other department heads and lower-level employees. Depending on the structure of the company, the CEO could report to the board of directors, the investors or the founders of the company. COOs have a strong educational background combined with extensive work experience.