What Is a COO? Understanding the Role of the Chief Operating Officer

An ongoing debate in the business world centers on the role of the COO. The main question that many continue to ask is, “Are COOs even necessary for companies anymore?” For example, in 2004, an influential and somewhat contentious study published in Strategic Management Journal concluded that “CEOs who have COOs deliver lower organizational performance than those who do not.”

The study seemed to have an effect on companies. Whereas nearly half (48 percent) of Fortune 500 and S&P 500 companies in 2000 had a COO, the number dropped to only 32 percent by 2018. For a while, the trendline indicated that organizations were slowly but surely phasing out the COO role.

But the pendulum has begun to swing in the other direction. By 2022, the number of leading companies with a COO had risen again to 40 percent. Clearly, businesses are beginning to recognize the value that a COO brings to the table. This starts by understanding what a COO does and how they can help companies reach new levels of excellence.

In this article, learn about what a COO does and how one can uniquely contribute to the success of your company.

What Is a COO?

A COO (Chief Operating Officer) is the executive who is mainly in charge of making sure the general operations and day-to-day functions of a business go smoothly. COOs largely concern themselves with efficiency. If something goes wrong with operations, they are responsible for fixing the problem. In most organizations, the COO reports to the CEO (Chief Executive Officer). Within the chain of command, the COO is usually the number two person. While CEOs may be more focused on long-term strategies and communicating the vision of the company to employees and the public, COOs concentrate on implementing those strategies and executing short-term plans. According to PayScale, the average salary of a COO is around $140,000 a year.

The Role and Responsibilities of a COO

The role of a COO covers many important aspects of a business, but one crucial element is that a COO should have skills that pair well with the CEO. In cases where a CEO and COO have similar skills and responsibilities, conflict can occur. This type of redundancy also does little to help the business as a whole. 

Shantanu Narayen, the current chairman and CEO of Adobe, says diversification of skill sets is necessary for the COO and CEO to work together. If “both like doing the same things or are good at the same things,” he says, “there is a lot more second-guessing and less appreciation than if you bring different skills to the table.”

In many ways, the COO is the senior executive who gets into the gritty details of how a business operates. While a CEO may be more of a “big picture” person, it’s up to the COO to ensure that vision becomes a reality. The COO should know the ins and outs of how to run a company. They are the internal force that keeps the motor running. Conversely, the CEO often acts as a public face and spokesperson when announcing exciting news. 

What Does a COO Do?

• Create and deliver reports to the CEO on all things requiring their attention.
• Analyze reports from subordinates to evaluate employee performance.
• Establish goals for company growth.
• Create and execute plans to maximize efficiency for day-to-day operations.
• Outline expectations and standards for managers to use during the hiring process.
• Set and promote a healthy culture within the organization.
• Oversee financial expansion, such as through acquisitions and investments.
• Maintain healthy relationships with business partners.
• Ensure data gathering is efficient and accurate.
• Oversee research and development of new products.
• Establish expectations for overall production.
• Encourage greater autonomy among the workforce.

The 7 Different Types of COOs

COOs don’t always fit into one narrowly defined category. Since they bring many different skill sets and talents to the table, they can perform various duties and roles. The following are some of the most notable types of COOs businesses can expect from the position.

1. The Complementary Role

As mentioned above, many companies feel having a COO whose skills complement the CEO’s is a vital part of success. The complementary COO is the type that has a skill set quite different than what the CEO possesses. Together, they can make a great and effective team because they don’t cover the same areas. This ensures the maximum number of strengths from the leadership team is utilized for the organization’s benefit. Peggy Shell, the founder of Creative Alignments, explains this type of COO can provide a big boost to the business. “Finding a COO who complements the founder means that the management team has a fuller, more diverse set of skills,” Shell says.

2. The Identical Twin

On the other hand, some organizations choose to have a COO whose skill set is almost identical to their CEO. There may be a few reasons to go with this approach. For example, sometimes having two experts on the same subject can lead to the best ideas getting implemented. That means the two leaders can bounce ideas off each other without overly explaining what they’re talking about. However, a COO with identical skills is a rarity, as diversification is usually the goal.

3. The Guide

Some COOs make great teachers. They work closely with newer team members as they guide them through the first few months and help them acclimate to the organization. Think of this type of COO as a mentor, someone who will take others in the company under their wing. They may even become a helpful guide to the CEO if the CEO is younger.

4. The Successor

One situation where it might be acceptable to have a COO mirror the skills of the CEO is when the company intends for the COO to later become chief executive in the future. In this situation, the COO can learn from the CEO while becoming more familiar with the ins and outs of the business. The CEO essentially preps the COO to take over and assume their important responsibilities. This type of role ensures that leadership transitions happen smoothly and with little disruption.

5. The Manager

The type of COO who believes in getting things done on a day-to-day timeline may be seen as more of a manager. Most COOs want to be involved in the details, but this type is one that goes even further than that. They’re able to break things down into more manageable parts and communicate what needs to get done on a monthly, weekly, daily, or even hourly basis. Some might look at this type as a micromanager, but they make sure to keep things organized and under control no matter the circumstance.

6. The Internal Hire

While some companies hire a COO from outside the organization, this type comes from within. The Internal Hire is often someone who has risen the ranks of the business. Maybe they started out in the lowest position, but through hard work and determination, they received promotion after promotion before entering the C-suite. Many companies like to promote internally this way because this type of COO knows every aspect of the company before they’ve even set foot in their new office. It’s also a way to keep other companies from poaching the best talent.

7. The Innovator

The Innovator is one of the types of COOs who embraces new ideas and strategies. They’re often the first to try something revolutionary and were often brought on specifically for that reason. Innovative COOs are the ones who usually bring about big changes in the company, often out of necessity. When companies need to change course or turn things around, The Innovator is the type to get the job done.

Examples of Successful COOs

While CEOs may get most of the spotlight, COOs can still be a major force for successful companies. The following are a few examples of COOs who have made an impact in their role.

Sheryl Sandberg

Perhaps one of the most famous COOs to ever hold the position is Sheryl Sandberg who worked for Facebook. Mark Zuckerberg met her in 2008 and thought that she would be a “perfect fit” as COO, but she had a monumental task ahead of her: making Facebook a profitable business. Through the use of advertising, Sandberg was able to help Facebook earn its first profit after only three years on the job. Sandberg played a vital role in nearly every business aspect of the company, including helping PayPal and Facebook work out their differences and negotiate a new deal at one point.

Bob Iger

While Bob Iger would go on to become the CEO of Disney, his time as COO helped prepare him for the role. Iger was named as COO in early 2000, becoming the first person to hold the number two executive position in six years. While COO, Iger was instrumental in helping Disney expand its theme park offerings. This included opening a new park in Hong Kong as well as the opening of Disney’s California Adventure right next to Disneyland in Anaheim, California. When the CEO position eventually opened up in 2005, Iger seemed like a natural choice to helm the company.

Sara Clemens

Sara Clemens has made a name for herself in tech and music. After gaining valuable experience at Microsoft and LinkedIn, Clemens became COO of Pandora in 2014. Under her leadership, Pandora grew as a company, becoming one of the leaders in the streaming music industry. Clemens eventually became COO for Twitch, where she once again scaled the business and led global efforts to expand the brand.

COOs Are the Engine of Success

Without a COO, many large companies would crumble. No one else in the company, save for perhaps the CEO, knows how the business runs and how to make it better. With more companies hiring COOs to handle their growing operations, you may be wondering if it’s time for your company to take the plunge and hire a new COO. 

Here are some of the key signs to look for to see if bringing on a COO will be beneficial:

• Innovative ideas at your company don’t occur as often as they used to.
• Your business has become more complex in the past few years.
• Communication breakdowns seem to happen more often.
• Your company has trouble reaching new audiences.
• Partnership and client negotiations take longer with fewer visible benefits.
• Follow-through on important business strategies is usually lacking.

If you notice one or multiple of these signs, a COO may be able to set everything right and get your company to where you need to go. But you’ll need the right COO if you want to see a difference, not someone who may suffer from imposter syndrome. That’s why the hiring process is so important. Check out the following article to learn how to get the right person for your team: The Hiring Process: A 10 Step Guide For Finding A-Players.