Definition

Chief Operating Officer (COO)

Contributor(s): Ivy Wigmore. Nicole Laskowski

A Chief Operating Officer (COO) is the corporate executive who oversees ongoing business operations within the company. The COO reports to the CEO and is usually second-in-command within the company. Alternative titles for the COO include Chief Operations Officer, Operations Director and Director of Operations.

Responsibilities and duties of the COO

The role of the COO varies greatly from one industry to another and even from one company to another, which makes it difficult to provide a succinct list of duties. The one constant is the COO's close relationship with the CEO, who is often responsible for defining the role. The co-authors of Second in Command: The Misunderstood Role of the Chief Operating Officer liken the COO role to that of a U.S. vice presidential candidate: The best person for the job is highly dependent on his running mate.

Although not a complete list, here are several examples of COO responsibilities:

  • Overseeing day-to-day operations and keeping the CEO apprised of significant events;
  • Creating operations strategy and policies;
  • Communicating strategy and policy to employees;
  • Fostering employee alignment with corporate goals; and
  • Overseeing human resource management.

The COO and the CEO

The COO is often seen as the heir apparent. Tim Cook, for example, was COO at Apple before being named CEO in 2011; Pamela Nicholson was COO at Enterprise Holdings before being named CEO in 2013; and Steve Ballmer was named president of Microsoft and was considered second in command before being named CEO in 2000. The title of president is often considered a title similar to COO.

A COO's success hinges on his relationship with the CEO, according to the co-authors of Second in Command. Absolute trust between the two executives is vital; without trust and respect, the relationship between the two chief executives can become dysfunctional.

The COO role adds complexity to a company's reporting structure. As such, COOs tend to be employed by the largest organizations, essentially freeing up time for the CEO to focus efforts elsewhere. Smaller organizations and startups that introduce a COO into the reporting structure often create power struggles and confusion among employees.

The current state of the COO

The role of the COO is in a state of flux -- and has been for some time. In the mid-2000s, several articles called COOs "endangered species." More recently, the executive search firm Crist|Kolder Associates reported that only 30% of the S&P and Fortune 500 companies have COOs, down from 48% in 2000.


The DNA of the COO.

One potential reason for this is another C-suite development. In the past, it was not unusual for a CEO to also serve as the chairman of the board of directors, but that has changed. Research out of PricewaterhouseCoopers found that only 11% of CEOs also served as chairman in 2014, down from 52% in 2001. Without the dual role, CEOs have more time on their hands and can pick up some of the duties normally given to their COOs.

PricewaterhouseCoopers provided additional reasons for the decline in COO position, all of which suggest the trend is directly linked to how CEOs and how they're managing the company. The list includes the advent of digital communications technologies, the board's demand for CEOs to work closely with the business, the push to flatten the organization and the shift in succession planning.

That said, the role of the COO is still valuable for many companies. Crist|Kolder Associates found that the existence of the role may depend on the industry -- with services companies more likely to bring on a COO than technology and industrial companies. PricewaterhouseCoopers found that COOs are often in place when companies want to be transparent about succession planning or when CEOs are spending time on strategy rather than the day-to-day operations. COOs are also brought in to complement CEOs who have a strong leadership background but may lack an operational experience.

While the role appears to be in decline, there are some who suggest companies will see -- and are seeing -- a COO resurgence. The co-authors of Second in Command stated that companies are becoming more complex, which result in CEOs hiring a second in command. Ernst & Young, a professional services firm, argued that compliance, business transformation and the pursuit of new markets are all reasons companies need operational leaders. Plus, research that appeared in the Strategic Management Journal found that COOs have a positive impact on company performance.

This was last updated in November 2016

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