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Chief operating officer

A chief operating officer (COO) (or chief operations officer) is an executive in charge of the daily operations of an organization (i.e. personnel, resources, and logistics). COOs are usually second-in-command immediately after the CEO, and reports directly to them and acts on their behalf in their absence.

A COO is usually voted in by shareholders or appointed by the board of directors.

Companies are becoming larger and more complex, making it more difficult for one person alone to have total oversight over the whole organization.

[1]

Companies are finding a strong relationship between firm performance and the presence of a COO.

[23]

Companies are becoming more deliberate about planning and will use the role to on-board and train successors.[1]

CEO succession

The increase in talent mobility means that the role will likely be used more often as a retention mechanism for key executives who are at risk of moving to a competitor.

[1]

At the direction of the CEO and board of directors, marshalling limited resources to the most productive uses with the aim of creating maximum value for the company's stakeholders

Developing and cascading the organization's strategy/mission statement to the lower-ranking staff, and implementing appropriate rewards/recognition and coaching or corrective practices to align personnel with company goals

Planning by prioritizing customer, employee, and organizational requirements

Maintaining and monitoring staffing, levels, knowledge-skills-attributes (KSA), expectations and motivation to fulfill organizational requirements

Driving performance measures for the operation (including a consideration of efficiency versus effectiveness), often in the form of dashboards convenient for review of high level key indicators

Communication—The CEO has to be comfortable sharing information with the COO and regularly communicating the strategy and any changes to it. Similarly, the COO has to be comfortable regularly providing status updates to the CEO. When communication breaks down, mistrust or misunderstanding is likely to mess up.

Clear decision rights—The COO role appears to work the best when the roles and responsibilities of the COO have been clearly delineated ahead of time and the COO is allowed to make the final decision within pre-agreed upon scope.

Lock on the backdoor—The CEO must not undermine the COO's credibility by continually reversing decisions. When employees learn that they can get a different answer by going directly to the CEO as opposed to the COO, the COO role quickly becomes impotent.

Sharing the spotlight—In effective CEO-COO relationships, both parties are comfortable with how much "credit" they receive for their work internally, externally, from the board of directors, and from each other.

Fit between CEO and COO—The two individuals must respect each other and effectively partner together. This is not a partnership that can be forced.

Fit Between the COO and the position—The selected COO must have the right credentials to carry out the purpose for which the COO role was created (which can include everything from operations expertise to change expertise to having a complementary skill set to the CEO).

Transparency of succession expectations and timeline—Both parties must understand whether the COO desires the CEO job, whether the COO is in consideration for the top job, and what the timing might be for such a transition.

Because the COO is often responsible for serving as an information conduit to the CEO, it is essential that the relationship between COO and CEO be a positive one.[29] Trust is the most important ingredient necessary for a CEO-COO relationship to thrive. The CEO must have full confidence that the COO is not making direct passes for their job, can get the work done, and shares their vision (rather than using their trusted spot and access to information to undermine the CEO's strategy or implement his/her own vision). When a relationship built upon trust is created between the CEO and COO, firm performance is improved and shareholder results are strengthened. Seven strategies that are key to building trust in the CEO-COO relationship include:[1][30]

Relationship with board of directors[edit]

In addition to having a strong and trusting relationship with the CEO, the COO should also have an effective relationship with the board.[31] A good relationship between COO and the board allows the board to better understand and independently judge a potential successor. A strong relationship between the board and the COO also offers the board an additional expert opinion on the health of the company, and status of key initiatives. It benefits the CEO to allow such a relationship to form because it reflects confidence and fosters transparency. It also reinforces that the CEO is capable of developing talent, and helps the CEO to retain the COO by further empowering the individual. A strong relationship benefits the COOs in that they are able to expand their experience as well as their professional network. 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 also urge the COO to develop his or her own voice, independent of the CEO.

Failure in the COO role[edit]

Any breakdown in trust between the CEO and COO can lead to failure. Additionally, the COO typically has to be a high-level leader who is comfortable being fully in charge. Many executives with the leadership skills necessary to be a top-level COO would prefer to be running their own organization as opposed to taking orders from a CEO. For COOs who are expecting to serve their time and be promoted to the top spot, their timelines for such a move can often be out of sync with the CEO's, causing a breakdown in the relationship. COOs can also find themselves trapped into being labeled an "operations" person or a "number two" as opposed to being seen as a strategic and top-level leader by the board of directors, which causes some executives to steer clear of the position.[1] Harry Levinson effectively summarized the challenges of the COO position: "The relationship between the chief executive officer and the chief operating officer in any organization is fraught with many psychological complexities. Perhaps it is the most difficult of all organizational working relationships because more than others, it is a balancing act on the threshold of power.".[32]

Experts and research[edit]

Nathan Bennett and Stephen A. Miles have researched the role of COOs.[1] Their published works analyse the role and its effectiveness, classify the different types of COOs, and examine relationships between CEOs and COOs.[30][31][33]

Bennett, Nathan; (2006). Riding Shotgun: The Role of the COO. Stanford, California: Stanford University Press. ISBN 978-0-8047-5166-7.

Stephen A. Miles

Turner, Antony (June 30, 2020). . ASIN B08C5CL3HZ.

COO Playbook: "Vision without action is a daydream"