Loading the player...

What is a 'Chief Operating Officer - COO'

The chief operating officer (COO) is tasked with the day-to-day administration and operation of the business. Typically, the COO reports directly to the Chief Executive Officer (CEO) and is considered second in command. In some corporations, the COO is also known as the Executive Vice President of Operations. 

BREAKING DOWN 'Chief Operating Officer - COO'

The COO’s focus is executing the company’s business plans according to its business model, while a CEO is concerned with long-term business goals and the outlook for a company. In other words, the CEO makes the plans, and the COO implements them. For instance, a CEO might look at declining market share and decide the company needs to focus more on quality control and enhancing its reputation among its customer base. Similarly, to improve quality control, the COO might instruct the human resources department to hire more quality control personnel. The COO determines the specifics needed to carry out the CEO's general plan. Where the CEO may be more involved with a long-term focus, the COO is more often responsible for daily, quarterly or other periodic measured results. He also is involved with strategic planning for the future and may establish initiatives to expand the organization's product lines or markets.

The Role of the COO

The COO's particular role often depends on the strengths and preferences of the company's CEO. Sometimes a COO handles all the internal affairs of a company, while the CEO focuses on being the public face of the company. In this case, a COO may be responsible for production, research and development, and even marketing. In many cases, the COO is chosen specifically to complement the strengths and weaknesses of the CEO or to work in tandem with a CEO who prefers to function as a member of a leadership team.

COOs are often responsible for the execution of the strategies proposed by the CEO and the rest of the company's senior leadership. In an entrepreneurial situation, the COO may have significantly more experience than the CEO, who may be the founder of the company. In this circumstance, the COO is expected to mentor the CEO during the early stages of the business's development.

If you were to categorize the common day-to-day responsibilities of a COO, they would include overseeing the company's day-to-day operations, daily communication with the CEO, creating operations strategies and policies, communicating operational strategies to employees, building employee alignment with company goals (and vice versa), and overseeing human resource development.

As mentioned earlier, the main reason why a COO's daily responsibilities can be so ambiguous is that the COO's role is primarily based on the needs of the CEO. With this in mind, there are generally seven types of COOs who fill specific needs within a company:

• The executor who leads the implementation of company strategies.

• The change agent who is hired to lead a new initiative, such as organizational change.

• The mentor who is brought on board to mentor younger or newer team members within the company.

• An "MVP" COO who was promoted internally to ensure they were not lost to a competitor.

The other common types of COOs are hired specifically to help the CEO:

• The COO who is brought on to be a foil or complement to the CEO.

• The partner COO who is brought on to be the right-hand man to the CEO.

• The heir apparent who becomes the COO specifically to learn from the CEO, with the expectation that he will eventually take the position of CEO.

Chief Operating Officer VS. Chief Operations Officer

In general, the chief executive officer (CEO) is thought of as the highest-ranking officer in a company, while the president is second-in-command. However, in corporate governance and corporate structure, many variations can take place, so the roles of both CEO and the president may be different across various firms. For this reason, it is important to have a general understanding of the corporate environment and how different positions ultimately fit into it.

First of all, the board of directors is elected by the shareholders of a company and is usually composed of both inside directors (senior officers of the company) and outside directors (individuals independent of the company). The board establishes corporate management policies and decides on "big picture" corporate issues. Because the board is in charge of executive functions, and the CEO is responsible for integrating company policy into day-to-day operations, the CEO often (but not always) fills the role of chairman of the board.

Another factor that determines the positions of company officers is corporate structure. For example, in a corporation with many different businesses (a conglomerate), there may be one CEO who oversees many presidents, each running a different business of the conglomerate and reporting to the one CEO. In a company with subsidiaries, it would be unusual to have one person carry out the roles of both CEO and president. Presidents often hold the position of chief operating officer (COO). 

Keep in mind these are examples of general scenarios. The CEO is not always the chairman of the board, and the president is not always the COO. The ultimate goal of corporate governance is to effectively manage the relationship between owners and decision-makers and increase shareholder value.

The Qualifications to Be a COO

A COO typically has extensive experience within the field in which the company operates and has often worked their way up through the ranks for at least 15 years. He or she has both business and management expertise as well as extensive experience in the practices, policies, and procedures of their field. Because she is responsible for directing the work of the departments and personnel below her, the COO position typically requires strong leadership skills as well as the ability to approach situations from a creative point of view. COOs typically have at least a bachelor's degree and often have other relevant degrees and certifications as well.

  1. Chief Executive Officer - CEO

    A CEO is the highest ranking executive in a company whose main ...
  2. Independent Outside Director

    An independent outside director is a member of a company's board ...
  3. Julian C. Day

    The CEO and chairman of technology retailer Radio Shack since ...
  4. Leadership

    Leadership is the ability of a company's management to make sound ...
  5. Executive Director

    An executive director is the senior operating officer or manager ...
  6. Brad Anderson

    Brad Anderson is the former CEO and vice-chairman of electronics ...
Related Articles
  1. Investing

    Lowe's New COO Will Focus on Omnichannel Execution

    Lowe's (NYSE: LOW) has been one of the consistent winners in the traditional retail sector, even as consumers have been steadily migrating more of their shopping to e-commerce players. For example, ...
  2. Investing

    Barnes & Noble Names New Chief Operating Officer

    Barnes & Noble (NYSE: BKS), which only has a semi-permanent CEO, now has a new second-in-command. The bookstore chain has named Demos Parneros, a former Staples executive, as COO, reporting ...
  3. Investing

    T-Mobile Adds COO to Its Board of Directors

    While T-Mobile's (NASDAQ: TMUS) outspoken CEO, John Legere, serves as the public face of the company, he's generous when it comes to sharing credit with his executive team. And he often shares ...
  4. Investing

    COO of Threshold Pharmaceuticals to Resign (THLD)

    The micro-cap pharmaceutical company announced plans to reduce its workforce and results from recent drug trials.
  5. Investing

    VF Corporation Names Its Next CEO

    Apparel conglomerate VF Corporation (NYSE: VFC) has selected its next CEO: Current President and COO Steven Rendle. He'll take the reins on Jan. 1. Rendle will replace Eric Wiseman, who has ...
  6. Financial Advisor

    A2A: Ed Swenson & Sean Mullen

    Dynasty Financial COO Ed Swenson and AdvicePeriod's Sean Mullen discuss the most common questions their clients have, plus the most popular strategies and products they're using lately.
  7. Investing

    BMO Financial Group CEO to Retire; Successor Named

    North-of-the-border banking conglomerate BMO Financial Group (NYSE: BMO) has announced a major transition in its C-suite. The Canada-based lender said CEO Bill Downe is retiring effective Oct. ...
  8. Investing

    Groupon Chooses New CEO, Vows To Refocus Company Resources (GRPN)

    To say it's been a tough year for Groupon (NASDAQ: GRPN) shareholders is putting it mildly. Down about 50% year-to-date, Groupon's stock price has taken a beating, and based on its latest news, ...
  9. Personal Finance

    A Day In The Life Of A CFO

    What would your life look like if you were CFO? We’ve interviewed three chief financial officers to find out.
  10. Investing

    Can Tim Cook Replace Steve Jobs? (AAPL)

    Looks at the similarities and differences between current Apple CEO Tim Cook and his predecessor, the iconic and mercurial Steve Jobs.
  1. What is Tim Cook's career and educational background? (AAPL)

    Discover where Tim Cook studied and worked before joining Apple and what roles he played in the company before taking over ... Read Answer >>
  2. Who is Responsible for Shareholders Interests?

    Several parties are supposed to be responsible for protecting and managing shareholders' interests, including the company's ... Read Answer >>
  3. The Role of an Asset Manager in the Real Estate Market

    Find out what role asset managers play in the real estate markets. Learn how real estate portfolios are selected and why ... Read Answer >>
  4. How often should I be checking the NAV of my mutual fund shares?

    Learn why the net asset value (NAV) of a mutual fund should be monitored regularly and understand the reasons why you should ... Read Answer >>
Trading Center