BLOG
7 Important Roles and Responsibilities of Chief Operating Officer
7 Important Roles and Responsibilities of Chief Operating Officer
Job Roles & Responsibilities

7 Important Roles and Responsibilities of Chief Operating Officer

8 mins read

7 Important Roles and Responsibilities of Chief Operating Officer

Updated On Dec 23, 2024

Content
Table of Content

The Chief Operating Officer(COO) is a senior executive who oversees the administration of the business's day-to-day operations. They normally focus on executing the company’s business plan. This is done according to the established business models. The Chief Operating Officer is responsible for devising plans laid out by the Chief Executive Officer.

To give an overview of how the COO and CEO roles are interrelated, for instance, if a company drops its market share the CEO might recommend the increased quality control. In this case, the chief operating officer will instruct the human resource department to hire more quality control personnel. The chief operating officer can also start a rollout of a new product line which means he may be responsible for research and development, production, and marketing.

The COO is normally second-in-command to the CEO and they report to them directly. If the CEO is absent, the COO acts on their behalf. Their roles extend in ensuring efficient and effective processes and activities, overseeing manufacturing and supply chain, and managing other administrative and planning functions. They also translate the CEO’s strategic vision into operational execution, and they oversee the internal processes.

There are some basic similarities between the COO and the CEO. They are both inside directors of a company and both are tasked with the daily management of the company's activities, their difference starts from the organizational chart. The CEO is the top in command and can be described as facing outward while the CIO is facing inward. The CEO therefore devises the strategy of the business on the other hand the COO oversees their implementation.  Below is a table showing their differences.

Chief Operating Officer (COO) Chief Executive Officer (CEO)
Daily Operation Long-term planning
Implements strategies and vision Sets strategies and visions
Internally focused Externally focused
Reports to the CEO Reports to the board of directors.

We are now going to dive deeper into the roles and responsibilities of the chief operating officer as we have basic understanding of the role. This blog will be a great guide to those aspiring to become chief operating officers.

Renée Ure

“One of the hats of a COO is the Overall Executor hat. An executor is a person who puts something into effect or action, which is a perfect description of a COO’s activity.”

Executive Leadership Insights, Co-Founder
Renée Ure

What Does a Chief Operating Officer Do?

A chief operating officer (COO) is a senior executive who manages the daily operation of the company. Their roles range from management of administrative functions to overseeing the day-to-day operations of the business and adding value to the business. According to a Harvard Business Review Study, there is no single agreed-upon description of a COO job. In most cases, a COO is specifically chosen to complement the skill sets of the sitting CEO. The COO in an entrepreneurial situation may have more practical experience than the founding CEO.

A chief operating officer (COO) has extensive skills and they are expected to be resourceful problem solvers and in possession of strong leadership skills. They usually hold a bachelor's degree at a minimum, but they may be required to hold a higher qualification like an MBA. The path to becoming a COO starts by gaining a bachelor's degree and then a master's degree.

This provides a strong foundation for business strategy and operations management. Gaining relevant work experience, developing leadership skills, and later building networks all entail the steps taken by the COO in their career advancement.

Any individual aspiring to become a COO is required to build a robust network. This involves connectivity with peers, mentors, and leaders across various functions. This will help them to stay informed about the trends in the industry. This will also make them learn from the challenges and successes of others, and gain insights application to their own leadership journey.

Networking requires online strategies as well as dedication to authenticity. This can be done by attending industry events, actively engaging on social media platforms, and also joining professional organizations. Building a strong network by the COO will not only support their journey but will also prove invaluable in driving organizational success.

The hiring of the COO is done according to the internal talents. The executive should consider hiring within an organization by sourcing experienced managers because they are already familiar with the goals and values of the company. Experience and background are other factors to be considered. The job market for the Chief operating officer is expected to grow in the coming years. According to the U.S Bureau of Labor Statistics (BLS), employment of top executives like COO is expected to grow by 6% from 02 to 2031.

In small companies they usually don't employ a COO and in such situations, the CEO takes over the responsibilities of the COO. Other roles of COO can be carried out by the C-Suite executives. Although there is a decline in the number of COO for the past 10 years, it is anticipated that in the future there might be an increase in the utilization of this position. The main reason for this is that companies are becoming larger and more complex. Companies are also finding a strong relationship between the COO and their overall performance. 

The Chief operating officers are supposed to be very experienced in all aspects of the company’s business. It also depends on the nature of the company, for example, one COO might be very knowledgeable in distribution and marketing, while another COO may be well versed with the professional services or SAAS. Many small companies have a CEO as the only C-Suite officer.

Due to more functional specialization, it has become necessary to hire the services of a COO. They receive direct reports from the departmental heads like the head of marketing, sales, finance, human resources, and the supply chain. According to a 2022 report by McKinsey, among the companies that are listed on the Fortune 500 and S&P 500, 40% had a COO. The number declined to its lowest in 2018 with 32%. In 2022, numbers are showing that COO have risen because 40% of the prominent companies have hired them.

With the basic knowledge of the roles of a chief operating officer, we can now introduce the core content of this blog: the chief operating officer’s key role and responsibility

7 Key Chief Operating Officer (COO) Roles and Responsibilities

Skill Why is this Skill Needed?
Operational Expertise The COO requires this skill to be able to monitor the overall operation of the business. They can also set up contingency plans and have minimal issues to solve. Through this skill, they will be able to manage time and prioritize tasks effectively.
Financial Acumen The COO should apply and maintain a broad understanding of the principles of financial management to ensure decisions are fiscally sound and responsible. This will help them monitor the overall performance of the company and adjust the allocation of funds based on progress against goals.
Budgeting Skills The COO requires budgeting skills because they help in balancing operational excellence with costs, and in ensuring that the company's functions are operated effectively.
Time Management Skills As they perform a variety of tasks simultaneously, this skill will help the COO to manage their time effectively. It will help them prioritize their tasks based on how important they are to meet the organization's short- and long-term goals. It will also help the COO to manage the teams effectively.
Strong Leadership Skills This skill will help the COO communicate with employees at all levels of the organization. It will also help the COO to inspire and motivate teams, and have an in-depth understanding of the business operation, strategic planning, and financial planning, which is crucial in achieving the organizational goals.
Communication Skills The COO should be able to communicate both in writing and verbally. This is because their job involves interacting with a variety of people. They should communicate with the clients, senior management team, and CEO while reporting their activities. They communicate with the employees while outlining their ideas and goals.
Strategic Thinking Skills The COO is usually faced with many obstacles in their line of duty. In such circumstances, they are required to make choices with minimal information. With these skills, they will be able to use logic and reasoning to analyze facts and consider their weaknesses and strengths. They need this skill also when creating procedures and making guidelines for the team.
Problem-Solving Skills COO often resolves setbacks and challenges. By using this skill, they can create contingency plans and predict issues in an organization. They are also able to create plans that minimize impacts on the organization when faced with a potential challenge.
Data Analysis Skills This enables the COO to make decisions that are data-driven and enhance the effectiveness of the operation. Through complex data set interpretations, they are able to identify trends, forecast outcomes, and process optimization to improve the performance of the business.
Interpersonal Skills These are important to the COO as they help them to collaborate with other C-level executives, departmental heads, and the board of directors to get the information and ideas. They are also able to communicate well, resolve conflicts, and maintain transparent channels of information.
Computer Literacy Skills The ability to use a computer in performing basic functions like research, emailing, or data entry helps the COO in performing management tasks. They normally use the computer to review the performance of business operations, communicate with the employees, and develop strategies.

The Chief Operating Officer's role is usually in meeting the plans of the company. Every organization has its unique organizational structure and operational needs and this makes the responsibilities of each COO vary accordingly. They lead the company alongside the CEO and act as a bridge between the employees and the executive team.

They are also responsible for building the company’s operational strategy and its implementation, and most of the time they are training to become the next CEOs. They have an average earning of $157,765 per year. As part of their daily operations, they are involved in setting up the company’s standards of recruitment, marketing efforts, reviews, and output, and business workflow optimization to achieve greater productivity and KPI and performance management.

According to EMEA 2023 report, driving operational efficiency was by far the number one strategic priority faced by the COOs. It is followed by cost reduction. It was observed that the COO faces obstacles in the course of their duties. Technology enabled optimization was a big handle and all the COO must invest substantially in technology. They anticipated changes and implemented effective risk management in this area of operation. Accessing the required talent and essential skills is another challenge faced by the COOs.

7 Key Chief Operating Officer (COO) Roles and Responsibilities

1. Executing the CEO's Vision

The chief operating officer (COO) plays a key role in executing the vision of the company by ensuring that the company’s vision is translated into actionable strategies. They oversee the day-to-day operations of the business and implement plans that align with the strategic goals of the company. They assist in optimizing processes, improving productivity and reducing costs.

The COO also focuses on executing the company’s business plan and this is done according to the business model already established. They play a pivotal role in long-term planning and this is crucial for any start-up to be successful

2. Managing Daily Operations

The COO manages the operations of the company on a daily basis. They are also tasked with reviewing the current business efficiency and the planning of changes. They also develop and implement strategies and policies and then communicate them to the employees. They collaborate with the CEO and other executives in executing the strategic plans of the company.

Delivering measurable results and driving performance improvement in areas like revenue growth, cost reduction, and operational excellence are also part of their duties. They also oversee other functions like resource management, sales and marketing, and research and development. The COO also reports to the CEO and advises on any important issues.

3. Aligning Company’s Goals

By aligning with the company’s goal, the COO will help the employee to understand how their work contributes to the mission of the organization, and this will improve the employee's performance and engagement. The goals of the company should be clearly defined and they should be communicated from top to bottom, and give an explanation of how the strategies of the business advance the visions and purpose of the organization.

They should be broken down into smaller pieces, set individual goals, and use a standardized goal-setting process. The COO should then track the progress toward the achievement of the goals.

4. Managing Relationships

The COO has several key relationships that include the board of directors, CEO, employees, suppliers, customers, and also other stakeholders. They have an interdependent relationship with all the stakeholders and are very crucial to the company’s success. They build and maintain strong relationships with all the stakeholders. Effective communication and strategic relationship management are key to ensuring support for organizational initiatives.

5. Monitoring Performance

The COO monitors performance indicators and ensures that the targets of the company are met. They perform this by creating and monitoring performance indicators, driving performance improvement, and driving measurable results in areas such as cost reduction, operational excellence, and revenue growth. They coordinate across departments to ensure departments work together to achieve the company’s goals.

They also collaborate with the CEO and other executives in executing the strategic plans of the company. COOs also promote a high-performance culture through continuous improvement, quality, and learning. They also ensure that the staff are trained promptly through appropriate training and development.

6. Improving Processes

The COO is in charge of leveraging Business Process Management (BPM) which will help them design, identify, improve, and implement business processes. This will promote a culture of quality, collaboration, and transparency.

7. Reducing Costs

The COO helps in reducing costs through the leadership role. This can be achieved by inspiring and monitoring teams and ensuring that they understand the importance of cost reduction. They can also streamline processes through automation. This can be done through auditing current processes, investing in software tools, and staff training.

They can also renegotiate vendors' and suppliers' contracts by reviewing existing contracts and looking for areas they might be overpaying, renegotiating terms, and exploring competitive bids. This can be done by looking for cheaper bidders.

Case Study: Chief Operating Officer in Automation Advocacy by manufacturing Behemoth Company

Task :The case study is of a manufacturing company where the COO was to implement advanced robotics and also advanced AI systems.

Solution: Both the Advanced robotics and AI systems were installed to improve the company's efficiency. It not only enhanced precision but also scaled the production capabilities.

Overall Impact: The results brought about a 50% increase in output with a 30% decrease in production time.

Key Learning:

  • The company's efficiency was increased through automation
  • There was a reduction in the lead time after installing the AI system
  • The general operation of Behemoth was streamlined

Various Types of Chief Operating Officers

This role varies according to the company’s needs and the individual skills, personality, and experience. There are mainly 8 types that include:

1. The Executor: Responsible for implementing the strategies of the top management. Their results highly depend on the organizational needs. If there is a need to incorporate constant feedback, the COO might report to the CEO concerning such issues. They are particularly prominent in the automotive and airline industries. They are also found in the tech industries.

2. The Change Agent: This type of COO has more specific goals. They are hired to solve a particular problem the company might be facing. For example, a tech company can hire a COO to improve performance on sales through an innovative marketing strategy. They don't get a lot of insights from the company on how to proceed, so they are required to use their creativity and analytical skills to come up with a solution.

3. The Mentor: CEOs are inexperienced and the reason for hiring them is to allow them to grow with the company and develop leadership skills. Hiring a mentor COO will help the CEO with the necessary guidance to succeed. They normally have years of executive experience and might have been CEO previously. They are patient, humble, and eager to promote innovation in their industry

4. The MVP: Whenever an executive has years of experience in an organization, they are familiar with all the intended processes and develop specialized skills in the course of their work. They are one of the valuable players in the company (MVPs). Because the company wants to retain them, they are usually awarded the COO position.

5. The CEO Foil: They are well-rounded individuals with skills ranging from communication and collaboration to decisiveness. They have accumulated a high industry expertise. Sometimes they are more knowledgeable in certain areas like finance or marketing. This type of COO might use their experience in finance to offer investment advice and this will allow the CEO to focus on broader goals. They can also complement the CEO in optimizing leadership in a company.

6. The Partner COO: They are normally second in command and report to the CEO. They share many of their responsibilities with the CEO and promote collaborative relationships. They exchange ideas effectively through balanced authority.

7. The Heir Apparel: Employees are promoted to the position of the COO first, and later they become the CEOs. These employees can learn more about the company and get a lot of advice from high-level executives. If the company's leadership decides the employee is experienced enough to handle executive roles,  they are promoted to the CEO position.

8. The Hybrid COO: The organization might decide to award an employee a CEO title after demonstrating exceptional performance as a high-level executive. They also do this as part of a retention strategy and to prepare them for assuming the CEO role.

Frequently Asked Questions

Why is the role of a Chief Operating Officer essential in organizations?

The COO is a very key figure in the management of the company. They are crucial because of executing strategies, leading in change, managing complex operations, improving efficiency, and deep knowledge of the business.

What business functions are most impacted by a Chief Operating Officer?

The roles that are mostly impacted by the COO include managing operations, implementing efficiencies, connecting teams to strategy, incorporating technology, and adapting to internal and external environments.

How does the Chief Operating Officer role differ based on organizational type and maturity?

The Chief Operating Officer's role is usually in meeting the plans of the company. Every organization has its unique organizational structure and operational needs and this makes the responsibilities of each COO vary accordingly.

Which industries have seen a growing demand for a Chief Operating Officer?

This role is found across all industries and can be broad including product design, research and development, manufacturing, procurement, distribution, customer support, and transportation.

What are the common challenges faced by a Chief Operating Officer?

The challenges they face include:

  1. Enacting changes within the organization.
  2. Managing the day-to-day operations of the company.
  3. Making informed decisions is normally a big challenge.
  4. Data governance and management.
  5. Optimizing operational efficiency.
  6. Management of resources efficiently.
  7. Implementation of best practices that drive productivity and cost-effectiveness.

Conclusion

The chief operations officer (COO) is a corporate executive managing the daily operation of the company. They are usually second-in-command to the CEO. They are also part of the C-suite. Their responsibility is to ensure that the company strategy is implemented effectively. They also undertake division and department supervision with the CEO, board of directors, and department director. They also motivate and guide operational teams, establish a culture of innovation and performance, and focus on operational excellence, resource management, and cross-functional collaborations.

The chief operation officer is the key figure in an organization. They are termed as a pillar of the operational efficiency of a company. They are also able to overcome temporary challenges or lead a specific project. For professionals aspiring to excel as COOs, continuous upskilling and staying updated on industry trends are crucial. Corporate training providers like Edstellar can play a pivotal role in this journey.

By offering cutting-edge solutions such as their Skill Matrix, Edstellar enables organizations to identify skill gaps, assess proficiencies, and design personalized learning pathways. This ensures COOs and their team members are equipped with the latest competencies in areas like management, Market research, data analytics, customer engagements, products marketing, and communication empowering them to lead in an ever-changing business and marketing environment.

Explore High-impact instructor-led training for your teams.

#On-site  #Virtual #GroupTraining #Customized

Edstellar Training Catalog

Explore 2000+ industry ready instructor-led training programs.

Download Now

Coaching that Unlocks Potential

Create dynamic leaders and cohesive teams. Learn more now!

Explore 50+ Coaching Programs

Want to evaluate your team’s skill gaps?

Do a quick Skill gap analysis with Edstellar’s Free Skill Matrix tool

Get Started
Contact Our Team

Contact Us

Submit your Training Requirements below and We'll get in touch with you shortly.

Valid number

Submit
Oops! Something went wrong while submitting the form.

Tell us about your requirements

Valid number
Oops! Something went wrong while submitting the form.