A chief operating officer, or COO, is the overall leader of a company’s operations and a member of the C-suite. While the role may vary by industry and company, COOs typically oversee manufacturing and supply chain, as well as other planning or administrative functions. As the strategic engine behind operations, the COO ensures efficient and effective processes and activities to provide goods or services for customers. The COO not only manages the people and assets critical to serving customers but also thinks about how to build competitive advantage through operational excellence. The COO role is pivotal in steering the company toward its strategic objectives.
What Is A COO?
The COO is the most senior operations leader in the company, reporting to the CEO. The role is found across industries and can be very broad, including research and development, product design, procurement, manufacturing, distribution, transportation, and even customer support. The COO is sometimes supported by a vice president of operations. Instead of a COO, some companies divide these responsibilities across multiple senior roles, such as heads of manufacturing or logistics.
A COO’s mandate extends beyond managing today’s operations to long-term optimization and improvement. This means a COO often recommends or decides on operating and capital investments. Good operations leaders spearhead continuous improvement and ensure financial and human capital resources are well utilized. They think about the end-to-end execution of strategic priorities to keep capabilities up to date. They collaborate with the chief technology officer (CTO) and data leaders to utilize digital improvements for gains in productivity and business value.
Unlike the CEO role, the COO role doesn’t include the commercial side of the business, such as sales or marketing. Therefore, the CEO owns the overall profit and loss statement of the business, while the COO typically focuses on controlling expenses and ensuring return on investments.
What Does A COO Do?
The COO ensures efficient and effective operations. For instance, in manufacturing businesses, a COO is accountable for running plants and logistics. In a retail business, a COO is accountable for running stores and distribution centers.
In any scenario, COOs spend time reviewing production or service metrics to guarantee the organization is fulfilling customer orders on time and at the desired cost. They create detailed operating plans for where specific activities should occur in order for operations to run smoothly. They also lead projects to build new capacity or capabilities and implement quality and safety policies. COOs manage a team of operators, which they may organize by product or plant type, geography, or functional specialization, such as transportation.
Skills And Qualifications Of A COO
COOs are seasoned people and asset managers who have typically risen through the ranks with hands-on experience across multiple sites and types of operations. They are disciplined cost managers who also seek opportunities to invest in future business value. They don’t shy away from new technologies or innovation, testing smart ideas and scaling ones that work.
The best COOs build trusted teams and foster an environment where members quickly surface problems. They are strong planners who feel comfortable making real-time decisions when something doesn’t go as expected.
Why Is It Important To Have A COO?
A COO is critical for optimizing and orchestrating the end-to-end activities of a company. They can eliminate waste, reduce unnecessary activity, and simplify processes. They can also build capabilities, bring together different experts in a more efficient and effective way, and, ultimately, ensure a high-quality product or service.
Without a COO, organizations must rely on enterprise teamwork to identify opportunities for operational improvements.
What Is The Average Salary of A COO?
COO salaries reflect the role’s importance in a company’s ability to serve its customers. The COO is often the right hand to the CEO and a candidate for CEO succession. According to Glassdoor, on average, US COOs earn between $263,000 and $490,000 annually, with a median total compensation of $350,000.
How Do You Become A COO?
A typical COO holds a bachelor’s degree and a master’s degree, such as an MBA. Many COOs have built judgment and expertise for 15 to 20 years before securing the top operations position. The qualifications and pathway for becoming a COO can vary by industry.
What Is The Future Of Chief Operating Officer Roles?
COOs are increasingly tasked with pursuing competitive advantage through operations. This includes more involvement in the creation of new products, as well as thinking through where and how the company sources materials or conducts activities.
As manufacturing and service operations become more digital, the COO must be responsible for exploring, testing, and encouraging the adoption of new technologies. Machine learning is reinventing many processes, and there’s an ever-expanding amount of operational data for production and service optimization. Leading COOs of the future will be open to testing new processes and technologies to determine what works. This requires stronger digital acumen and an enhanced ability to scale change at pace throughout operations.
Bottom Line
As a right-hand person to the CEO, the COO has always been one of the most critical roles to a company’s success. With the data and technology revolution underway, there has never been a more exciting time to be a COO, transforming what work gets done and how it gets done.