Chief operating officer facts for kids

A Chief Operating Officer (often called a COO) is a top leader in a company. Think of them as the person in charge of making sure the company's daily work runs smoothly. This includes managing people, resources, and all the different tasks needed to get things done.

The COO is usually the second-in-command after the CEO, who is the main boss. The COO reports directly to the CEO and can even act on their behalf if the CEO is away.

COOs are usually chosen by the company's owners (called shareholders) or by a group of leaders called the board of directors.

What a COO Does: Roles and Responsibilities

Unlike some other top jobs in a company, a COO's exact duties can change a lot. It often depends on who the CEO is and what the company needs. The COO and CEO work very closely, so their roles fit together like puzzle pieces.

For example, choosing a COO is a bit like how a vice president is chosen. Their power and responsibilities can change depending on the style and needs of the main leader. So, the COO's job changes as the leadership team adjusts.

You'll often find COO positions in companies that have a lot of daily operations, like airlines or car manufacturers.

COO vs. President: What's the Difference?

Sometimes, a company might have a "President" who isn't also the CEO or COO. This role is also a bit flexible. The President is usually the highest-ranking officer legally, above other vice presidents. However, in practice, the President is often seen as working under the CEO.

Why Companies Have a COO (or Don't)

Many modern companies actually operate without a COO. For instance, in 2007, almost 58% of the biggest companies (listed in the Fortune 500) didn't have one. In these cases, the CEO might take on more duties, or other top managers handle the tasks usually given to a COO.

Even though the number of COOs has gone down in recent years, there are reasons why we might see more of them in the future:

• Bigger Companies: Companies are growing larger and more complex. It's getting harder for just one person (the CEO) to oversee everything.
• Better Performance: Companies are finding that having a COO can help the business perform better.
• Training Future Leaders: The COO role is often used to train and prepare someone to become the next CEO.
• Keeping Top Talent: It can also help keep important executives from leaving to work for a competitor.

Daily Life of a COO: Functions and Tasks

The COO's job changes from one industry to another and from one company to another. Some companies don't have a COO at all. Others might even have two COOs, each looking after different parts of the business. For example, Lehman Brothers once had two COOs from 2002 to 2004. A COO might also be brought in from another company to help "fix" problems, like Daniel J. O'Neill did for Molson in 1999.

In companies that make things (like in the manufacturing sector), the COO's main job is often about operations management. This means they are in charge of creating, designing, running, and improving the systems that make and deliver the company's products. The COO makes sure that all the daily business tasks are efficient and effective. They also manage resources, handle the delivery of goods and services to customers, and analyze how things flow.

Even with all these differences, COOs usually perform some common tasks:

• Using Resources Wisely: They help the CEO and board of directors use the company's limited resources in the best ways to create the most value for the company.
• Sharing the Company's Vision: They help share the company's goals and plans with all the employees. They also make sure people are rewarded or coached to help reach these goals.
• Planning Ahead: They plan by figuring out what customers, employees, and the company itself need most.
• Managing Staff: They keep an eye on staffing levels, make sure employees have the right skills, and keep them motivated.
• Tracking Performance: They set up ways to measure how well the company is doing, often using easy-to-read reports that show key results.

COO as the Next CEO

In many large companies, the COO is often seen as the person who will become the next CEO. Some COOs have worked their way up through the company over many years. Others might be hired from outside. Either way, the COO position is often used as a place to train and test someone for the top job.

Working with the CEO: A Key Relationship

Since the COO often shares important information with the CEO, it's super important that they have a good relationship. Trust is the most vital part of a strong CEO-COO team. The CEO needs to feel confident that the COO isn't trying to take their job, can get things done, and shares the same vision for the company. When a strong, trusting relationship exists, the company usually performs better.

Here are some ways to build trust between a CEO and COO:

• Good Communication: The CEO needs to feel comfortable sharing information and plans with the COO. The COO also needs to regularly update the CEO on progress.
• Clear Decisions: The COO's role works best when their responsibilities are clear, and they are allowed to make final decisions within their agreed-upon areas.
• Support from the Top: The CEO should not go back on the COO's decisions. If employees learn they can get a different answer by going directly to the CEO, the COO's power quickly disappears.
• Sharing Credit: Both the CEO and COO should feel good about how much credit they get for their work, both inside and outside the company.
• Good Fit: The two people must respect each other and work well together. This partnership can't be forced.
• Right Skills for the Job: The chosen COO must have the right skills for why the role was created. This could be anything from operations expertise to being good at managing change.
• Clear Future Plans: Both parties need to understand if the COO wants to be CEO, if they are being considered for the job, and when that might happen.

Working with the Board of Directors

Besides having a strong relationship with the CEO, the COO should also have a good connection with the company's board of directors. A good relationship helps the board understand and judge a potential future CEO better. It also gives the board another expert opinion on how healthy the company is and how important projects are going.

It helps the CEO to let this relationship grow because it shows confidence and openness. It also proves that the CEO can develop talented people and helps keep the COO by giving them more power. For the COO, a strong relationship with the board means they can gain more experience and grow their professional network. Plus, if they want to be the next CEO, it helps them build trust with the board. Experts suggest that COOs should do more than just present at board meetings; they should try to build strong one-on-one relationships with each board member. They also encourage the COO to develop their own voice, separate from the CEO.