Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Chief Operating Officer (COO)

What it is:

The chief operating officer (COO) is responsible for executing and implementing the operational directives set by the CEO and the board of directors. Whereas the CEO is responsible for the overall leadership of the company, the COO is responsible for the day-to-day execution.

How it works (Example):

The COO works for the CEO. Often, the board of directors has a role in the selection of the COO. The COO is often viewed as the CEO's second in command.

There is a lot of variety in the COO's job across industries and companies, but in general the COO oversees a company's operations on a more detailed basis than the CEO. The COO also translates the board's and the CEO's strategic objectives into executable plans.

For example, if one of the company's objectives is to increase customer satisfaction, the COO works with the appropriate departments to execute the plan and devises ways to measure and control the progress. The COO then monitors those measurements over time, advises the CEO and board on certain issues and reports back to the CEO on the status of the progress toward the strategic goal.

If companies were ships, the CEO would be the captain, deciding where the ship is going and standing on deck to ensure things were moving in the right direction. The COO would be below deck making sure everyone is rowing in the right direction, measuring resource levels, making sure everybody understood what to do and calculating how long it should be until the ship reached its destination.

Why it Matters:

COOs are behind-the-scenes people with a lot of responsibility. They are "go-to" people who are critical to effective organizations. The best COOs work with the culture of the organization to get things done according to its strategic vision and the directives set forth by the CEO.

It is very important that the COO is able to trust and work well with the CEO and CFO. The COO must be able to persuade and motivate people toward action; must be able to manage a wide range of departments; and must be able to do so within financial constraints.