COO vs. CEO
If you're thinking of rising to an executive position within a company, it's important to make a clear distinction between the responsibilities of CEO and COO. The CEO and COO are both high-ranking executive positions within a company, and they work together to maintain business growth and ensure profit within the business. However, there are some differences in their job responsibilities and expectations. In this article, we'll explore the differences between a CEO vs a COO.
Related: What Is Corporate Culture?
What is a COO?
The COO, or Chief Operations Officer, serves as a senior executive who oversees the daily administrative and operational functions of a business. They are usually considered the second-in-command at a company and report to the Chief Executive Officer.
The main function of the COO is to execute company plans based on an approved business model. While the COO follows the directives set by the CEO, they have the authority to make their own decisions in terms of the execution of business plans and the operational functions of an organization. In most cases, COOs will need practical knowledge to build a business and strategize for it. They are considered the architects of business management.
A COO's responsibilities vary depending on how their position relates to the CEO. The core responsibilities of a COO usually involve the following:
Coordinating with stakeholders in terms of budgeting and financial planning
Planning and creating strategies on business approaches to ensure growth and minimize risk
Managing business costs and expenditures and developing tactical initiatives to minimize profit loss
Monitoring the auditing of company income and expenditures
Reporting accurate financial performance
Delegating tasks to staff to make sure that all employees are performing well
Developing company policies that promote a positive company culture
Overseeing the internal operations of the company and the output of other executives
Assessing performances through data interpretation and developing business metrics
Managing relationships with business partners and actively participating in expansion activities such as investments, acquisitions and business negotiations
Reporting important matters to the CEO
The COO focuses more on the internal affairs of the business. They play a very important role in making sure that the entire enterprise is working as it should be and the company is earning a profit.
Related: Guide to Company Culture
What is a CEO?
The CEO, or Chief Executive Officer, holds the most senior and highest-ranking role in a company. They also serve as the face of a company and are responsible for its overall success.
The CEO makes top-level decisions to ensure the future of the company. Most CEOs have consultants and other senior executives to provide input on business decisions, but the CEO is usually the only one who has the authority to make a final decision.
The CEO of a smaller company often manages the overall functions of their organization more directly, while CEOs of big companies often delegate tasks to department heads so they can focus on making big decisions and developing high-level corporate strategies.
The responsibilities of a CEO vary according to the size of the company. However, all CEOs share the same goal of guiding the development and implementation of long-term strategies to increase the value of shareholders. Some typical responsibilities of a CEO can include:
Developing and implementing company vision and mission
Executing overall company strategies
Consulting with the board of directors
Communicating with shareholders, the board of directors, government officials and leaders of the administration on behalf of the company
Keeping oneself updated with the market landscape, expansion opportunities, development of business competition and technological advancement in the industry
Monitoring and assessing all risks and preventing any kind of loss and damage to the company
Participating in any industry-related events to increase leadership skills, build the company's reputation and strengthen the company's potential for success
Developing and setting business strategic goals that are measurable, attainable and describable
COO vs. CEO: What are the differences?
Here are some important distinctions between a CEO and a COO's roles:
The necessity of the position
Shares and ownership
The main difference between a COO and a CEO is the structural ranking in an organization. The CEO holds the highest rank within an organization, and the COO reports to them. More importantly, the CEO is the head of the company and makes the final decisions for the future of the business, while COOs can only give advice based on the functions and current status of the business.
CEOs focus more on the overall long-term aspects of running a business while COOs focus on the current operations and financial status of the organization. Although COOs are allowed to make their own decisions on matters under their authority, the CEO still has the power to change the decisions of the COO if necessary.
The necessity of the position
Not all companies that have CEOs necessarily have a COO. For example, CEOs in small businesses often perform the responsibilities of a COO themselves while maintaining their duties as a CEO. This helps a CEO manage their business closely while it grows.
Shares and ownership
While not always the case, many CEOs either own the business or are shareholders, if not the major shareholder, of the company. COOs, however, are less likely to be the major shareholder within their company.
How to choose between becoming COO or CEO
Choosing between the position of CEO and COO depends on your management background, experience and skills. If you're considering a career in a C-level position, follow these steps to choose between COO or CEO.
Get more experience.
Consider your capabilities.
Make a checklist.
1. Get more experience
It's advisable to start working as a COO before becoming a CEO, which will give you the experience needed to make the right decisions as a CEO. Gaining this prior experience may also help you determine if you would prefer to remain in the role of a COO instead.
2. Consider your capabilities
Being a COO means working alongside the CEO. This can serve as training for you before you take on the task of a CEO. When a CEO retires or resigns, the successor of the position is usually the COO, who is the next in the chain of command. By the time you will take over the position, you will likely already be familiar with the overall operations of the company. If you choose to remain COO instead, you may be asked to help find a suitable replacement for the CEO.
3. Make a checklist
One of the best ways to choose between the position of COO and CEO is to make a checklist of the roles and responsibilities and evaluate yourself to see which position fits you well. For example, if you're more skilled with internal operations in an organization, you may excel more as a COO.
4. Seek advice
You can also seek advice from people you know who are working as executives to give you a better understanding of what to expect in both positions. This way, you can get more perspective and learn more about both positions.
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