COO vs. CFO: Definitions and Differences
Two essential executive roles in business are the chief operating officer (COO) and chief financial officer (CFO). These positions require extensive experience, education and a specific set of skills, resulting in high-paying jobs with a wide range of responsibilities and benefits. In this article, we define what a COO and CFO are and explain the differences between each position.
What is a COO?
The chief operating officer, or COO, is responsible for the day-to-day operations of an organization. This includes all activities related to marketing, sales, production and staff management. Also referred to as senior vice president, the COO reports to the chief executive officer (CEO) and often collaborates with the CFO to discuss a company's financial circumstances.
A COO is typically a member of the executive team in organizations such as government entities, for-profit businesses, educational institutions and charities. A COO's typical job duties might include the following:
Designing and implementing business strategies, plans and procedures
Setting goals for performance and growth
Overseeing daily operations of the company and the work of executives
Leading and evaluating employees to encourage maximum performance
Writing and submitting important reports to the CEO
Managing relationships with partners and vendors
Participating in expansion activities such as investments and corporate alliances
Introducing initiatives to address company losses
Read more: A Guide to Executive Business Titles
What is a CFO?
The chief financial officer, or CFO, is a senior manager responsible for analyzing and reviewing an organization's financial data, reporting financial performance, preparing budgets and monitoring expenditures and costs. CFOs typically work closely with CEOs as well as the company's board of directors. They are essentially the financial spokesperson of an organization, often supporting the COO on strategic matters such as cost-benefit analysis, securing new funding and managing budgets.
Other typical CFO job duties may include the following:
Controlling the organization's fundraising plans and capital structure
Deciding on investment strategies by determining cash and liquidity risks
Performing risk management by analyzing the company's liabilities and investments
Preparing both current and forecasting financial reports
Ensuring compliance with legal regulations and company policies
Managing teams of financial analysts and financial controllers
Preparing quarterly and annual tax filings
Attending board meetings and providing company leadership with detailed financial reports and recommendations
COO vs. CFO differences
The COO and CFO are both senior managers of an organization. However, these two positions are different in their day-to-day duties and responsibilities. Here are three important distinctions between the COO and CFO roles:
A COO's salary mostly depends on an individual's experience, education and professional qualifications as well as the company's size and industry sector. The national average salary for a COO is $119,653 per year.
Like the COO, the salary of a chief financial officer (CFO) may vary depending on the size, location and industry of an employing company. CFO salaries also depend on a potential candidate's education, level of experience and professional qualifications. The national average salary for a CFO is $134,088 per year.
Related: COO vs. CEO
Most employers require COOs to have at least a bachelor's degree in business or a related field such as business administration. CFOs also need to have at least a bachelor's degree in a more specific, finance-related field such as accounting or economics. Both COOs and CFOs can benefit from pursuing a master's degree in their fields, as this can help them find higher-paying positions with more responsibilities.
Both COOs and CFOs need excellent communication and strategic planning skills to be successful at their jobs. However, a CFO focuses primarily on a company's finances while a COO focuses on a company's employees and general operations management.
Relevant skills for a COO include:
Leadership: A COO must be an excellent leader with extensive business operations knowledge, as they're required to manage and supervise a multidisciplinary team.
Decision-making: COOs have strong decision-making skills to consider options, anticipate outcomes and make choices that positively impact the company.
Financial management: To make strategic decisions, COOs need to be skilled in financial management so they can consider consider budget requirements and business accounts.
Communication: As business leaders and role models, COOs use exceptional communication skills to motivate employees and clearly explain expectations and responsibilities.
Delegation: COOs use delegation skills to assign responsibilities to different teams and ensure work is completed on time and with accuracy.
Relevant skills for a CFO include:
Risk management: CFOs should be able to predict and evaluate financial risks and identify how to avoid or minimize their impact.
Collaboration and teamwork: Because CFOs are executives, they need to have strong collaboration skills to work effectively with teams of financial analysts, accountants, other executives and more.
Financial modeling: CFOs use financial modeling skills to create summaries of a company's expenses and earnings so they can make accurate financial predictions and decisions.
Financial compliance management: CFOs have strong financial compliance management knowledge to help them understand legal regulations and refer to these regulations when making decisions.
Critical thinking: CFOs need excellent critical thinking skills to make important decisions about a company's future and incorporate new financial strategies with certainty.
Problem-solving: CFOs have strong problem-solving skills so they can accurately assess and minimize a company's financial risks.
Tips for becoming COO or CFO
As you explore COO and CFO job opportunities, keep the following tips in mind:
Continue your education. Continue learning and pursuing educational opportunities as your career advances so you can stay up to date on relevant business leadership research, tools and resources.
Consider your skills. Think about your strengths and consider them while exploring the COO and CFO career options. For example, if you enjoy interacting with people more than numbers, you may be more successful as COO.
Network. Consider utilizing your professional network often to seek advice, ask questions and discover job opportunities in your industry.
Understand your values. As you look for COO or CFO positions, think about how your values may impact your performance at certain companies. If you are passionate about academic knowledge and research, for example, you may be more successful working as COO or CFO at an educational institution rather than a for-profit business.
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