As your business grows you may reach a point where you question whether your organization needs a chief operating officer. With your vice presidents effectively running their respective departments, you -- the CEO -- may question the role of a COO and when one becomes necessary. To make that determination you must assess the performance of your management team to determine if it really needs a COO.
The Vice President's Role
The responsibility of a vice president is to run a department and the position's title typically tells which one – vice president of sales, vice president of research and development, for example. Their authority is generally limited to the departments they run. Depending on the size of the firm, there may be a hierarchy of vice presidents. Executive and senior head the list. Senior typically denotes seniority within the firm and carries more respect and a bigger paycheck. An executive vice president has executive authority that may cross departmental boundaries. He is a fill-in for the president when the latter is occupied.
Chief Operating Officer
A chief operating officer falls in the category of “C” positions -- CEO, COO, CIO, CFO -- positions that sometimes overlap with the president and vice presidents. There are no standard qualifications for the COO, nor are there standard position descriptions. A COO may have company-wide authority in one firm, while he may be focused in one aspect of operations in another. Chief operating officers are not necessarily in line for promotion. One study found that only 17 percent of chief operating officers were promoted to CEO.
While vice presidents run their departments, chief operating officers generally have responsibilities that encompass all of the business. A COO provides day-to-day leadership. Monitoring company performance through management information system reports, he can evaluate the effectiveness of company operations and cross department boundaries to assure that company goals are met. Because his responsibilities are business-wide, his activities are an important determinant of the company culture. The COO also represents the firm to outside interests. He is instrumental in working with investors and raising capital.
Do You Need a COO
The COO can act as a chief of staff for a CEO. In many technology-oriented firms, the COO is a key player on the management team. If the CEO is immersed in technology, the COO may run the company. The role of the COO may be covered by others who lack the title. In a single location business, a retail store, for example, the store manager is the de facto COO. Whether your small business needs a COO depends on how many divisions and employees it has. With a small number of employees and a solid team of vice presidents, you probably can work without the added administrative layer of a COO.
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