In the corporate world, the CEO and COO work in tandem to drive the growth and prosperity of a company. While both positions hold significant weight, their respective roles and priorities vary. Understanding the differences and responsibilities of a CEO and COO can assist in determining if these roles are necessary for your business.
The CEO is the highest-ranking employee and plays a crucial role in the success of an organization. This position encompasses top-level duties such as establishing the company's strategies and culture.
Here are the key responsibilities of a CEO:
Every business requires a long-term vision and a clear strategy to achieve it. The CEO holds a vital role in defining the company's vision, such as envisioning a software startup becoming a leader in a new technology.
In addition, the CEO determines the values that the company stands for, such as customer satisfaction, innovation, inclusivity, and integrity. These principles act as guiding forces as the business expands and works towards its vision. The company's overall vision also influences its long-term objectives.
Creating strategic plans is one of the primary duties of a CEO. These decisions uncover opportunities and mitigate risks for the company. They also shape the direction of the company's growth, including new products, markets, and policies for mergers and acquisitions.
In most cases, the CEO serves as a vital link between the board of directors and the rest of the organization. They keep the board informed about the company's performance, financials, and potential risks.
It is the CEO's responsibility to uphold the company's culture and values. For example, they may prioritize diversity and inclusion, fostering a welcoming work environment. Additionally, they have a role in determining the company's structure and hierarchy, as employees look up to the CEO as a leader.
The COO oversees the day-to-day operations of the company, working closely with various departments such as production, sales, marketing, human resources, and finance to ensure efficient functioning. This includes identifying and addressing any bottlenecks that may impede operations, such as delays from vendors impacting production.
While the CEO focuses on long-term plans and the bigger picture, the COO works hands-on to ensure smooth daily operations within the company. While the CEO has an external focus, the COO has an internal focus, collaborating with departments to maintain the business's smooth functioning.
In addition, the COO has the following duties:
The COO is responsible for ensuring operational effectiveness and efficiency within the company. This involves creating and monitoring processes to streamline operations, such as implementing an efficient expense-reporting system for employees.
While the CEO sets the key performance indicators (KPIs), the COO is responsible for ensuring the company meets its performance goals. This includes closely monitoring the KPIs and addressing any operational issues that may arise. For instance, if there is an increase in customer churn or a decrease in revenue, the COO works to identify and resolve the underlying issues.
The COO works closely with the CFO to ensure each department stays within its allocated budget. They monitor departmental expenses and ensure they align with the company's financial objectives.
When a department requires a budget increase to perform at its best, the COO can evaluate the new budget requirements. However, what are the advantages of having both a CEO and COO in an organization?
For startups, having a CEO and COO can be a winning combination. The COO typically brings hands-on experience in running a business, while the CEO brings technical expertise and a vision for the company. Together, they can steer the company towards success through their complementary skill sets and shared responsibilities.
In any well-defined executive structure, the CEO and COO play vital roles that complement each other's strengths.
According to Bryan Clayton, CEO of GreenPal, a lawn care services company, the COO's responsibilities extend beyond just overseeing day-to-day operations. "A COO is more than just a task delegator," he explains. "They are a trusted partner who understands the intricacies of the business and shares the same passion for the company's culture and product."
On the other hand, Josh Amishav, founder and CEO of Breachsense, a successful cybersecurity firm without a separate COO position, has found a way to balance both strategic and operational responsibilities. "As CEO, I focus on setting the company's direction, building relationships, and representing the organization. As COO, I am responsible for managing daily operations, monitoring performance, and addressing any operational challenges."
However, for Jeff Matlow, president at By Title Only, a leading business consultancy firm, it's unrealistic for a single person to handle the roles of CEO and COO as the company grows. He believes that dividing these responsibilities between two individuals becomes necessary as the business expands.
"When a company reaches approximately 30-50 employees, the lack of a division between CEO and COO duties becomes a major obstacle in its growth," Matlow states. "Usually, the founder/CEO is so consumed with COO responsibilities that they are unable to fulfill their role as a true CEO."
While smaller businesses may manage without a dedicated COO, as the company grows and operations become more complex, the CEO will need the support of a COO to effectively manage day-to-day activities and work closely with teams. This allows the CEO to focus on long-term growth and the overall vision for the business.
