COO vs. CEO: Differences in Responsibilities

COO vs. CEO: Differences in Responsibilities

A CEO and COO are both C-suite executive positions, but there are several noteworthy differences between them. CEOs and COOs collaborate to ensure efficient business operations and maintain adequate growth in the business.

The job responsibilities of a chief executive officer, however, differ from that of a chief operating officer. Although there are many senior executives in any organization’s C-suite team, the CEO and COO play crucial roles in achieving business goals.

Read on to find the key differences between a chief executive office and a chief operations officer to discover why both positions are essential to the functionality and success of any C-suite team and business as a whole.

What is a Chief Executive Officer (CEO)?

A chief executive officer is the highest-ranking executive in a company. A CEO has many roles and responsibilities, of which the most important include guiding, maintaining, and formulating the strategic plan of the company and making major decisions regarding the profitability and direction of the company to achieve the company’s vision.

Moreover, the chief executive officer is responsible for overseeing all the other c-suite positions and ensuring the company’s management adheres to the established business decisions.

The CEO is the connection between the board of directors and the senior executives of a company and must report any business decisions and development matters directly to the board members. Some companies appoint the CEO as the board’s chairman or designate them a seat on the board. The board members define the responsibilities and roles of the CEO, including everything relating to public relations and the company’s mission statement, depending on the size of the business.

As the highest-ranking role, the CEO has the final say in corporate decisions and must guide the implementation of long-term strategies in order to increase the value of the shareholders. The CEO of a large company often assigns duties to department heads so they can get back to their primary role, which is advancing high-level corporate strategies.

Below is a list of the primary responsibilities of a CEO:

• Implementing each company strategy
• Developing the company vision and goals
• Communicating with the board of directors, the shareholders, the head of administration, and government officials on behalf of the business
• Consulting the board of directors on various matters
• Staying updated on expansion opportunities, the landscape of the market, business competition, and critical advancements in the industry
• Monitoring and evaluating any risks to prevent damages and losses in the company
• Attending industry-related events to develop the company’s reputation, improve leadership skills and decision-making strategies, and advance the potential for success in the company
• Serving as the public representative of the business
• Setting and developing attainable and measurable business goals

What is a Chief Operating Officer (COO)?

The chief operating officer is a senior executive responsible for overseeing business operational functions, including administration, company strategy, and staffing. Often referred to as the executive vice president of operations, the COO essentially serves as the second-in-command after the company’s CEO.

A COO is one of the C-level executives that make up the management team of the company. Other members of the management team include the chief information officer, the chief financial officer, the chief technology officer, and the chief marketing officer.

Although the COO reports to the CEO and follows their guidance on the company’s day-to-day operations, they also have the freedom to make their own decisions involving operational functions and business plans. The position of chief operations officer requires business management skills and in-depth knowledge of the entire company.

The COO executes duties related to internal affairs and ensures efficient daily operations to promote the growth and profitability of the company. Although duties may vary based on the business, the COO’s responsibilities include the following:

• Long-term planning and establishing company strategies to advance growth and mitigate risks
• Collaborate with interested parties regarding financial planning and budgeting
• Managing the expenditures of the business and creating strategic initiatives to reduce losses
• Reporting the company’s financial performance
• Monitoring audits of the expenditures and income of the company
• Assigning duties to staff members and ensuring high performance by all company employees
• Establishing policies that foster a constructive company culture
• Developing business metrics and evaluating performance via data interpretation
• Overseeing the performance of other executives and the company’s internal operations
• Reporting all noteworthy matters to the CEO
• Partaking in expansion strategies and directing business relationships with partners

Major Differences Between a CEO and COO

There are several key differences between a CEO vs. COO:

Company Hierarchy

The CEO oversees the functionality and operations of the entire organization, and all C-level executives must report back to the CEO. 

The COO, on the other hand, typically serves as the CEO’s right hand. While having the authority to make decisions themselves, the CEO has the final say and may change or make suggestions regarding all company matters. While the CEO reports to the board of directors, the COO reports to the CEO.

Primary Responsibilities

The CEO focuses on creating the company vision, and they are often the public representative of the company. The CEO is also responsible for executing crucial initiatives established by the other senior executives and high-ranking board members. The chief executive officer develops short- and long-term strategies, along with company missions, visions, and values.

The COO must use the CEO’s vision and turn it into a practical business plan. The chief operating officer is responsible for overseeing internal affairs and the company’s daily operations and making sure they align with the long-term goals of the company.

Different Skill Sets of Chief Operations Officer and Chief Executive Officer

A CEO is required to have outstanding communication and leadership skills and excellent management capabilities.

On the other hand, a COO focuses primarily on executing decisions finalized by the CEO. They must be driven, detail-oriented, organized, and analytical.

Ownership and Shares

As the senior executive, the CEO is oftentimes a major shareholder or the business owner. The COO may be a shareholder, but they won’t likely be a major shareholder of the company.

The Necessity of a COO vs. CEO

All companies have appointed CEOs, but not all employ a COO. In small businesses, the CEO often fulfills the responsibilities of a CEO and COO, which helps them manage their company more closely.

In larger organizations, however, a COO is a necessity, as the CEO may not be able to execute the duties of their position as best they can without aid.

Creating an Optimal Environment for a CEO and COO

The success of any company relies greatly on the ability of the CEO and COO to work together toward a common goal. A COO is the executor, mentor, and trusted advisor of the CEO, so maintaining a healthy partnership between these two executive positions is essential in creating a productive environment for C-suite members and the organization as a whole.

Companies grow optimally when they are selective in designating a CEO and COO. As these roles entail the most responsibilities in the company, the guidance of a dedicated executive search firm will significantly benefit the performance of the business.