Strategy & Operations » Leadership & Management » Are COOs becoming the new stars of the boardroom?

Are COOs becoming the new stars of the boardroom?

Graham Oates, chief executive of executive search and interim management agency Norrie Johnston Recruitment, explains why the role of chief operating officer is becoming vital.

There’s no doubt that COOs play a vital role. Often considered to be second in command at an organisation, they are responsible for overseeing the day-to-day operation of the business, as well as managing a proportion of the workforce.

However, in recent years we have noticed a shift in the role of the COO and this has impacted on the type of individual companies now require to fill the position. Keen to find out more about the changing role, and what it takes to be a great COO today, we undertook research among chief operating officers working within both the UK and overseas businesses. The results were clear. The vast majority agreed that COOs are more central to a company’s success today than ever before, with those fulfilling the role required to take responsibility for a diverse range of additional disciplines and business initiatives.

The role

As many as 87 percent of those researched agreed that the role is currently undergoing change, with this evolution taking many forms. Over three quarters reported that the role now involves greater emphasis on driving business and digital transformation, creating new business opportunities and overseeing the allocation and prioritisation of corporate resources. Many also felt that COOs are now required to be more strategic, as well as more deeply involved in talent management.

Addressing the diverse range of roles that can be performed by the COO, Nathan Bennett and Stephen A. Miles suggested that there are as many as seven types of COO in their book Riding Shotgun: The Role of the COO. These include The Executor, The Change Agent, The Mentor and The Other Half to the CEO. Similarly, Harvard Business Review describes the role as “situational” and claims that there are “almost no constants”.

Skills and experience

COOs are also required to have a broader spectrum of skills and experience than ever before in order to fulfil the pivotal role. 64 percent of people agreed that leadership ability is the most important attribute for the position. However, individuals must possess a range of other skills if they are to succeed, with good decision making, the ability to manage transformational change, courage, strong interpersonal skills and tolerance of complexity all flagged as vital for a COO.

The breadth of expertise required is reflected in the diversity of the positions previously held by the COOs studied. 73 percent had previously been operations directors or managers before becoming COOs, but this wasn’t the sole route taken; their previous experience spanned a number of areas, including senior roles in procurement and development, sales, marketing, production, strategy and transformation. Interestingly, none of those researched had previously held a Finance Director or CFO role, although finance was found to be one of the departments that COOs are often expected to have governance over.

Reporting lines

In fact, the research found that COOs are responsible for a vast number of functions within the business. In addition to finance, most of those surveyed head up transformation and change, facilities, strategy, HR and IT. Many also have governance over sales, marketing, R&D and supply chain/procurement. With teams reporting to them across all these areas of the business, COOs are required to have knowledge and understanding of almost all key divisions in their business.

With responsibility over such an array of job functions, it is also likely that the COO will be managing many different types of people. Within each of the departments and job roles reporting into the COO there will be a wide range of character profiles, each responding very differently to a single management style. What motivates one person may demotivate another. This means that the COO must have excellent interpersonal skills and a strong understanding of these behavioural differences in order succeed.

Key responsibilities

In addition to managing a broad spectrum of departments, our research found that the role itself encompasses a range of business initiatives and responsibilities. According to the COOs, continuous business improvement, optimising operational processes and driving key transformational projects are the most key elements of their role. However, the position is hugely varied, with responsibilities often also including keeping the business running, shaping the future of the organisation and designing a framework to turn strategy into operations. Delivering cost efficiencies also often falls within a COOs remit, requiring them to work closely with finance directors to define transformation programmes, set KPIs, streamline budgets and achieve targets.

Lessons for finance directors

It is clear that in many organisations the COO is usurping the traditional role of the CFO as the CEO’s right hand. This is both a challenge and an opportunity for finance directors. In many ways FDs are peculiarly well-placed to transition to COO roles since finance is peculiarly well-placed to see and understand the strategy and operations of the whole business. To convert this opportunity, however, they need to be fully committed to being true strategically and commercially oriented business partners and apply this to business transformation and improvement opportunities for their particular organisation.

Conclusion

Our research suggests that COOs are very often corporate superstars. Multi-talented with a phenomenal breadth of skills and experience to draw on, COOs are a vital member of the team and are now required to perform well across a variety of business functions.

However, the research also shows that one size doesn’t fit all when it comes to selecting the right COO for an organisation. Maynard Webb, former chief operating officer at eBay, summed this up when he said: “The first COO, Brian Swette, had a job that was nothing like my job. Brian was a sales and marketing guy. He had the business units reporting directly to him and spent no time on any of my role.” Webb’s suggestion that the COO role changes and evolves depending on who is in the position at the time is an interesting one. This presents a challenge for employers who must ensure that would-be-COOs don’t have a tendency to focus too heavily on the aspects of the role that they favour.

Our research demonstrates that the way in which the role is defined and used by a company depends on so many factors, including the business’s wider organisational structure, its priorities and its challenges. In today’s fast-moving climate, these factors can all change quickly, making the role more challenging to recruit for than ever before.

It is therefore important for companies looking to introduce the COO role for the first time, or those looking to replace a COO, to carefully define the position they are recruiting for and consider working with an executive recruitment agency who will help to scope the role properly. This will ensure that the individual placed in the role is a strong fit and integrates effectively with the wider business.

 

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