COO vs CEO: 7 Key Differences Explained

The thing is, companies can’t run themselves. They need appointed professionals who can make the goals, vision, and overall success of a company a reality. These C-suite executives hold many titles: Chief Financial Officer (CFO), Chief Technology Officer (CTO), Chief Information Officer (CIO), or Chief Marketing Officer (CMO), followed by the vice president.

There are two executive-level positions that often get confused: the Chief Operating Officer (COO) and the Chief Executive Officer (CEO).

The Roles Explained in Short

The Chief Operating Officer (COO) plays a crucial role in translating the CEO’s vision into a functional and sustainable path. They oversee day-to-day operations, implement strategic plans, and manage internal functions, working in harmony with the CEO. While the CEO sets the company’s vision, culture, and brand identity, the COO ensures the practical realization of this vision, fostering a cohesive business culture. Both roles are distinct yet interdependent, contributing significantly to the company’s success.

The Key 7 Differences in Duties and Responsibilities

The CEO holds the topmost position, often reporting to the board of directors, ensuring accountability. The COO, typically second in command, collaborates closely with the CEO, ensuring smooth operations. Reporting structures cascade down, with the C-suite executives reporting to the CEO and the senior executives managing teams under them, ensuring efficient company functioning. Let’s take a closer look at seven key differences between these two positions:

1. Scope of Responsibilities

The scope of responsibilities refers to the specific areas of an organization’s daily operations and leadership initiatives that COOs and CEOs are responsible for. The key responsibilities typically associated with COOs may include overseeing business operations, managing departments like human resources, ensuring efficiency, monitoring metrics like profit and pricing, and executing the company’s strategy.

The distinct responsibilities that CEOs typically have include being responsible for setting the company’s strategic direction, making high-level decisions, representing the organization to stakeholders, and driving growth. The CEO is in charge of the plan, and the COO is in charge of making the plan happen.

2. Decision-Making Authority

Decision-making authority refers to the power and responsibility individuals in leadership positions hold to make key choices that impact the organization. COOs often have the authority to make operational decisions that align with the company’s strategy and goals. COOs focus on day-to-day operations, ensure that the organization runs smoothly, and call the shots on daily operations and team management to address any operational issues that may occur. They are also responsible for being a trusted partner in assisting the CEO with any long-term challenges for the company.

CEOs make high-level, strategic decisions that set the direction for the entire organization. CEOs are responsible for defining the company’s vision, mission, and long-term strategy that determines the company’s overall growth and sustainability. They may oversee areas like team building, and organization, and oversee finances and budgets across all areas of the company.

3. Qualifications and Background

The qualifications and backgrounds of individuals who hold COO and CEO positions may vary depending on the industry or company, though there are typically certain qualifications associated with these roles. Both parties usually have at least a bachelor’s degree with a business background. CEOs usually have extensive industry experience and a track record of success in leadership roles. They may have worked their way up through the company or industry, gaining valuable experience and insights along the way.

COOs are usually chosen for their extensive operational experience within the company or industry. They are great problem-solvers and always have a plan. COOs often have a strong operational and management background, while CEOs often have a more diverse range of experiences, including leadership and strategy. While COOs often have a more specialized operational background, some may transition to CEO roles over time, but this is not always the case.

Strong leadership skills are essential for CEOs. They must have the ability to inspire and lead a diverse team, set strategic direction, make tough decisions, and manage the overall operations of the company. Leadership qualities, such as the ability to inspire and motivate teams, are essential for both roles though these skills are applied differently in the COO and CEO positions.

COOs also need emotional intelligence to build strong working relationships within their teams across departments, and CEOs require emotional intelligence to inspire and lead the entire organization while maintaining a strong connection with employees, investors, and other stakeholders. COOs must be adaptable to changes in daily operations, such as adjusting production schedules or responding to unforeseen events that impact efficiency. CEOs need to be highly adaptable to navigate the changing landscape of business and market dynamics, making bold decisions to ensure the company’s long-term success.

4. Reporting Structure

The reporting structure pertains to how COOs and CEOs fit within the chain of command. COOs typically report directly to the CEO. They are often the second-highest-ranking executives in the company and are responsible for executing the CEO’s strategic vision.

CEOs report to the board of directors. They hold the highest executive authority and are responsible for setting the company’s overall strategy and direction. The board of directors oversees the CEO and, indirectly, the COO. The board provides governance, guidance, and accountability by evaluating, supervising, and compensating the CEO. The board ensures no one person has too much power in a company and provides an objective observation regarding the company and its operations.

5. Risk and Accountability

COOs and CEOs may encounter various types of risks. These can include operational, financial, strategic, or reputational internal affairs, as well as compliance risks. COOs typically deal with operational risks, while CEOs often have a broader risk management responsibility. Accountability is intertwined with decision-making for both roles in senior management. COOs are accountable for the outcomes of operational decisions they make. CEOs, as ultimate decision-makers, are accountable for strategic choices that affect the entire organization.

6. Leadership Style

Leadership style refers to the skill set and manner in which individuals in leadership positions guide and influence their teams and organizations. Quality leadership skills are non-negotiable for those in chief operations. COOs often exhibit a hands-on, detail-oriented approach, focusing on efficiency for operational functions and internal operations, execution, and problem-solving. CEOs tend to adopt a visionary, strategic, and big-picture leadership style, where they set the company’s direction, define its culture, and drive innovation.

7. Succession Planning

Whether a business is a startup or has a seasoned C-level executive team, succession planning is a major key to success. Succession planning ensures the long-term viability and continuity of an organization. Effective succession planning minimizes leadership gaps and disruptions. COOs are often involved in grooming potential successors to their own roles or other key operational positions. CEOs are typically responsible for identifying and developing their own successors and other senior leaders within the organization, overseeing their career development.

Collaborative Relationship

The collaborative partnership between a COO and CEO is fundamental to effective corporate leadership, significantly impacting sustainable success. These roles complement each other, bringing unique strengths and perspectives. The COO acts as the executor of the CEO’s vision, bridging long-term goals with day-to-day operations, and enhancing decision-making and organizational performance.

Operational excellence and efficient execution are the focus of the COO, translating the CEO’s vision into actionable steps. This synergy results in a balance between long-term planning and practical implementation, leading to superior decision-making and organizational performance.

Clear and open communication forms the foundation of this collaboration. Regular discussions align their strategies with company goals, enabling necessary adjustments in response to market dynamics. This synchronization maintains the company’s vision and culture, ensuring cohesive operations. Upholding the company culture with integrity is a shared responsibility between the COO and CEO.

Conclusion

There are critical differences between COOs and CEOs in corporate leadership, though both are important for the reputation and success of a company. Understanding these distinctions is necessary for aspiring executives and anyone interested in corporate governance. If you are looking to advance your career to a C-level role, one of Crummer’s award-winning MBA programs may be right for you.