What does the Chief Operating Officer do?
This position is very unusual and isn’t present in every organization. The COO takes full responsibility for the areas which the CEO doesn’t want to handle. Usually the CEO wants to get rid of the responsibility for those areas of development in which he’s not an expert.
For this reason, we can imagine a COO that joins an organization that is run by a very efficient business CEO and a strong CTO. In this setting, operations (i.e. the traditional domain of the COO), finance, customer service, special projects (e.g. change of headquarters without affecting current operations) would be popular weaknesses of the organization.
In another example, you can imagine an organization managed by a technology- and product-efficient CEO, who requires strengthening in business areas. In this approach, the COO assumes responsibility for sales, marketing, customer service and ongoing operations, which brings this position much closer to the role of a CRO (Chief Revenue Officer).
Another special case is when the company founder launches another business project that consumes him more and more as it scales. Usually in this situation, two COOs (or another constellation of managers to support the founder) are employed in the projects, so that the CEO can manage both at once.
That’s what happened in the case of Jack Dorsey, who is the CEO of Twitter and the CEO of Square at the same time (the difference is that Dorsey was outside Twitter for several years and returned to it later). It looked similar in the case of Stefan Batory, who was the CEO of Booksy and iTaxi simultaneously for some time. Lech Kaniuk became the COO iTaxi and then took the position of the CEO.
That is why this recruitment differs significantly from all other top managerial recruitments. If we employ a marketing director with experience confirmed by successes in a given industry, the probability that he will work well in another organization in the same industry is very high. The same applies to the sales director who manages sales to similar target groups and at a similar price point or the HR director whom we employ at a given moment of the organization’s development.
Contrary to these examples, a good COO in one organization may not work out in another, although theoretically the position is the same. Therefore, hiring top managers resembles sewing a suit that can be bought after trying one on from the display. In this metaphor, COO employment falls way closer to a tailor-made suit.
Should I hire a COO?
Probably not. This position doesn’t have a permanent place in the organizational chart precisely because it is not required in every company. However, if you see that a large part of the following conditions are met, you may consider employing a COO:
- your organization is growing very fast (over 100% per year)
- despite employing managers of key areas, some elements of the organization are suffering because of the CEO’s incompetence
- you feel that you could use a “right hand”
- your organization has a minimum income of PLN 5 million
- the problems you have cannot be solved by hiring two team leaders, a director, an assistant to the CEO and sorting out two other areas that are problematic
- The CEO is developing other projects outside the company
You may find that your motivations are slightly different than business-related. For example, you’re burned out and haven’t taken a time-off in 3 years. Or you’re sick and it’s not clear when you will be able to return to full capacity. Or you have completely lost your love for your business. In this case, consider hiring an external CEO and moving to the chair of the board of directors.
When should I hire a COO?
If, after reading about all of the criteria, you didn’t get discouraged from this idea, then let’s try to look at the organization in which it makes sense employ a COO. It is definitely worth considering in a very fast growing organization, especially when the growth takes place at fairly large levels. If you grow from e.g. PLN 4 million at a rate of 200% per year, the probability that this is a good idea is much higher than if you grow at a rate of 50% per year from PLN 6 million.
If you’re convinced that your growth is fast enough and takes place from sufficiently large levels, check if all key areas such as sales, marketing, customer service, HR, product etc. have their owners who are responsible for achieving the goals in these parts of your business. We often observe CEOs who want to hire an operational director while it would be enough to give up the power over the area that covers about 40% of the CEO’s calendar.
How to hire a COO?
Apart from being harder, this recruitment is no different from other recruitment of key managers in companies. If timing and allocation of responsibilities are done well, it should work out. In addition to all traditional candidate sourcing techniques, consider headhunting companies (Casbeg is able to help, provided that the COO would have to have very strong business competence), internal promotion, seeking through consultants, investors and members of your supervisory board.
Job ads are not completely pointless, although the risk of employing a COO that is completely outside the organization is certainly significant. Summing up: take your time. You may find that you can hire a COO in a month. However, it will probably take 3, 6 or maybe even 9 or 12 months. Hiring the wrong person can endanger the entire company, so if an additional 90 days spent on recruitment reduces your risk by 5%, this is a great place to be patient.