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What is a chief operating officer, and how does the role differ from the CEO?
This employee holds one of the key roles in a company's management structure: the chief executive officer sets the overall direction and major goals, while the chief operating officer decides how to achieve them, breaks them down into smaller tasks, and monitors their completion.
In simple terms, the chief operating officer, or COO, is a manager who organizes the company's routine work—the day-to-day operations that often keep other leaders occupied. The COO understands how internal processes work and can adapt them to the company's development strategy or external conditions.
The COO organizes everyday work: distributes responsibility, improves processes, and chooses tasks to automate. The extent of the role's authority depends on agreements with the CEO and the company's structure.
When should you hire a chief operating officer?
The main reason for hiring a COO is the desire to get out of an endless cycle of the same daily problems:
You spend the morning sorting out one set of tasks, dive into new routine issues after lunch, and find an hour for priority work by evening—only to repeat it all the next day.
Tasks pile up, questions from employees keep coming, and something is always happening on construction sites. These pressures lead the CEO to look for an operating partner. A capable manager may seem able to bring order to the business easily.
However, hiring is always a difficult step for a small construction company going through a challenging period. Before bringing in a new manager and expecting a miracle, we recommend starting by improving how your existing team works with the help of the 101 App.
Explore the 101 App if you are looking for a management accounting tool. Before adopting it, determine what data you need, who is responsible for its completeness, and how often the team will reconcile it. Time savings depend on your processes; assess them using your team's actual results.
Responsibilities of a chief operating officer
The COO's main task is to organize employees' work so that they can deliver agreed plans. Building a system for managing tradespeople (article in Russian) and foremen and project managers (article in Russian) requires studying processes and employees' motivations, together with clear procedures and rules.
Other responsibilities of a chief operating officer include:
- developing a strategy to improve inefficient business processes—for example, encouraging tradespeople to submit reports regularly instead of whenever they feel like it;
- evaluating product profit margins and planning improvements through better internal processes;
- defining and assigning realistic tasks to each department;
- allocating funds across projects;
- monitoring the delivery of agreed plans.
Improving internal processes is important in the COO's work. In a construction company, the COO might notice that preparing 20 estimates a month does not pay off given the current costs and number of signed contracts. This is a hypothetical example: the result must be checked against the company's data. The role includes proposing other ways to attract customers. How can you move beyond endless estimates to a new way of working? We discuss this in the community of forward-looking entrepreneurs (in Russian)!
What falls outside a chief operating officer's responsibilities?
A COO is no magician. The role is responsible for agreed operational outcomes and works together with the CEO. The job title alone does not establish identical responsibilities in every company.
Without separately agreed authority, a COO should not:
- independently take responsibility for finding investors or making investment commitments; preparing materials and taking part in negotiations are agreed with management;
- approve the company's development strategy alone; participation in its development may be part of the agreed responsibilities;
- change the company's overall goals without agreement; operational goals and ways to achieve them are defined within the agreed mandate.
The COO connects strategy with execution. They may take part in strategic discussions, but results depend on the team, resources, and agreed decisions; appointing someone to the role does not guarantee a way out of a crisis.
What skills does a chief operating officer need?
Let us look at qualities common to many chief operating officers:
1. Strategic thinking
You need to see the connections between tasks: which activities come before others, what repeats, and where delays arise. Turning chaos into a system requires systems thinking.
2. Financial literacy
A COO should understand the basic concepts of management and financial accounting: profit margins, revenue (article in Russian), net profit, turnover, and other concepts.
3. Communication skills
A COO will communicate extensively with people: assign tasks, give feedback, and resolve disagreements.
4. Leadership qualities
A COO explains why tasks matter, supports the team, and helps employees move toward a common goal.
