Posted by The Bowdoin Group on June 30th, 2020
In today’s competitive business environment, many organizations are proud of their bootstrapped origins. Building a thriving company with a team and a handful of founders is practically the new American dream. But for most companies, there comes a point where you want to position yourself for growth and your current processes just won’t cut it – and that’s when you need to bring in a Chief Operating Officer.
I’ve always said, hiring a COO is not a sign of weakness – it’s a sign of growth. When delivering on your promise to customers becomes harder, when you can’t quite handle the volume of business coming in the door, and everything is infinitely more complicated – these are signs you need the support of a COO.
What is the Role of a COO?
A COO oversees all business operations within an organization. This person is often the right hand person to the CEO, so they deeply understand what needs to happen in order for the company to continue to grow. The COO coordinates operations and strategy that enable the business to run efficiently.
When Do You Need to Hire A COO?
Businesses typically need to hire a COO after establishing their sales and marketing teams. When these teams become highly functional, it can cause an internal strain on the delivery mechanism that was initially put into place. So when demand has overwhelmed your team and has slowed the process for delivering to customers, the process of fulfilling that business becomes more complex and sometimes clunky. At this point, you need an operations leader to step in to keep everything functioning smoothly and to develop a new strategy to not only fix what’s immediately broken, but to plan for growth over the next 1-3 years.
One of our clients had put off hiring a COO because there were other executive roles they wanted to have in place first — namely, sales and marketing. Within six months, their team had made great progress on the sales front but internal processes hadn’t kept up. Internal structures hadn’t been put in place to handle an increased volume of sales — staff was overloaded and clients felt the strain. Sales and marketing were forced to slow down until a COO was hired and operations could keep up with their pace.
What Qualities Make for an Excellent COO?
The qualifications of a COO revolve around organization, critical thinking, and systems. But the qualities that separate an average COO from an excellent one are people skills.
To begin with, an excellent COO happily shares the spotlight with other executives, most notably the CEO. The COO takes pleasure in growing the company and helping it achieve its full potential – not in taking credit for the success or managing the public image. In fact, the COO often sees their company’s achievements as an extension of their own success.
We’ve had the good fortune to work with (and place) highly successful COOs. Here are three traits that we’ve found that stand out as particularly important for a great (vs. good) COO candidate:
- Strategic Mindset: The COO can foresee not only what needs to be fixed today, but can anticipate how the company is growing and what infrastructure will need to be in place 1-3 years down the line. They can map out exactly how to achieve that growth.
- Unflappable Presence: In the world of operations, there’s no such thing as surprises. COOs must be able to maintain a calm, unflappable presence even as they lead through tumultuous or stressful scenarios. Through daily stresses and significant crises, the COO steps up to assign responsibilities and make sure the company delivers on its promises. They are the masters of moving pieces.
- Collaborative Leadership: A star COO operates with conviction, ensuring what needs to be executed gets done, but in a way that is motivating and inspiring for others within the organization. As a leader, the COO makes everyone within the organization feel as if they’re contributing and part of the success that’s occurring because the role touches all parts of the organization – there is no silo the COO doesn’t impact.
Because these traits can be developed in many different specialities, it’s important to note that a COO can come from a strategy or finance background:
You can come into the position from different parts of the company and still be an effective COO because there are absolutely no constants, especially in the new environment businesses find themselves in post-COVID-19. The COO needs to have their finger on the pulse of micro and macro operations within an organization, and understand all the ways a company may need to pivot in the coming years. That ability to navigate change during a tumultuous time can come from a wide variety of experience.
Which roles typically “cover” the COO role before a company hires one?
Before an organization hires a formal COO, the role is typically shared among other leaders from finance, sales, and existing leadership. But because each of those players have different priorities and skills, operations aren’t often very organized before the COO takes over – there’s sometimes not much structure in place to ensure everyone is working successfully or efficiently.
What does the typical compensation package look like for a COO?
- Salary ranges from $225K-300K
- 30% Bonus
- 1.5-2% Equity
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