What is a chief operating officer (COO)?

A senior executive who oversees a company's day-to-day operations, the COO is typically the second in the chain of command, below the CEO.

A man standing in front of co-workers extends his hand in welcome

Image source: Getty Images

What does a COO do?

A chief operating officer, or COO, is the most senior company executive in charge of overseeing its administrative and operational functions.

The COO reports directly to the chief executive officer (CEO), taking over some of a company's administrative and operational burdens so the CEO can focus on leading its strategic direction. Similar titles can include a company's executive vice president of operations, chief operations officer, or operations director.

A COO is a member of the C-suite. This group of senior company executives reports directly to the CEO and oversees various functions such as finance (chief financial officer, or CFO); information technology (chief information or technology officer, CIO or CTO); marketing (chief marketing officer, or CMO); and operations (chief operating officer, or COO).

In addition to having a single senior executive holding the COO role, some large companies will also hand the title out to the head of a specific business unit in charge of its operations.

Their official title will denote that they're the COO for a geographic region or a particular business segment. Instead of running the entire company's day-to-day operations, they oversee a specific aspect of its operations.

Why are COOs important to a company?

A COO plays a crucial role in a company. Although the exact functions can vary by company or industry, they're vital to its success. The COO typically has a very close working relationship with the CEO.

They often take over the day-to-day operational and administrative role to free up the CEO's time for more critical tasks.

The responsibilities of a COO can include:

  • Running the company's daily operations.
  • Informing the CEO about significant events within the company.
  • Advising the CEO about important decisions.
  • Executing a company's business strategy.
  • Communicating a company's business strategy and goals to employees.
  • Overseeing human resources.

A company's CEO focuses on external issues by overseeing its overall strategy and direction; the COO focuses on internal issues. It's their job to ensure a company operates at its full potential. They're also responsible for making changes to improve a company's operations if they fail to meet expectations.

Why investors should know a company's COO

The CEO is often the face of a company. Most investors know the name and some background information about the CEO leading one of the companies in which they're invested. They also might know about the company's CFO since that person often speaks on the quarterly conference call and may provide a quote or two in an earnings press release.

In addition to knowing about those two top executives, investors should also learn the name and background of a company's COO, if it has one. Companies often hire COOs (either through internal promotion or by bringing in a high-performing executive from another company) to take the business to the next level.

COOs often make great future CEOs. Many companies will promote a top internal performer to the COO role as a stepping stone to eventually becoming its CEO when the current one leaves. Other companies will hire a COO from another company to become their CEO if they don't have a strong internal candidate.

Who are some notable big tech COOs?

Many top executives of well-known tech companies in the US have held the COO title in the past. For example, Tim Cook was the COO of Apple (NASDAQ: AAPL) before he became the tech giant's CEO in 2011. Meanwhile, Sheryl Sandberg earned high regard for her COO role at Facebook — now Meta Platforms (NASDAQ: META) — in helping to drive its success.

C-Suite Spotlight puts out an annual list of The Top 100 Chief Operating Officers. Topping its 2022 list was Ana Corrales, the COO of Google's — Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) — consumer hardware and service business. She helps to lead the development process for the tech giant's hardware products, including Pixel, Nest, and Fitbit.

This article contains general educational content only and does not take into account your personal financial situation. Before investing, your individual circumstances should be considered, and you may need to seek independent financial advice.

To the best of our knowledge, all information in this article is accurate as of time of posting. In our educational articles, a 'top share' is always defined by the largest market cap at the time of last update. On this page, neither the author nor The Motley Fool have chosen a 'top share' by personal opinion.

As always, remember that when investing, the value of your investment may rise or fall, and your capital is at risk.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, and Meta Platforms. The Motley Fool Australia has recommended Alphabet, Apple, and Meta Platforms. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.