A couple of weeks ago I was with a group of friends. We were all discussing our goals for 2015 and the bold moves that we are taking in order to ensure that we get there.
“I’m hiring a COO,” said one of my friends who runs a medium-sized business with about 150 employees.
“Is this a replacement, or a new position?” asked another, who had previously run a publicly-traded organization. Based on the inflection, you could tell he was suspect about whether or not it was the right move.
It turns out that my friend was hiring into a new position in order to free himself up to focus more time on and push forward a new strategic initiative that he felt would revamp the organization. As the conversation moved forward it became abundantly clear that while he was excited about the additional capacity, he wasn’t crystal clear on what his and his new employee’s job descriptions were, how they integrated, and who would be responsible for what.
Having hired a COO under similar conditions myself, I encouraged him to ask himself a few questions.
Do you intend to allow the COO to “run the business”?
I made a major mistake when I hired a COO several years ago. My intent was to find a “running mate.” I wanted someone to assist with operations, but I intended to continue to “run the business” myself. While adding executive capacity would allow me to spend more time on the external functions of the business, I still planned to be involved.
As the “chief operating officer,” any senior executive worth their salt will likely expect to “run the business” for you. If you don’t intend to totally hand over the keys, hire a VP of Operations instead.
Do you have the right structure in place?
A warning sign that should have tipped us off to the fact that I was not necessarily looking for a COO but rather a VP of Operations was my organizational structure. The structure I created reflected my desire to run the business. Sales, Marketing, HR, Legal, and Finance all reported directly to me.
Most “chief operating” roles oversee all operations – from marketing and sales through the delivery of goods and services. While it is common for Finance, Legal, and sometimes HR to fall outside the purview of the COO, it will be nearly impossible for any executive to play a chief operating role if they are not responsible for the entire supply chain.
Do you have a plan for cascading the vision and the culture?
Adding a COO to your organization will create a level of management between you and the core of your business. This isn’t a bad thing, it’s just a reality that you need to be aware of and be deliberate about managing. As the chief executive, you are responsible for the vision, values, and culture of your organization.
“Culture eats strategy for lunch.”
“Without vision the people perish.”
No matter how strong your vision and culture currently are, adding a strong COO will likely change the way you communicate and reinforce them. Make sure that you adapt with the changes that you are making and find ways to double down even further on these key aspects of your business.
Why do you need this position now?
I have another friend who recently hired a COO to “fix” their operations. After years of underperformance, he felt as though he needed a new set of eyes. He wanted someone to come find the inefficiencies within the organization and “build a well-oiled machine.”
In short, he wanted a consultant.
A strong COO has the ability to create or overhaul a strong operating model. They continually iterate, refining the business’ operating model and making it stronger while they “run the business.” They don’t just set up the model, they operate it, and it’s through the course of operations that they continually refine it.
If you’re looking for a second opinion or to just fix what is broken, you may be looking for a management consultant. Make sure you’re searching for the right thing before you hire a COO. If you’re just looking to create operating efficiencies, hiring a COO will only make your problems worse.
Deciding to hire any senior executive is something that requires serious deliberation. Hiring a COO requires significantly more. A COO can be a huge accelerator for a business, but the position’s prominence within the organization means that it comes with high risk.