April 28, 2022 | 9-minute read (1711 words)
As your business expands, you’ll likely realize the need to bring on additional high-level executives to help oversee day-to-day operations. You may wonder whether you should bring on a chief operating officer or a vice president of operations as part of the effort. While there is some overlap between the two roles, in general, VPOs tend to lead the whole company on a daily basis, whereas COOs tend to focus on developing long-term business plans for specific departments in the company.
Smaller businesses frequently rely on their own momentum and the vigilant eye of the founder to keep operations on course. But when a company expands, and especially when a sales and marketing division is added, the ability to maintain and fine-tune operations simultaneously becomes more important and more challenging.
You need a good leader to upervise this expansion effort, and for most firms, that will either be a COO or a VPO. Even though on the face of it these positions may seem interchangeable, there are meaningful differences. Each serves a specific function inside a business, and it's critical to assign one or the other (or possibly both), depending on your particular requirements and goals. Below we examine the noteworthy distinctions between a COO and a VP of operations, giving you the information you need to make the right choice.
How do you define a vice president of operations?
When it comes to firm operations, the vice president of operations is in charge. VPOs are typically strategic thinkers and decision-makers who use data, metrics and statistics to determine the organization’s operational future. Most VPOs report directly to their organization’s president.
In terms of day-to-day operations, the VPO has many hands-on responsibilities. In contrast to the COO, who is focused on the long term, the VPO manages operations in a short time period.
The performance goals of operations teams are closely monitored and managed by the VPO, and all of the other stakeholders are held accountable for accomplishing them. The VPO can implement new rules, equipment, procedures and other modifications.
This leader is best considered a link between executives and the rest of the team. It is critical that the VPO communicate the company's long-term strategy to the team and develop support for any changes that are being implemented. However, information should also be passed through VPO from the bottom up to ensure proper flow. Effective communication between the team and the organization's highest levels is a hallmark of a great VPO.
What does the vice president of operations do?
As part of their role, VPOs are often tasked with formulating plans and policies to guide the company to reach its objectives. To keep the business running smoothly, they are responsible for ensuring that operational procedures are followed. Financial reporting accuracy is also one of their responsibilities. In addition, a VPO may be called upon to fill in for the CEO or president in an urgent situation.
It is also the job of VPOs to manage and staff their departments and units. Assigning and managing tasks, creating an optimal working environment and providing feedback are all embedded in this responsibility. This likely entails working closely with subordinate personnel, including managers and other senior-level employees.
Long-term planning and oversight are also typical tasks assigned to VPs of operations. Among the many other responsibilities they have are:
• Operations strategy development: VPOs use measurements and data from the operational team to design plans for improving workflow, increasing profitability and increasing the organization's stability.
• Coordinating activities: The majority of VPOs ensure that all operational workers collaborate to accomplish organizational goals and objectives.
• Overseeing operational hiring: Most VPOs work with the HR team to make sure new hires are ready to help the company grow.
• Evaluating accomplishments: VPOs frequently examine goal data to see whether the operations team is meeting targets.
• Working with others: VPOs work with other company vice presidents and the organization's president to ensure that teams and departments are cohesive.
• Developing corrective plans: When necessary, VPOs adopt policy or process modifications to increase the operational team's effectiveness.
What is a chief operating officer
A chief operating officer is a part of the executive C-suite, which typically also includes the CEO, chief information officer and chief finance officer. These positions may sometimes overlap with that of president and vice presidents. There are no standard requirements or definitions for the role. In one company, a COO may be in charge of all operations, while in another, the COO may be responsible for a specific area of the business. COOs are not always in line for advancement. According to a study by Crist Association cited by Harvard Business Review, only 17% of COOs are promoted to CEO.
In the HBR article cited above, titled "Second in Command: The Misunderstood Role of the COO," author Nate Bennett writes that the role tentails two essential reponsibilities. One, the COO frequently collaborates with the company's CEO. Two, the COO is generally the right-hand person for the CEO, meaning they can accomplish many different things in the organization.
In general, the COO is responsible for overseeing a company's overall operations from a strategic and long-term perspective. As a result, the role entails anticipating how strategic goals and market forces will affect the company's operations in coming months and years. Setting greater standards for operations — in terms of efficiency, quality, cost and the like — and producing strategies to make these goals a reality is another key responsibility.
In addition to working closely with other executives, a COO is responsible for managing the company's operations. The COO should be able to communicate what a company can and cannot perform. Additionally, the C-suite’s strategic vision must be translated into an actionable set of goals and procedures.
What does the COO do?
While vice presidents are usually in charge of particular divisions, COOs are typically in charge of the whole company, including acting as the CEO's chief of staff. COOs oversee the day-to-day operations of a company, ensuring that the firm's goals are realized through the use of management information system reports and cross-department evaluations of the success of corporate operations. Because of these wide-ranging responsibilities, the COO has a significant impact on the company's culture. The COO serves as the company's face to the outside world and plays a crucial role in attracting new investors and securing funding.
Others who undertake comparable duties but who don't have the title of COO may substantively fulfill the function. A shop manager, for example, serves as the de facto COO in businesses with a single physical location. Small businesses may or may not need a COO, depending on the number of divisions and employees they have. You may get by without a COO, for example, if your company has a small staff and a strong group of vice presidents.
The firm's day-to-day operations are typically under the supervision of the COO. Typical responsibilities for the COO may include:
• Supervising operational teams: COOs collaborate closely with operational teams and departments within the organization to ensure their success.
• Collaborating with C-suite executives: Most COOs meet and plan with the other C-suite executives in their regularly to ensure that all departments are working toward a cohesive goal.
• Overseeing and delivering performance evaluations to operational staff: Another frequent job obligation for COOs is to oversee and give performance reviews to operational employees.
• Putting policies and procedures in place: Many COOs implement policies and procedures within their organizational teams to help ensure employees can reach their goals and objectives.
• Setting performance objectives: Many COOs assist lower-level operational staff in setting and tracking performance targets.
• Identifying talent: COOs frequently collaborate with department heads and human resources staff to find outstanding individuals who are deserving of further responsibility or advancement.
What are the differences between a COO and a VPO?
COOs and VPOs have a lot in common. For certain companies, the designations of "president" and "chief" are effectively synonymous; the choice of position relies on whether the company employs a "presidential" or a "chief" structure. However, there are few common differences between the two roles, including the following:
• Oversight: VPOs typically interact with other vice presidents and the president and tend to have less contact with lower-level personnel, but COOs frequently work more directly with operations staff at all levels of the business.
• Reporting: The VPO will most likely report to the company's president, whereas the COO will generally report to the CEO.
• Career advancement: VPOs typically resign from the post due to a lack of upward mobility in the position. Some COOs, on the other hand, may rise to become CEOs.
• Scope: COOs are long-term forecasters and decision-makers for a company's operations, whereas VPOs focus on the operations team's day-to-day structure and efficacy.
How to decide which is the best option
A COO and a VPO may both be employed at an enterprise, but this is not the norm. In the majority of cases, only one or the other is needed for a company to run well. The following are some factors to consider when determining which to hire:
Strategy – What do you plan to do in coming years? Do you want to double down on your current strategy and aim for excellence in all you do, or do you want to implement radical changes that will fundamentally alter your way of doing business? The former calls for a VPO, while the latter calls for a COO.
Scale – If your business is rapidly growing, having a COO on board may help operations scale up quickly as circumstances demand. A VPO may be a better choice if the company's size is expected to remain the same in the near future, since they tend to focus on improvement rather than change.
Market – As operations comprise a significant competitive difference, market momentum and competitor actions will affect the type of oversight you need. It's better to have a COO who can adapt if your sector is facing upheaval or transformation.
Track record – How well has your operations department performed historically? You may seek to bring in a COO who can provide a rejuvenating perspective. Do operations thrive in terms of innovation but fall short in terms of efficiency and consistency? These are initiatives that a VPOs is skilled at implementing.