The roles of Chief Executive Officer (CEO) and Chief Operating Officer (COO) are two of the most critical in any organization. Both positions hold a tremendous amount of power and influence over a company’s strategy, operations, and overall success. But when it comes to who is ultimately more powerful – CEO or COO – there are strong cases to be made for both.
Quick Answer
Overall, the CEO generally holds more organizational power than the COO. As the top leader of the company, the CEO oversees the entire organization and has the final say in all major decisions. The COO manages day-to-day operations but ultimately reports to and takes direction from the CEO. However, the COO role still wields significant influence through oversight of internal operations. The dynamic between the two roles can vary across different companies.
Responsibilities and Authority of the CEO
The CEO is the highest-ranking executive in any company. They have the ultimate responsibility for the organization’s overall vision, strategy, and success or failure. Their key responsibilities include:
- Setting the company’s vision, mission, values, and overall direction
- Making major corporate decisions and leading strategy development
- Leading and managing the executive team
- Driving growth, expansion, turnarounds or other major strategic initiatives
- Serving as the main link between the board of directors and corporate operations
- Ensuring the company meets financial and operational goals and objectives
- Representing the public face and voice of the organization
With these major responsibilities, the CEO is empowered with a significant degree of formal authority. This includes:
- Exercising full control and decision-making power over corporate strategy and direction
- Commanding the organization’s financial resources and capital allocation
- Appointing and dismissing members of the executive leadership team
- Presiding over board and shareholder meetings
- Leading negotiations for mergers, acquisitions, partnerships and other major deals
Essentially, the CEO sets the course and agenda for the entire organization. All other executives, including the COO, ultimately report to the CEO. This gives the CEO tremendous hard and soft power in the company.
Responsibilities and Authority of the COO
While the CEO focuses outward on the organization’s strategy and external relationships, the COO focuses inward on the company’s operations and internal performance. Typical COO responsibilities include:
- Overseeing the company’s day-to-day operations and internal performance
- Managing vice presidents and heads of departments
- Ensuring smooth and efficient operations across departments
- Implementing the company’s vision and strategy as laid out by the CEO
- Leading operational changes and improvements
- Resolving operational issues and challenges
- Optimizing systems, processes, policies and procedures
The COO is empowered to make significant decisions related to internal operations. Their authority includes:
- Making decisions on departmental budgeting, resource allocation and headcount
- Designing and implementing operational policies, workflows and systems
- Hiring, managing and dismissing department heads and senior operations personnel
- Driving operational efficiency by identifying improvement areas
- Leading special operational projects and improvement initiatives
While empowered to handle day-to-day affairs, the COO’s authority has limits. They cannot unilaterally make strategic decisions or external commitments for the company. Major initiatives they implement must align with the CEO’s vision. And they report directly to the CEO rather than having independent authority.
Comparing Power and Influence
When comparing the power and influence of CEO vs. COO roles, the CEO clearly has greater formal power. However, the COO can wield significant informal power depending on their leadership abilities and relationship with the CEO.
Here is a comparison of sources of power for each role:
| Power Base | CEO | COO |
|---|---|---|
| Formal Authority | Highest in company | Significant over internal operations but subordinate to CEO |
| Organizational Control | Full control over strategy, structure, personnel | Controls operations but limited influence on corporate strategy and structure |
| Decision-Making | Full decision-making power | High on operations, lower on corporate matters |
| Financial Resources | Full control over budgets, spending and investments | Input on departmental budgets but CFO and CEO have final budget authority |
| Information Access | Full access to operational and strategic information | Broad access to operational data but less visibility into strategic planning |
| Expertise and Experience | Can hold significant influence with board and employees | Can influence CEO and executive peers through operational expertise |
| Relationship with CEO | N/A – CEO has self-influence | Can strongly influence CEO as a trusted deputy and confidante |
While the CEO clearly has more formal power, the COO can develop significant informal influence by leveraging their expertise, relationships and information access. A highly competent COO who has the CEO’s trust and ear can impact decisions and align operations with corporate priorities. But ultimately, the CEO role remains atop the internal organization hierarchy.
Power Dynamics Between CEO and COO
The exact power dynamic between the CEO and COO roles can vary depending on individual capabilities, company size and industry. Some guidelines help explain the typical relationship:
- In very small companies, the CEO commonly takes on COO duties making the roles indistinguishable.
- In larger companies, the CEO concentrates more on strategy while empowering the COO to run day-to-day operations.
- In times of crisis or transition, the CEO may rely more heavily on the COO to manage urgent internal issues.
- The COO provides information and counsel to the CEO from an operations perspective, influencing strategic decisions.
- A skilled, experienced COO can win the CEO’s trust and gain the freedom to shape operational strategy.
- But the CEO has the power to override the COO’s authority if needed on critical issues.
At the end of the day, clear communication and alignment between the CEO and COO is essential for the organization’s success. The CEO retains ultimate control but depends on the COO to execute on strategy internally.
Advantages of Separating the CEO and COO Roles
While smaller companies often combine CEO and COO duties, larger organizations often benefit from separating the roles. Some key advantages include:
- Specialization – Allows the CEO to focus externally and the COO to focus internally.
- Streamlined leadership – Prevents the CEO from being overwhelmed by operational details.
- Balanced skillsets – The CEO can have general strategic skills while the COO has specialized operational expertise.
- Smoother succession – Grooming an internal COO can ease the transition when the CEO departs.
- Accountability – Fixes clear responsibility for driving strategy (with the CEO) and execution (with COO).
The COO also serves as a failsafe for the CEO. The COO can step in if the CEO is unavailable and keep operations steady. And they provide an internal checkpoint on the CEO’s decisions and performance.
Disadvantages and Challenges
Despite the benefits, there are also some inherent disadvantages and challenges in separating the CEO and COO positions:
- Confusion around roles and authority which can undermine coordination.
- Tension or rivalry between the CEO and COO over decisions and turf.
- Delayed or poor implementation of strategy if the COO does not align with the CEO’s agenda.
- Disconnection between external positioning and internal realities.
- The COO may receive blame for poor execution of the CEO’s failing strategy.
Much depends on the specific individuals in the roles and maintaining a cooperative dynamic. The goals and incentives for CEO and COO should align to foster collaboration rather than competition. Ongoing communication is vital.
Current Trends in CEO vs. COO Roles
While the fundamental duties have remained intact, we have seen some shifts in the CEO and COO roles in recent decades:
- CEOs have become more externally and investor focused due to greater market pressures.
- COOs have taken on more whole company oversight beyond day-to-day operations.
- CEO tenures have shortened while COOs change roles less frequently.
- Companies are being more deliberate in using COO role as CEO succession training.
- CEOs delegate more to experienced COOs to manage complexity and pace of change.
This shows the COO role gaining more strategic influence, even though the CEO remains the top leader. Communication channels between CEOs and COOs have also widened with more frequent meetings and informal connections. This helps align their work and priorities.
Conclusion
In assessing whether a COO or CEO holds more power, the CEO clearly retains ultimate formal authority over the organization and strategy. However, an experienced and trusted COO can wield significant informal influence over internal operations and performance. This influence indirectly impacts the CEO’s strategic decisions as well.
The ideal model is a cooperative alliance between CEO and COO, rather than a rivalry. The CEO should empower the COO to optimize operations, while providing strategic guidance. And the COO should provide candid counsel to shape strategy while driving flawless execution. This balance of external vision and internal excellence offers the best outcome for the overall organization.