Easy. COOs deal with short-term management and daily, weekly and monthly issues. This is the “Care and feeding” of employees to coordinate resources and track results. CEOs work more on the long-term from 1 to 5 years out. CEOs also spend their time, maybe as much as 50%, on proper staffing at the management level, coaching this team up and developing these managers to grow professionally to take on more responsibility with that growth. Often the CEO will spend 50% of their time divided between: Strategy development, customer contact (direct input), and optimizing processes for marketing, sales and finance. In smaller companies where there is no full-time CFO 50% of a CEO’s can go to fundraising at times too. So, you can see how many situations can require more people power.
Typically, a CEO and COO are not both needed until a company exceeds 50 employees, but there are many factors. Some Founder/Owners also lack the management skills, patience or detail orientation required to manage a team and are better focused on other areas of the business. They are more “Visionary” and get bored with daily operations, detail and people problems that are the heart of management.
If high growth is planned and capital is cheap, the company may staff up more fully getting ready for the future and to handle the growth. And to get the infrastructure and team built and in sync, ahead of the need.
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Of course, the #1 job of a CEO is to set the main objectives via a MBO/OKR or other goal setting process that links the long-term strategic priorities with monthly, quarterly and annual goals that the management team then adopts and “owns”. Almost no company will be successful without a disciplined goal setting process and monthly meetings of the senior staff. This requires collaborative management, planning and lots of ongoing communication to do well.
Remember, anyone can call themselves a CEO, with any skill set, even a new grad. However, becoming a competent CEO requires 10 to 15 years experience minimum. Many Founders will be replaced, fired or moved into a job created for them because they lack the experience, discipline and other things that are best to grow the company. This is usually better for them, too, because their equity will become worth many times what it would if they stayed as the CEO. Getting a CEO can help delay this or even groom the COO to become CEO too.
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Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
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