What happened to the COO? The most likely answer? He or she moved up—not out. While some companies may still rely on the COO to act as the ‘number two’ in the organization, many have opted to eliminate the role—and someone has to take it on.
In our recent blog, The New Roles of the CFO, we discussed four faces of the CFO and opportunities to grow in each. However, while that discussed the archetypes a CFO needs to embrace, there is one area in which the CFO is heading that is much more defined: Operations.
What Happened to the Chief Operating Officers?
Often considered the second in command to the CEO, the Chief Operating Officer is often a high-profile position in the organization—if the role exists. As little as two decades ago, a COO parting ways with his or her CEO was deeply speculated in the media, with one 2000 ‘breakup’ receiving more drama than a daytime soap opera, according to Harvard Business Review. However, as the 2006 article goes on to mention, the role of the COO wasn’t as constant as any other position, as it included people with a variety of backgrounds, ascent paths, and ability to succeed.
“Salespeople or marketers who have developed the tools of their trade in one company can usually apply them to good advantage in another, even in a dramatically different industry. Financial and human resource executives likewise are schooled and practiced in standard ways of doing things. But it’s hard to discern whether a COO who has succeeded in one company has what it takes to be COO in another; the skill set is neither generic nor very portable. Even within a single company, the right qualifications for the COO role can shift.”
Knowing this, the number of COOs continues to decline. According to the Crist|Kolder 2017 Volatility Report, the number and representation of COOs at Fortune 500 and S&P 500 Companies has continued to decline—48% had a COO in 2000, 29% in 2017.
While the COO may not have a well-defined role from company to company and companies may be posting fewer openings for open COO positions, those who were already in the position were not forgotten in succession plans. When it comes time for the CEO to part ways, the COO is often tapped to take over—Crist|Kolder found 46% of current CEOs came from an internal COO role, followed by another 22% from Divisional President. In fact, according to the study, more companies studied hired an external CEO than promoted their CFO.
COOs Move Up, Finance Moves In
Throughout the 2000s and 2010s, after a COO was promoted to CEO, it resulted in the elimination of the role, in turn companies split up the job. Who was trusted to take on these new responsibilities? None other than the CFO.
According to a recent Microsoft report, finance leaders continue to take on an even bigger role in operations. In a recent survey by EY, 64% of CFOs reported being asked to take on broader operational leadership roles beyond finance.
Microsoft adds, “the role of the CFO can be summed up in two simple truths: 1) if something impacts the bottom line, it’s the CFO’s responsibility, and 2) everything impacts the bottom line.” Today, this means even more—CFOs today often have the final say in IT oversight, risk management, and procurement.
The Right Technology, the Right Decisions
With CFOs taking on new documented roles (as well as new personas), the finance department needs to deliver results and the technology needs to be the catalyst. According to their recent Finance Trends Report, Microsoft adds,
“Technology is ubiquitous in modern businesses, and while CFOs may not be able to code a website or set up a database, like technology, CFOs have also become ubiquitous throughout the organization. Because CFOs possess a deep understanding of both the organization’s technology and its operational units, they are a natural fit to drive corporate strategy. And with a background in finance, CFOs possess a unique ability to apply a systemic and objective lens to business decisions. While CFOs remain saddled with a reputation for being penny pinchers and number junkies, the shift to a more quantified management approach provides an essential counterbalance to the gut instinct style of previous decades.”
The Right Decisions, the Right Partner: MIBAR
At MIBAR, we work with decision makers at a wide variety of businesses to leverage the right technology to make the right choices to drive their business forward. As one of the top 100 ERP implementation partners and solution providers in the nation, we offer the size, scale, and focus you need to deliver results for your business.