The name of the game is engaging and retaining top talent. So, in an increasingly competitive market, how do you set a solid COO salary? In addition to being the CEO’s right arm, the chief operating officer is the go-to person when it comes to leading the day-to-day workings of any business. Given this, a business simply can’t overestimate how important it is to set an appropriate COO salary.
The companies that take the time to figure out the right level of compensation are only halfway there. In addition to paying a competitive salary, they still need to find the right person for the job. This article offers a bit of advice on both fronts. By following these simple guidelines, you’ll be able to fill the COO role at your company with confidence.
What Does the COO Do?
In many growing companies, the chief executive officer may wear a lot of hats. Perhaps they also fill the role of COO. But there are a lot of reasons to have a dedicated COO, particularly as the company grows.
The COO typically reports directly to the CEO and works closely with them to execute company strategy. They may have a role in managing other chief executives, as well. The COO’s duties include developing operational strategies and may involve establishing organizational structures, as well.
What are the Salary Expectations for a COO?
When you’re looking for a COO, you’ll need to pay what the market demands. As C-level executives with a wide range of responsibilities, COOs expect to be paid well. They are visionary leaders responsible for managing budgets and perhaps other executives for their company.
The best COOs must have a broad range of functional experiences and competencies, in many cases exceeding those of the CEO. A typical day in the life of a COO includes overseeing accounting and finance, HR, legal and compliance, IT and more. In addition, they should have experience with various managerial skills, including managing teams and leading projects.
A COO could hold an MBA, but that certainly isn’t a requirement. They’re just as likely to have a bachelor’s degree in accounting. The type of degree isn’t nearly as important as their experience.
Salary Range for a COO
How much does the average COO make? It depends on who you’re asking. A quick scan of the first three pages of a Google search reveals average salaries ranging from $79K to $446K. It’s doubtful that any of these averages are particularly useful since we need to know more about the context.
LinkedIn has data, as well, that is more granular. Here is a sampling of some reported medians:
- Location: Bay Area $185K vs. Phoenix $158K
- Industry: Energy and Mining $187K vs. Hardware, Software, IT and Finance $175K
- Company size: 1,000 to 10K employees $243K vs. 200 to 1,000 employees $135K
- Education: JD $190K vs. MBA $180K
Clearly, COO salaries vary. They can go much higher, depending on company size, geographic location, the industry and more. It’s not a simple calculation. As a business, you have to determine how much you can afford to pay vis-a-vis your competitors. If you can’t afford to pay as much, you might consider a more robust benefits package or rely more on a performance-based bonus. You want the best person you can find, given your budget.
What You Need to Know to Conduct a Search for a COO
A search for a COO can take time. The stakes are high for this position. The wrong person can derail much of the progress you’ve already made. There are three things you and your executive team can do to prepare.
First of all, you’ll want to know as much as possible about your competitors and comparable companies, such as the following:
- Which products and services do they offer?
- How profitable are they?
- What do customers think about their services?
- How much do their COOs make?
With this knowledge, you’ll have a better understanding of what strengths and capabilities you need from your COO.
Second, as mentioned, you need to know where the industry is going. The pandemic may have provided some clues. Many businesses needed to kick a field goal from the 50-yard line and execute strategies ahead of the intended timeline. To stretch those sports metaphors even further, your COO will need to skate to where the puck is going.
You already understand the complexities of your business today. But you must also consider where you want to be in the future. With today’s emerging technologies, operational considerations are likely to get more complicated before they become easier. Also, with emerging technology, there are industry disruptions to consider.
Third, throw out whatever cut-and-paste job description template you or your team found online. Job descriptions simply don’t cut it when you need results. A boilerplate job description is too generic and quite possibly the result of over-analysis. Plus, your job description provides a virtual cheat sheet for any candidate who simply wants to tell you what you want to hear.
So what do you do instead?
Hire with Intention
A better process is to determine three to five success outcomes that the COO must achieve. These could be around any number of areas, but they should originate from your competitive and internal research. Is it innovation that you need? Or is the customer experience top of mind?
Also, consider your expectations for the COO in the future. Are they a potential successor to the CEO? If so, you’ll need to pay particular attention to temperament. Your COO will be the coach when it comes to executing both an offensive and a defensive strategy. At the same time, they are often called upon to react without being reactive. This means that the best COOs are masters at managing their emotions and staying calm when the curveballs just keep coming.
You want to bake as much objectivity into the hiring process as possible. It’s crucial to find the right person, and that means taking into consideration your company culture. But you don’t want to let personal and organizational biases lead you to continually hire people who are clones of one another.
Everybody doesn’t have to look the same, think the same, or wear the same brand of shoes. In fact, research proves that you’ll get better results and greater profitability with diversity.
When you’re ready to hire your next executive, contact Y Scouts. We can help you maximize the impact that your COO will make.