Why Should You Hire a Chief Operating Officer? (And When to Do It?)

If your company is considering hiring a Chief Operating Officer, it must definitely have crossed milestones and reached a phase of huge expansion. The C-Suite needs a leader to focus exclusively on improving revenue generation through excellence in operations management.

There is more to hiring a COO than finding a leader to head operations and productions. If that is your only focus, then you might be on the wrong track. Why should you hire a Chief Operating Officer? What are the outcomes that the role should focus on?

Find out in this blog curated through the knowledge gained by top COO executive search experts from various industries.

When Does Your Company Need A COO?

1. Are you planning to expand operations in several geographies?

If your company is ready to start expansion activities – organic or inorganic – and establish operations centers that might increase production 3x or 5x, you need an outstanding leader to take on the huge responsibilities. A CEO can guide and offer strategic advice and oversee performance. Spending a huge amount of time managing every aspect of operations might totally distract a CEO from achieving the main goals.

Founders and owners are often visionaries and might not have experience in overseeing and improving operations at a huge scale. You need a leader that can improve every function – costs, risk management, threat management, production yield, product quality, timely project management, suppliers and vendors, financial stability, administration, and HR. That is when you need to hire a Chief Operating Officer.

2. Are you planning to increase the size of manufacturing operations?

Your company might be planning to significantly expand the size of your manufacturing plant. You might want to shift base and open a factory that will have 5x-10x more capacities in a few years.

You will need a Chief Operating Officer to make functions across operations Lean and profitable. A COO is the position that will hold the biggest responsibility for making production processes run optimally and getting maximum performance from workers, machines, managers, and directors.

3. Are you planning captive-intensive business transformations?

When your company has plans to diversify business lines or introduce new business lines that would involve huge operational changes and investments, you need a leader who can make these transitions a success.

Recruiting a COO becomes critical for directing operational transformations in a correct manner. The founder, CEO, and other members of the C-Suite will have their hands full in taking care of the other tasks – client acquisition, investor management, technology investments, etc.

4. Is your company struggling with compliance requirements?

If your company is struggling with getting compliance right in various global locations and investing a lot of money into consultations and compliance management, it is better to get a leader in-house to take on those responsibilities.

You can hire several in-house counsel to manage compliance in the different locations where you have operations. But these professionals can flag risks and offer support in finding solutions. But there has to be someone at the helm to make all projects and programs run in a compliant manner. This is when you need to hire a COO.

Hiring a COO allows a company to get all functions running in a streamlined manner that ensure compliance with industry standards, client specifications, and regional, national, and international regulatory requirements.

Why Recruit A COO? How Can A COO Help Your Business?

1. To Have an Operations Champion to Ensure Target Production Quality and Outputs

While a CEO can take a huge amount of responsibility for operations, he or she will need someone to ensure that each and every production process is well-managed and gives the desired outcomes. That is where a Chief Operating Officer enters the picture.

Only when you have a COO can you have the right leader to understand what needs to be done to achieve any given productivity targets. You need to recruit a COO who has extensive technical knowledge, superior management skills, and outstanding leadership skills to optimize processes for suppliers, vendors, production, quality control, audits, and packaging.

2. To Win the Trust of High-Revenue Clients for Getting, Increasing Projects/Accounts

Companies in sectors such as manufacturing and engineering will always need highly intellectual people to oversee projects and programs. Clients will trust a company that has a COO to oversee that their specifications about design, engineering, business processes, and order management and delivery are managed in a perfect manner.

High-revenue clients who have millions of dollars to spend might not prefer partnering with companies without an operations captain like a COO to ensure high standards in their order management and delivery.

3. To Enable The Achievement of Operational Efficiency Goals

Operational efficiency targets are difficult or almost impossible to achieve for most companies worldwide without a COO. You need a COO to determine how process automation and optimization activities can be implemented without disturbing customer order fulfillment or production yield levels.

When done correctly, process redesign and automation can cut costs and improve quality by 30%-50% and achieve operational efficiency targets. But the wrong perspective can lead to wrong investments and major losses. This is why when hiring a COO to achieve operational efficiency goals, you need to select candidates who have a proven track record in achieving operational efficiency targets similar to yours.

4. To Manage Current and Forecasted Growth and Profitability

A CEO will brainstorm, analyze, and strategize to forecast excellent short-term and long-term growth and profitability. He or she will get the clients and investors to achieve those targets. But someone has to ensure that all operations activities and projects are managed in the correct manner so that clients remain and offer repeat business. That is another reason why companies need to hire a COO.

Questions like where are cash flow issues rising from, which functions need to be outsourced and at what value, how to implement real-time monitoring across production lines, etc., can be answered correctly when you have a capable COO. That is why hiring a COO is a decision that impacts how a company will perform in the future.

5. To Help The CEO Manage Strategic Partnerships and Business Collaborations

A CEO needs a partner to manage business partnerships from the ground level. A CEO might bring in impressive clients who will be ready to invest in your business, but he or she needs an outstanding leader – a COO – to ensure that the company acquires the resources-real estate, machines, technologies, equipment, office setup, operators, managers, and directors-to run operations and meet expected production capacities.

Read more : Finding The Right COO: The Important Elements in The COO Recruitment

Conclusion

Hiring a COO is a sign of expansion. When it becomes increasingly difficult to maintain client promises, when you can’t keep up with the volume of business flooding in the door, and when everything gets much more complicated, it’s time to hire a COO.

But anyone playing the role of COO in your industry might not be the right one for your business. You need to create a well-researched, insight-driven COO selection criteria and implement a targeted hiring process to get the right candidate on board. This is where COO recruitment agencies can help you.

If you are planning to hire a Chief Operating Officer, you will need to consult with an expert COO recruitment agency.

Get the right information about hiring a COO and the ideal candidates for your business by consulting with Alliance International.

Alliance International

Hiring a COO can become a highly successful process when you consult with the executive search experts of Alliance International. Our global manpower consultancy has top-tier C-Suite headhunters with wide experience in COO recruitment. They will find you the best candidates to help your business achieve the targets you have set for production efficiency, client retention, revenue management, and profitability.

Connect with us and find the best candidates in your industry to fill C-suite positions in your company.

FAQs

Q 1. What Exactly Is A Chief Operating Officer?

Ans. A Chief Operating Officer is the top-most ranking officer after the CEO. A COO is responsible for managing all operations in a strategic manner to achieve goals related to profitability, compliance, risk management, and financial stability.

Q 2. When is the best time to hire a COO?

Ans. A company should hire a COO when it enters a phase of high growth and expansion that is capital-intensive and requires a C-Level leader to exclusively focus on strategically managing operations to achieve key business goals.

Q 3. What qualifications should I look for in a COO?

Ans. It depends on what kind of technical background, knowledge and expertise levels, and experience are needed to manage the duties involved. For example, If you are running complex engineering and manufacturing operations, your COO needs to have a master’s degree in the relevant field along with 15-20 years’ background in managing various aspects of the operations. Only then, he or she can guide the chief engineers, production heads, and directors.

Q 4. How Does Hiring A COO Bring Value To Your Team?

Ans. Recruiting a COO can help a company to achieve critical goals related to financial stability, compliance, operational efficiency, and profitability.

Q 5. What Are the Signs You May Need A COO?

Ans. Here are a few signs indicating that your company needs a COO

• Your company’s CEO is overwhelmed with operational issues and has little time for key sales and business growth initiatives.
• Your operations have expanded beyond USD30 million dollars, and there is no C-level leader to exclusively focus on making it Lean, efficient, and profitable.
• Your CEO has a multitude of great ideas, but no one in the top management has the bandwidth or expertise to make them a reality.

Q 6. When should I hire a COO startup?

Ans. When your company needs a C-level leader to help the CEO in managing project management, administrative and HR divisions, guide top management to achieve business targets, and ensure 100% compliance with client specifications across production processes, it is time to hire a COO.

Q 7. Why do you need a chief operating officer?

Ans. Your company needs a Chief Operating Officer to execute the company’s business plans and operational plans that the CEO has devised.