What does ceo position mean

1. Career Development
2. CEO vs CEO: Definition, Duties, Salary and Differences

By Indeed Editorial Team

Published 11 October 2021

The top leadership positions in corporations carry with them a significant share of responsibility for the performance of an organisation as a whole. These positions also require years of work and learning to do well. If you have the ambition to work towards a top-level leadership position, your salary and sense of accomplishment are likely to be commensurate with your effort. In this article, we look at what makes the CEO and COO positions different and what it takes to achieve each of them.

CEO vs COO: what's the difference?

CEO and COO jobs are high-level executive positions. The chief executive officer, or CEO, is the top-ranking executive responsible for the overall business strategy and direction of the business. The chief operating officer, or COO, answers to the CEO and is generally in charge of all aspects of operations, making sure the business works as needed to meet the vision and strategy set by the CEO. While there is a significant overlap between the skills and abilities of people in these positions, their focus and level of responsibility are different.

The CEO is largely responsible for the external and public-facing behaviour of the company. The COO is primarily concerned with the internal or operational processes within an organisation. While every C-level position in a corporation means a significant level of responsibility, these two are more visible. Both the CEO and the COO often receive significant attention from the board of directors and their employees. Their decisions affect everyone in the company, including the many customers, clients and partners larger companies serve.

Education

The overwhelming majority of C-level executives, especially of medium and large enterprises, have extensive educational experience and training. A bachelor's degree often forms the baseline of the necessary education, which you can build upon through years of work experience and advanced education. These executives frequently hold advanced degrees at the master's level or higher. They also undertake a variety of specialised training programs and pursue informal study and training. These may include soft skill development seminars or more formal training programs, like the Six Sigma certification.

The founder of a company often becomes the first CEO or COO of a new company. While there are no educational requirements to be a successful founder, as the company grows, the founders often continue their education to meet the requirements of the job. They also often foster a growth mindset and pursue lifelong learning so that they can lead others effectively. Here's how these educational paths may differ:

Common education routes for CEOs

Professional CEOs, meaning executives who did not found the company but joined as a hire, are usually highly educated and experienced. It's common for these executives to hold a post-graduate degree like an MBA. Depending on the industry of the company, they may also have additional degrees relevant to their industry. Many CEOs have additional executive education beyond an MBA. Because this position requires the ability to understand large economic trends in the market, it's common for these high-level executives to be continuously learning and studying, whether formally or independently.

While many CEO career paths don't follow the same progression as others, there are a few commonalities among many high-performing CEOs. A common career path is to receive a bachelor's degree and to gain some experience in the field for which you have studied. After achieving a level of responsibility in your career, you could consider higher education or an MBA program to advance your understanding of business and to refine your leadership skills.

Education trajectory of COOs

The beginning of a COO's career trajectory can look very similar to that of a CEO. A bachelor's degree can be instrumental in starting one's career and lead to a solid portfolio of project successes. After gaining some experience and rising to a management position, a future COO is likely to pursue further education, with an MBA degree being a popular choice. Management experience involving leadership and decision-making about resource allocation, work processes and experience in creating teams can be very helpful to a potential COO.

Expertise in specific management and technical topics can help COOs succeed in their position. By studying business management, accounting and finance, you can gain the skills that can help you create effective people-oriented processes. By gaining expertise in operational processes like supply chain management, project management and strategic planning, you can build a foundation of skills that can help a company operate more efficiently, increasing profit margins and decreasing waste.

Responsibilities of a COO

The skill sets of CEOs and COOs rely on the same foundation of business management, but a successful COO is likely to be very comfortable in creating work processes, benchmarking the effectiveness of these processes and finding ways to make them more efficient. Being familiar with the operational specifics of most aspects of the business can give a COO the insights needed to help the organisation gain a competitive edge. Performing the following job duties well can help you become a successful COO:

• Managing projects and providing direction to help them succeed

• Managing resources and budgets to ensure the company spends money wisely

• Continuously optimising and improving processes and workflows

• Learning about industry developments and ensuring the company stays competitive

• Delegating tasks effectively to ensure internal development of staff

• Ensuring quality of work and operational efficiency

• Managing the strategy of hiring and staff development through the HR department

• Helping implement the CEO's vision in the company

Responsibilities of a CEO

While the CEO is technically in charge of everything about a company's performance, this position often relies on your ability to manage a positive external perception of the company. The CEO is foremost a leader, providing a vision of the future and setting the goals for the company. Many operational and internal decisions within a company involve the CEO. The CEO often presents as the public face of the company and may have a significant impact on how external stakeholders view their brand. A set of responsibilities that successful CEOs share include:

• Creating and communicating a vivid vision for an organisation

• Leading groups of people by example and via specific directions

• Making decisions in response to changing industry and market conditions

• Employing strong brand communication skills, including public speaking

• Developing trust and creating strong relationships with clients and partners

• Remaining accountable to the Board of Directors

Compensation

Both CEO and COO salaries often reflect the success of the company and the commercial interest in the industry or market segment. Executives in larger companies with bigger budgets tend to receive a higher salary and more ample benefits. Industries like banking, oil, energy and large-scale manufacturing can offer high salaries and generous benefits packages to their top-ranking executives. As the CEO outranks the COO, their earnings often reflect this difference in seniority. Here's how these two positions compare on compensation:

CEO compensation

The average salary of a CEO is approximately $889,114 per year. Beyond the base salary, a CEO often receives bonuses via additional payments or equity. A CEO hired to lead a company can often expect to receive a set of stock options that they can exercise after a period of time, often a year or several years. This kind of remuneration scheme may encourage the CEO's performance as it ties the CEO's potential compensation with increasing the value of the company.

This approach is particularly common with publicly traded companies, where the stock share price represents the value of the company. For privately held firms working towards a public listing, a similar compensation approach is common with CEO incentives. However, those that intend to remain private sometimes connect the CEO's bonuses and performance incentives to revenue and profit results. Regardless of the specific situation, the company's overall performance is often closely connected to the financial incentives of a CEO.

COO compensation

The average salary of a COO is approximately $214,276 per year. Executives in this position also tend to receive a variety of bonuses and performance incentives. The main purpose of these benefits is to incentivise performance within the organisation. Your remuneration scheme may connect your compensation bonuses and other perks to operational benchmarks like production efficiency or quality improvements. Since the operational efficiency of a company is likely to have a strong impact on its share price, the equity portion of a COO's compensation intends to incentivise them to develop internal value through improved processes.

Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.