How to Hire a COO
If being the public face of your company as well as managing day-to-day operations is becoming unfeasible, or if your board of directors has been hinting that you need another member of the management team to drive growth and performance, it might be time to hire a chief operating officer.
While the actual duties of a COO can vary greatly company to company, the classic description includes responsibility for managing the activities of the company, including daily operations. As one of the highest-ranking executives, the COO reports to the CEO and the company's board of directors.
Hiring a COO can free up a CEO to focus on major external initiatives and foster new opportunities rather than being occupied with keeping multiple departments productive. Also, an experienced COO can bring new leadership tools to an office – which is especially true for start-ups whose CEO has been the single executive running the show from day one, according to Tom Berray, a managing partner at Cabot Consultants, an executive search firm based in Virginia.
"In the CEO-COO model, the CEO is trying to figure out the strategic aspects and the COO owns the execution model. The COO figures out how to keep things running efficiently, and on time," he says.
How do you know it's time to bring another executive on board? Berray says he usually sees companies that haven't had a COO from the start decide to add one when growth is well underway and the company needs to ramp up its execution scale in a short period of time. If that's the case, then it's time to bring in a COO with a proven record of builiding up sales and scaling the departments that are key to your company's success.
Hiring a COO: Define Your Needs
While it's true that any new employee needs to be part of the long-term corporate strategy, that couldn't be more important than when hiring an executive teammate. Visualizing where you want to be in five years, one year, and even next quarter, will be significantly more natural to see how a new COO fits into that matrix.
The cleanest way to plot out that role is through a well crafted, future-oriented job description, which can be the single step that begins the hiring process – and makes it simpler, from start to finish.
The basics of a solid job description include title, to whom the position reports (here, it's the CEO and board of directors) and a summary of the position and bullet-pointed specific job duties. For a more thorough document, add names and positions of colleagues that position will work with closely and minimum qualifications.
Even if you do not include them in a description, executive search experts advise thinking specifically about what accomplishments your ideal candidate should have – say, successfully overseeing a variety of departments spread across multiple business locations. Remember, for any executive-level position, you need not only be searching for someone with education, qualifications and who's a good match personally, but also someone with a proven track record of growth success.
Because the role of a COO can vary from company to company, you'll want to assess which departments of your organization the COO should oversee – be it all or just a few. Also, ask yourself whether you want to allow some flexibility in hiring based on the strengths of your best candidates.
"A lot of times the CEO recognizes and focuses on their few core strengths, for instance a former lawyer could have the legal department report to him," Berray says. "Sometimes the CEO and COO will split up department-reporting by skill set."
Hiring a COO: Recruit Wisely
If your company is in the position to hire a COO, chances are you have a significant budget for doing so. If that's the case, have you also budgeted for the time and energy it will take to find an ideal hire?
Because most top candidates from related fields are likely entrenched in great jobs already, they're unlikely to be trolling job-posting sites. To reach out to a qualified group of candidates you'll need to prepare to spend significant time on calling and networking with peer CEOs and COOs, or to fork over what can be a large fee to enlist the help of an executive search firm.
"You could use a search company, but a lot of start-ups don't have that 20 percent to spend on a head-hunter," says Dan Teree, who founded Ticketfly two years ago with Andrew Dreskin.
Berray, an experienced executive recruiter, says his firm rarely turns online for finding executive-level candidates, due to the daunting task of weeding through "hundreds if not thousands of responses – and getting a lot of irrelevant stuff."
There are exceptions, though. He recommends posting a COO position if it's located in a remote geographic area or is in a field different from the one you'd like to hire from. "If you're looking for some cross-industry pollination – if you're open to some people you wouldn't normally think of, it could work," he says.
If you do decide to post a job listing online, let the job description you've already crafted be your guide. Include minimal qualifications, educational background, relevant fields of previous work, and what sort of a track record you're looking for.
You must also consider how to convey what kind of candidate will be a strong cultural fit. Performance-management expert Jamie Resker, president of Employee Performance Solutions, suggests looking for characteristics that already exist in your office. "It's not an exact science, but you want to find out whether this person is going to be a good fit culturally in the office is important," she says. "For that, you just need to tap into the best qualities your existing employees share."
If you fear getting a flood of applicants, listing a salary could narrow the pool. Otherwise, experts suggest it is not necessary, and is highly variable at the executive level. With the listing complete, post to your company website, and supplement that with listings in targeted trade publications and specialized media and postings on online job sites.
Hiring a COO: Be Competitive
In order to attract top candidates, you'll need to offer a competitive salary. Searching competitors' job listings can be a useful means of finding that industry information if you aren't in the position to purchase salary study information or work with a firm that conducts compensation research. Other simple sources of information can be PayScale.com and Salary.com – and they adjust for geographical inequalities in pay.
Some executive search firms offer compensation data and recommendations based on candidates' experience and qualifications. Another way to gauge salary norms for technology executives in your area is basic networking. Woods cautions that, salary demands from a candidate will likely match their individual experience and track record, so be prepared to pay more for someone who has overseen repeated successful growth.
If you're still unsure, it's perfectly acceptable to ask applicants about their salary expectations, including whether they expect additional bonus or incentive compensations. It's also worth asking what sort of salaries the candidate expects for his or her staff.
And don't ignore the power of benefits to affect a COO's decision to join your company. In small companies, benefits send important signals about the culture and company's stability. "If you're like Google and have incredible benefits, then you might not need to pay that much. But if you don't offer health insurance, you might need to pay more," Matuson said.
Hiring a COO: Go the Extra Distance
As with hiring any executive-level position, it is important to treat the hiring process as a way to not only grow, but also to shape and transform the future of your business. Experts say its important to adequate time for a search, and to recognize that the interview process is far more complex than it would be when hiring a junior-level employee.
"The hire is going to be so important to the cultural fit and the personal chemistry on an executive level,' Berray says. 'After [a search firm or the company itself has] done the vetting, sitting down one-on-one with the CEO should really be the first step.'
Berray suggests bringing in the applicant again for a first-round of interviews with the CEO and possibly the chair of the board. The second round would include any peer executives, and a third round of interviews could take place with anyone who would report to the new COO as well as additional members of the board of directors.
When you're looking to seal the deal, consider doing it out of the office in a more casual environment, such as a restaurant.
The meat and bones of these interviews should examine the candidate's skill set, social skills and other qualifications. 'One way you can help understand who is going to work for you best is have a clear statement of your goals for the short-, medium-, and long-term,' Woods says.
In addition, you'll want to incorporate behavioral lines of questioning that can help you better understand and analyze the candidate's personality traits.
Of course, each CEO has her or his own standards to meet. For Teree and Ticketfly, new hires should be genuinely interested in music, ticket sales, and the technological infrastructure that goes into the operation.
"You want people who really dig it," Teree says. "Just as you don't want an architect who loves modern homes rebuilding an old Victorian, people are going to be at the end of the day more productive if they like what they are building."
And, on the flip side, they should not be in it for just a good "next step" or resume-builder. "I'm always wary of people who are looking for titles," he says. If your company is also not keen on cushy titles, consider the core roles of the COO you are hiring, and consider proposing the position be called "manager" or "director" or simply be given a VP title.
Checking a candidate's references is the most overlooked part of the hiring practice, but experts say it is absolutely essential, even at the executive level. Many employers also ask that applicants agree to credit-history checks and pre-employment drug screenings; those are optional, and often depend on vocation.
Of three references, have a phone conversation with at least two, and pay attention to the tone of a reference's recommendation, not just its content. Most people feel that it is not wise to hamper future employment for a past employee or coworker, so savvy references won't say anything negative. One tip: Leave a voicemail message that says, "I would appreciate a call back only if you feel this candidate is exceptional." If a reference truly believes in the candidate, he or she will return the call quickly. If you do not hear back from them, you can read into that, too.
"I work hard to find someone who worked with the particular person, but who wasn't their recommended reference," says Ellen Rudnick, the executive director of the Polsky Center for Entrepreneurship at the University of Chicago Booth School of Business. "Through one or two phone calls, you can usually track somebody down to get an unbiased opinion."
When you have an ideal candidate with whom you can agree on a salary and benefit package, begin the on-boarding process as quickly as possible, because helping the new executive become acclimated to your business, its culture, and its standard procedures can be a lengthy process.
Despite that you'll be working closely with your new COO day in and day out and the person will be functioning as a near parallel executive, don't forget to maintain standards of having a formal assessment of their progress two or three months after their start date. Take time every few months at least for the first year to allow for questions from them on expectations and review any problems they might be having on projects or in the position.
Hiring a COO: Additional Resources
Riding Shotgun: The Role of COO, by Nathan Bennett and Stephen A. Miles. Stanford Business Books, 2006.
Co-Leaders: The Power of Great Partnerships, by David A. Heenan and Warren Bennis. Wiley, 1999.
Breakthrough! Exploding the Production of Experienced Recruiters, by Steven M. Finkel. 2008.
Hire With Your Head: Using Performance-Based Hiring to Build Great Teams, by Lou Adler. Wiley, 2007.
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