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What Is the Difference Between a Vice President & Chief Operating Officer?

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As your business grows, you're likely to discover that you need to appoint additional senior level executives to help manage the day-to-day operations of the company. As such, you may question whether you need a vice president or a chief operating officer (COO). While there is some overlap between the two positions, COO's tend to take a company-wide approach to providing day-to-day leadership, while vice presidents tend to be more focused on developing overall strategies for a specific department within the business.

The Vice President's Role

The responsibility of a vice president is to run a department and the position's title typically tells which one – vice president of sales, vice president of research and development, for example. Their authority is generally limited to the departments they run. Depending on the size of the firm, there may be a hierarchy of vice presidents. Executive and senior head the list. Senior typically denotes seniority within the firm and carries more respect and a bigger paycheck. An executive vice president has executive authority that may cross departmental boundaries. He is a fill-in for the president when the latter is occupied.

VP Responsibilities

Vice presidents typically work with other executives to develop strategies and policies to help the business reach its goals. They are responsible for monitoring operational compliance with policies to ensure the success of the business. They are also responsible for monitoring the financial performance of the company and ensuring the accuracy of financial reporting. In addition, a vice president may step in for the CEO or president when necessary.

Vice presidents also have responsibilities in terms of staffing and management. This includes working closely with junior staff, including managers and other senior level employees, to assign and manage projects, create an optimal working environment for everyone and provide feedback to ensure both employee and client satisfaction.

Chief Operating Officer

A chief operating officer falls in the category of “C” positions -- CEO, COO, CIO, CFO -- positions that sometimes overlap with the president and vice presidents. There are no standard qualifications for the COO, nor are there standard position descriptions. A COO may have company-wide authority in one firm, while he may be focused in one aspect of operations in another. Chief operating officers are not necessarily in line for promotion. One study found that only 17 percent of chief operating officers were promoted to CEO.

COO Responsibilities

While vice presidents run their departments, chief operating officers generally have responsibilities that encompass all of the business, including serving as the chief of staff for a CEO. A COO provides day-to-day leadership, monitoring company performance through management information system reports and evaluating the effectiveness of company operations and cross department boundaries to assure that company goals are met. Because his responsibilities are business-wide, his activities are an important determinant of the company culture. The COO also represents the firm to outside interests. He is instrumental in working with investors and raising capital.

The role of the COO may be covered by others who perform similar work without the title. In a single location business like a retail store, for example, the store manager is the de facto COO. Whether your small business needs a COO depends on how many divisions and employees it has. With a small number of employees and a solid team of vice presidents, you probably can work without the added administrative layer of a COO.

References

About the Author

Thomas Metcalf has worked as an economist, stockbroker and technology salesman. A writer since 1997, he has written a monthly column for "Life Association News," authored several books and contributed to national publications such as the History Channel's "HISTORY Magazine." Metcalf holds a master's degree in economics from Tufts University.

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