Delta Organization & Leadership

Designing CEO and COO Roles

Options for Structuring a Critical Relationship
Heading goes here

Text 9.5/14 goes here.

Text subhead goes here

Text 9.5/14 goes here.

 Oliver Wyman – Delta Organization & Leadership

Over the past 25 years there has been a shift in the strategic distri-
bution of leadership roles at the top of corporate organizations. Part
of this shift has entailed the movement toward design and deploy-
ment of the executive team. With the increasing emphasis on the
executive team’s responsibility for governance, a need has emerged
to more clearly define and structure the role of the team leader. The
leadership responsibilities typically reserved for the chief executive
officer have changed, and different leadership forms have evolved.

In many organizations, the position of chief operating officer has

been created to directly manage internal operations. In others, the
executive team functions as the COO. Increasingly, however, compa-
nies employ both an executive team and a COO. Neither governing
role precludes the importance of the other; instead, designation of a
COO opens the door to dual management of the team.

Where both CEO and COO roles are employed, an effective working
relationship between the two executives is increasingly critical
to successful governance. This paper describes design options for
structuring this CEO-COO working relationship. We begin with a
taxonomy of corporate leadership roles and related behaviors that
together define the collective executive team leadership responsibili-
ties of the CEO and COO. We then present some alternative models
based on the strategic role distribution for structuring the CEO-COO
relationship, along with a comparative analysis of each model’s
relative advantages and drawbacks. The paper concludes with a
discussion of two critical concerns that need to be addressed regard-
less of structure: management and governance processes, and part-
nership issues.

Designing CEO and COO Roles 

We present the design options in the context of
the following four key assumptions concerning the
relative roles of the CEO and COO, whose working
relationship is aptly described as a balancing act
on the threshold of power:
n Although structural schematics are useful
tools for discussing CEO-COO roles, the crux of
the issue lies in determining who does what.
Titles, lines, and boxes should promote, not
replace, discussions of leadership roles and
responsibilities.
n The balance of unique versus shared responsi-
bilities at the top of the organization will change
over time in accordance with the performance
and comfort level of key executives.
n Severe hazards are inherent in the CEO-COO
relationship and can easily be exacerbated
by rivalry and corresponding defensiveness.
Focusing on the assignment of specific
responsibilities provides an opportunity for a
constructive role discussion.
n The working relationship between the CEO and
COO is crucial to the success of any structural
arrangement. Clear reporting relationships and
role differentiation will be of little help if the
individuals involved are unable to confront and
resolve their relationship issues.
Corporate Leadership
Roles and Responsibilities
We have identified a set of roles and behaviors
that are essential to governing a large complex
organization. For example, someone, either
alone or in partnership with other senior execu-
tives, must set strategic vision and direction.
Someone must establish organizational structures
that ensure the achievement of those strategic
objectives. Someone must serve as the external
representative of the organization. These roles—
strategist, architect, ambassador—and others can

Figure 1: Corporate Leadership Roles

Role activites
Strategist Shapes corporate strategic direction
Architect Establishes organizational structure and operating systems to ensure achievement of strategic direction
Ambassador Serves as principal external representative of the company
Keeper of
Sets tone and direction for relations with key external constituencies
Corporate Image
Policy
Translates corporate vision and strategy into organizational policies, directives, and procedures
Management
Performance
Sets and reviews corporate management performance targets
Management
Operations
Manages operations of company in ways consistent with strategic goals and performance targets
Management
Functional
Manages functional staff, such as human resources, legal, public relations, and finance
Management
Process
Ensures that core business processes are in place and working effectively
Management
People
Develops and leads senior management
Management
Information
Serves as internal spokesperson for corporate messages
Management

 Oliver Wyman – Delta Organization & Leadership

be thought of as key categories in the job descrip-
tion of corporate leadership. In Figure 1 we define
11 specific roles that together constitute both
the strategic and operational responsibilities of
corporate leadership.
Design Options
Our design options for corporate leadership roles
reflect two basic models for structuring leadership
at the top of an organization: first, the traditional
hierarchical pattern and, second, a partnership
structure (embodied in the notion of a Corporate
Office). Multiple variations on these models are
possible, based on the relationship of corporate
staffs to the CEO and COO, and we describe seven
of them.
Readers will recognize of course that organizations
are rarely structured in the pure, strict fashion
described in this paper; these diagrams for pur-
poses of illustration only hint at the complexity of
the reporting relationships often found in today’s
corporate environments. Similarly, the real-world
manifestations of these models are dynamic; roles
and structures evolve over time, shaped by such
factors as succession, external pressures, internal
reorganizations, and mergers and acquisitions.
Figure 2: Traditional Models
Option a¹:
traditional (single staff)
ceO
cOO
staff
Operations
Designing CEO and COO Roles
Traditional Designs
Options A1 and A 2 in Figure 2 represent traditional
views of the relationship between the CEO and
COO. They reflect a clear hierarchy and division
of labor, with the CEO responsible for strategic
issues, external relations, and overall corporate
governance, and the COO primarily responsible for
running internal company operations. Each of the
executives reporting to the COO manages his or
her own piece of the organization in ways consis-
tent with strategies and policies from the top.
In Option A1 the entire corporate staff reports
directly to the CEO. In Option A 2 staff func-
tions are divided into two groups—strategic and
operational—that report to the CEO and the COO,
respectively. Strategic staff manage processes such
as corporate policy and resource allocation and
often include the distinct roles of corporate strat-
egy officer, general counsel, chief financial officer
(CFO), and so on. In contrast, the responsibilities of
operational staff often have shorter time horizons,
focusing on current-year priorities, performance
management, and integrated operations of busi-
ness units. For example, human resources and
information technology are often (but not always)
part of the operational staff.
Option a²:
traditional (Dual staff)
ceO
cOO
staff
Operations staff
Operations

Although specific roles and responsibilities
vary from company to company, this two-per-
son structure has been the dominant leadership
model since it emerged in the 1960s. Corporations
employing the traditional CEO-COO leader-
ship dyad in recent years have included Eli Lilly
& Co. (Tobias/Taurel), Corning Inc. (Houghton/
Ackerman), and PepsiCo (Kendall/Pearson).
The traditional model offers distinct advantages.
The well-delineated, clearly understood chain of
command is typically associated with equally clear
role differentiation. There is little ambiguity about
who sets the organization’s strategic direction and,
by extension, who is ultimately accountable for the
organization’s success or failure.
The clarity of a single voice and vision at the top
of the organization comes at a price, however.
The leader-manager distinction characterizing the
traditional model frames the exercise of power
and influence as a zero-sum game. Within this
context, relatively mild personality differences
between CEO and COO, exacerbated by insecurity,
may develop into intense rivalry and full-blown
power struggles. Historical examples include
the Brophy-Vanderslice disputes at GTE and the
O’Neill-Fetterolf conflicts at ALCOA. In addition,
Figure 3: Simple Corporate Model
Option B¹:
corporate Office (staff-to-the-Box)
corporate Office
ceO
cOO
staff
Operations
 Oliver Wyman – Delta Organization & Leadership
a large power differential between CEO and COO
jeopardizes succession planning. Without stretch
leadership responsibilities for the number two
executive, it is difficult to assess his potential as a
future chief executive.
Corporate Office Designs
As demands for speed, simplicity, customer focus,
and cost reduction make governance processes
more and more complex, the concept of the
Corporate Office (also executive office, office of
the chief executive, and so forth) has received
increasing attention. In effect this is a structure
with permeable boundaries that speeds the flow
of strategic and operational information among
executive decision makers.
The primary difference between variants of this
model and the traditional leader-manager model
lies in the increased emphasis on shared respon-
sibility, or partnership, at the top. Roles are less
distinct than in a zero-sum perspective and are
blended, in the sense that more responsibility is
jointly owned by the CEO and COO. (There is one
exception: the operations staff still report directly
to the COO.) This partnership can provide greater
flexibility, with leaders less constrained by rigid
and static job descriptions (resulting in such per-
spectives as “that’s your job, not mine”).
The next set of design options identifies the two
top executives as members of a Corporate Office
that oversees the entire organization. Within the
Corporate Office the COO participates in many
of the strategic leadership activities traditionally
reserved for the CEO, and the CEO may have more
involvement in key operational decisions than the
traditional model.
Increased partnership and sharing of leadership
responsibilities at the top offer several important
advantages:
n It sends a message of trust in the COO
n It provides “stretch” assignments for the COO
Figure 4: Dual and Designated Staff Models
Option B²:
corporate Office (Dual staff)
corporate Office
ceO
cOO
staff staff
Operations
n When developed through a thoughtful allocation
of roles and responsibilities, it allows each indi-
vidual to maximize personal preferences and
strengths
n It serves to reify the corporate team—the
Corporate Office creates a strong sense of team
identity and unified leadership at the top
At the same time this design has several points of
vulnerability:
n Partnership requires intensive and continuous
work on “chemistry” and “personal style” issues
n True partnership requires a high degree of trust
between the individuals
n Without a high degree of formal structure, the
design has potential for ambiguity in reporting
relationships
The Corporate Office design variations offer alter-
native reporting relationships for staff functions.
In the simplest Corporate Office design (B1 shown
in Figure 3), staff functions report to the Corporate
Designing CEO and COO Roles
Option B³:
corporate Office (Designated staff)
corporate Office
ceO
cOO 1 1 1 2 2
staff
Primary contact
1 = ceO
2 = cOO
Operations
Office as an entity rather than to any specific
individual. The staff can therefore be thought of
as reporting into the box. No formal distinction is
made between strategic or operations staff.
In the dual staff model (B2 shown in Figure 4) there
are two sets of corporate staff. Some staff mem-
bers report to the Corporate Office, while others
report directly to the CEO. The CEO’s role as the
primary driver of long-term corporate strategy is
so fundamental that even within these partner-
ship models, the strategic staff continue to report
directly to the CEO. Those staffs reporting to the
Corporate Office, on the other hand, are not clearly
aligned with either the CEO or COO, both of whom
share the responsibility for managing those staff
functions.
The designated staff model (B3 shown in Figure 4)
offers clearer reporting relationships between the
staff and the Corporate Office than are found in
the staff-to-the-box model (B1). In the designated
staff model, individual staff functions are aligned
with a primary contact, either the CEO or the COO.
This is essentially a traditional staff structure with
solid-line (primary) and dotted-line (secondary)

reporting relationships. At any given time
actual reporting relationships are determined
by the current business context. This avoids the
ambiguity inherent in pure in-the-box reporting
relationships.
Aggregated Staff Designs
Another set of Corporate Office designs entails the
aggregation of key staff functions under the direc-
tion of a chief staff officer (CSO), who brings staff
representation to the leadership table. In Option C1
(Figure 5) the CSO, CFO, and COO form an execu-
tive team, residing in the Corporate Office with the
CEO as team leader. In Option C2 (Figure 5) the CFO
and CSO operate outside of the Corporate Office.
The aggregation of staff offers some unique
advantages:
n More efficient decision making—all corporate
staff can be represented with two individuals
(CFO and CSO)
n Lower overhead, more manageable meetings,
less chance of process loss
n Potential for the CSO to foster development of
other leadership talent
Figure 5: Aggregated Staff
Option c¹:
aggregation of staff (in corporate)
corporate Office
ceO
cFO cOO csO
staff
Operations
 Oliver Wyman – Delta Organization & Leadership
At the same time, designating one individual as
the spokesperson or advocate of the staff functions
for the purpose of executive team meetings may
result in over-representation of certain interests in
decision making, depending upon the interest and
focus of the CSO.
It should be noted that it is possible to aggregate
staff through a CSO function in the more tradi-
tional models (A1 and A 2; Figure 2) without the
existence of a Corporate Office. However, in these
situations the CSO reports to either the CEO or the
COO, thereby simply adding another layer to the
structure. In contrast, adding the CSO function to
a Corporate Office expands the executive team,
enabling corporate decisions to include, by repre-
sentation, the voice of all corporate staff.
The C1 design, mentioned, basically creates an
executive team, and these are the general advan-
tages associated with this team-at-the-top design:
n Benefits derived from team synergies, such as
better-informed decision making
n Development of other executives and future
leaders through their participation in executive
activities and decisions
Option c²:
aggregation of staff (Outside corporate)
corporate Office
ceO cFO
cOO csO
staff
Operations
n Increased coordination across functions
However, the following points of vulnerability
must also be considered with the team model:
n Intensified political behavior
n Potential loss of individual accountability
n Potential for team dysfunction, such as process
loss, group mentality, diffusion of responsibility,
and the like
n Special requirements for the CEO as team leader
Comparative Analysis of Design Options
Although no design option is inherently correct
or incorrect, the selection of a particular option
should be guided by how well the model fits the
current business context and the capabilities,
styles, and needs of the individuals involved.
Toward that end we have evaluated the seven
options just presented on the basis of the following
high-impact criteria:
n Clarity of CEO and COO roles
n Support of succession plans through validation
of COO role
n Provision of stretch assignments for COO
n Effective governance in terms of coordination of
various staff and operational functions
n Efficient governance procedures in terms of
numbers of meetings, streamlined decision-mak-
ing processes, and so forth
n Use of governance process as a way to model
and drive the desired operating environment
from the top
After applying these criteria to the options
available (Figure 6), it becomes apparent that the
Designing CEO and COO Roles
aggregated staff designs have greater benefit.
Clearly, the final choice of option will be influ-
enced by a number of contextual factors, such as
players’ personalities and styles, the CEO’s assess-
ment of the COO’s competency, the organization’s
historical roles for the CEO and COO, and so on.
However, all things being equal, partnership-
oriented approaches to governance are preferable.
In addition to the structure and role issues raised
when evaluating alternative CEO-COO design
options, relationship and management process
issues demand attention.
Management Processes
Whatever the organizational structure selected,
to ensure organizational performance, corporate
leadership must design and manage three sets of
processes:
1. Core business processes. Developed to manage
the core work of the organization, such as prod-
uct development and delivery, innovation, order
fulfillment, and customer support.
2. Management processes. Developed to help
guide the enterprise, allocate resources, and
ensure performance, such as strategy develop-
ment, operating plan development, portfolio
management, and performance management.
3. Support processes. Designed to support the
other management and core business processes
and develop and manage infrastructure, such as
information management and human resource
management.
In a large and complex corporation the core busi-
ness processes are managed by the operating units
and at times may be championed by a senior exec-
utive. However, the core management processes
and selected support processes are the exclusive
responsibility of the executive leadership. The
leadership of these processes happens in various
forums (committees, teams or groups, and regular
meetings) at the executive level.

Typically, the executive level has two primary
forums for the management of processes: one
devoted to the strategic management of the enter-
prise and usually a second devoted to the near-
term (current year and next year) operations of the
company. Critical issues include determining the
appropriate forums for managing processes, who
has responsibility for the leadership of each forum
(the CEO, the COO, or another executive), and how
these forums will function.
Relationship Issues
A genuine partnership between the CEO and COO
can be hard to achieve. Rivalry, defensiveness,
and issues of control often exacerbate an inher-
ently intense alliance between two powerful
individuals responsible for running an organiza-
tion. Consequently, attention and effort must be
dedicated to building a bond of mutual respect
and trust. It is imperative that both parties feel
not just comfortable enough but absolutely com-
pelled to raise difficult issues with one another in
a timely and constructive manner. Their sharing
of information must go beyond “due diligence” to
a rapport that is characterized by a strong sense of
interdependence and joint responsibility.
There are two very important strategies for build-
ing this type of unique relationship. First, as early
as possible in the development of the partnership,
the parties must discuss in explicit terms the dis-
tribution of roles and responsibilities. One of the
greatest sources of stress between the CEO and
the COO is ambiguity about who is in charge of
what. Second, the CEO and the COO must candidly
express their individual wishes and aspirations
concerning both the roles under discussion and
their long-term career goals.
In addition they must address their feelings and
concerns regarding the partnership. This open,
honest discussion is essential if the parties are to
confront and deal with any potentially destruc-
tive interpersonal dynamics that might, over time,

Figure 6: Evaluation of Design Options Against Criteria

Design Options TRADITIONAL CORPORATE OFFICE AGGREGATE STAFF

C¹ C²
A¹ A² B¹ B² B³ Inside Outside
Criteria Single Single Staff Dual Designated Corporate Corporate
Staff Staff to the Box Staff Staff Staff Staff

Clarity of role High High Low Moderate Moderate Low Moderate

COO role validation Low Low Moderate High High Moderate High

COO development Low Low Moderate Moderate Moderate High High

Effective coordination Moderate Low Moderate Low High High High

Efficient governance
Moderate Low Moderate Moderate High High High
processes

Driver of desired
operating Low Moderate Moderate Moderate Moderate High High
environment

Note: Cell entries denote the degree to which each design option enables achievement of a given criterion.

10 Oliver Wyman – Delta Organization & Leadership

undermine the relationship. Due to the sensitive
and often awkward nature of such discussions,
outside facilitation might be necessary.
The CEO and COO share the responsibility for
successfully resolving most partnership issues.
However, two areas of responsibility are solely
incumbent upon the CEO: empowerment of the
COO and the positioning and development of the
COO as CEO successor. To carry out these respon-
sibilities, the CEO must:
n Give guidance to the COO by sharing the insights
and wisdom gained through experience as CEO
n Work with the COO to develop a shared
approach to shaping the future direction of the
organization
n Work diligently to validate and support the
COO’s role through high-impact assignments
and symbolic activities
n Provide timely and thorough performance
feedback to the COO
Just as the CEO has some unique responsibilities
for strengthening the alliance, the COO also has
several corresponding responsibilities. He or
she must:
n Provide upward feedback
n Push back on the CEO by testing assumptions,
questioning decisions, and disagreeing when
necessary
n Seek high-impact stretch assignments
n Actively support the CEO in all forums and
situations where anyone other than the two of
them is involved
Clarifying structural, process, and relationship
or role issues demands significant time and
focused attention on the part of the CEO and
Designing CEO and COO Roles
COO, possibly with third-party support. To aid
discussion, a worksheet that details the collec-
tive responsibilities of the CEO and COO is pro-
vided in an appendix to this paper. The worksheet
is intended to facilitate determination of which
responsibilities are shared, which are unique and
primary, and which are secondary. We also suggest
that much of this work be done off-site in order to
devote enough uninterrupted time to discuss these
important issues. These discussions should have
the goal of producing clear documentation of the
agreements reached and an explicit communica-
tion plan for start-up and implementation of the
desired model.
We believe that in many organizations the
partnership-at-the-top model is not only workable
but potentially highly productive. But its success
will depend on both the CEO’s and COO’s commit-
ment to the alliance. True partnership involves
more than lines and boxes on a piece of paper;
in the end it will be the attitudes and behavior of
the individuals involved that will determine the
arrangement’s ultimate success.
Summary
This paper has investigated the advantages
and drawbacks of seven options for designing a
CEO-COO working relationship that can meet the
modern organization’s governance needs. These
models are based on a taxonomy of corporate
leadership roles and related behaviors that
together define CEO and COO responsibilities.
We also addressed the management process and
relationship issues that members of an executive
team must deal with openly to form an effective
partnership.
Although a number of considerations will affect
a CEO’s design choice—including his or her views
of comparative personalities and management
styles, of a COO’s competency, and of the way
CEO and COO roles have been patterned in the
organization’s past—we conclude that typically
the partnership models of governance are prefer-
able to the traditional model.
11
Appendix: Roles and Responsibilities for CEO and COO Worksheet
Instructions: For each responsibility, determine whether it is unique or shared. If it is shared, then deter-
mine if it is a primary or secondary responsibility for the CEO or COO.

strategic responsibilities CEO COO

Strategist

Sets corporate strategic direction (vision and strategy)

Shapes the company’s long-term aspirations

Makes decisions on key strategic issues facing company (e.g., market entry,
acquisitions)

Communicates and builds commitment to corporate strategic direction among

external constituents (analysts, customers, etc.)

Communicates and builds commitment to corporate strategic direction among

internal constituents (management, associates, etc.)

Periodically reviews the company’s overall strategy to ensure the organization

anticipates and responds to changing business conditions

Architect

Establishes organizational structure and operating systems to ensure the

achievement of strategic objectives

Defines desired corporate philosophy, values, and operating environment

Defines core business processes

Ambassador

Serves as principal external representative of the company

Develops successful alliances and joint ventures

Keeper of the Corporate Image

Protects and builds brand integrity

Sets strategic marketing direction

Sets tone and direction for relations with key external constituents (clients,
shareholders, analysts, etc.)

Sets tone and direction for relations with key internal constituents (Board,
senior team, management, employees, etc.)

12 Oliver Wyman – Delta Organization & Leadership

 policy-related responsibilities CEO COO

Translates corporate vision and strategy into organizational policies, directives,

and procedures

Develops guidelines for use of corporate assets (people, brand, information)

Communicates and builds commitment to organizational policies, directives,

and procedures among key external constituents (shareholders, etc.)

Communicates and builds commitment to corporate strategic direction among

key internal constituents (management, associates, etc.)

Integrates organizational policies, directives, and procedures into coherent

framework

Ensures implementation of policies, directives, and procedures

Monitors effectiveness of policies, directives, and procedures

operational responsibilities CEO COO

Performance Management

Sets corporate performance targets (balanced scorecard)

Translates corporate vision, strategy, and performance targets into business

unit plans and performance targets

Deploys corporate vision, strategy, and performance targets into business unit
plans and performance targets

Reviews and approves business unit strategies

Reviews business unit process performance against world-class criteria (for

example, Baldrige National Quality Award)

Operations Management

Manages operations of the company in ways consistent with strategic goals

and performance targets

Monitors operational progress against performance targets and organizes

counter-measures when required

Manages infrastructure required to support operating units

Manages resources (including people and capital) across lines of business

Resolves critical shared-resources issues

Manages corporate staff resources

Resolves issues of conflict between business units and staff functions

Designing CEO and COO Roles 13

 operational responsibilities CEO COO

Functional Management

Manages financial information and compliance activities

Manages the attraction, retention, and development of a high-performance

workforce

Manages public relations

Process Management

Ensures that core business processes (for example, time to market, integrated
supply chain, and customer service) are in place and working effectively

Integrates company-wide business processes

Ensures effective management processes (for example decision making and

conflict resolution) are in place at all levels

Ensures that quality tools and methods are used in managing the business

People Management

Ensures the right leadership team is in place, with complementary skills

represented

Leads senior team

Develops and monitors succession-planning process for top leadership

positions

Ensures all critical executive positions are adequately staffed

Develops top leadership through selection, coaching, and reinforcement

Ensures replacement personnel are suitably trained and developed

Information Management

Transmits top-level decisions throughout organization

Serves as internal spokesperson for corporate messages

14 Oliver Wyman – Delta Organization & Leadership

Designing CEO and COO Roles 15
 To obtain further information about
Oliver Wyman – Delta Organization
& Leadership, please contact us at
About Oliver Wyman – deltainfo@oliverwyman.com or
the telephone numbers below.
Delta Organization & Leadership
Visit us online at
www.oliverwyman.com
Oliver Wyman is building the leading global management
consultancy, combining deep industry knowledge with
specialized expertise in strategy, operations, risk management, North America
organizational transformation, and leadership development. Toll-free: 1.866.909.8239
Delta Organization & Leadership works collaboratively with
Atlanta Philadelphia
CEOs and senior executives to meet the challenges of
building talent, accelerating organizational performance, Boston Portland
and driving business success. Our Executive Learning Center
provides top-tier executive education around the world, Chicago San Francisco
designing and implementing customized programs that Montreal Toronto
develop the leaders you need to compete and grow.
New York

We bring deep expertise and a track record of high-impact

solutions that minimize business risk by: United Kingdom
London: 44.20.7343.9500
n Maximizing CEO and senior team effectiveness

France
n Making your strategy work Paris: 33.1.70.75.01.30

n Building an effective board

Germany
49.69.710.447.600
n Managing the business of change
Frankfurt Munich
n Redesigning your organization
Hamburg
n Developing a pipeline of the right leaders for your business

n Securing commitment through communication and engagement

n Bringing meaningful data to decision-making © 1998 Delta Organization & Leadership

LLC, a member of Oliver Wyman.
All rights reserved.