The Washington PostDemocracy Dies in Darkness

The case of the disappearing chief operating officer

Placeholder while article actions load

Early last year, McDonald's chief operating officer Tim Fenton said he was retiring, unable to meet the travel demands of the job due to his severe asthma.

But rather than replace him with a new operations chief, McDonald's, which was struggling with consecutive months of sales declines, opted to eliminate the position outright. It split his duties between two company executives who would report directly to then-CEO Don Thompson.

It's a C-suite move that has become increasingly common in corporate America. In January, oil services company Weatherford International said it was eliminating the same position, giving its COO a strategy role instead in an attempt to flatten the organization's management structure. Symantec said in November it scrapped the role in advance of the company's split in two. Other public corporations, like Twitter and Crocs, also jettisoned the job over the last year.

The chief operating officer has long been the day-to-day operator, the heir apparent and the right-hand details whiz to the visionary CEO (think Tim Cook to Steve Jobs, back in the day). But, while not yet an endangered species, this breed of corporate executive is definitely seeings its numbers dwindle. Recent data show that just 36 percent of Fortune 500 and S&P 500 companies today have a chief operating officer — marking a steady turn downward since 2000, when 48 percent of those companies had one.

A primary reason for this decline is the shifting role of the chief executive, says Gary Neilson, a partner with the consulting firm Strategy& who authored a new research article highlighting COO data. He says boards have been holding the CEOs more personally accountable in the years since the Sarbanes-Oxley Act, expecting them to more closely monitor the nitty-gritty of the business and to more closely communicate with executives who once reported to the COO. 

At the same time, fewer and fewer CEOs — particularly new ones — are holding the joint role of chairman, which has freed up some of their time and reshuffled their priorities. Combine that with the rise of technological tools like management dashboards that give CEOs an instant window into how different units are faring, and it's becoming easier for them to have their hands in the operational details.

Another reason for the decline has to do with succession planning, says Peter Crist, chairman of the executive search firm Crist|Kolder Associates, which collected the COO data Neilson cited in his article. When a firm names a chief operating officer or the equivalent, that person is often immediately seen as the CEO-in-waiting. And sometimes that prompts other talented executives to jump ship, thinking they're out of the running for the top spot.

To prevent against that, some companies are opting to just nix the COO role once it goes empty. Their thought process, as Neilson describes it, is: "Why do I want to put someone in a role that signals to others that I’ve already put some bets on succession?"

Crist says the decline in COOs also has led to increasing power for chief financial officers, who often take on many of the operational duties after the job is eliminated. "You're basically watching the evolution of the structure changing ever so slightly every year," Crist said. He pointed, as an example, to Deutsche Bank's announcement this week that its next CEO will be UBS Group's former CFO. "You're going to see more of that."

The declining number of COOs, however, doesn't necessarily mean their usefulness has disappeared. There are several reasons some companies have preserved the role, according to Neilson. One, of course, is that sometimes CEOs really do want to signal their retirement is near and assure shareholders of their succession plan. Another is that it can liberate CEOs to focus on specific strategic issues, such as making an acquisition that requires a lot of time with outside bankers. Yet another is that the COO role can counterbalance a CEO's experience, either by bringing certain expertise the chief executive lacks or serving as a consigliere in tumultuous times.

Then again, given the increased oversight and pressure from boards, some CEOs may see the COO position more as a threat than a support. Paranoid chief executives, Crist says, may worry that boards could quickly replace them with a second in command who know the ins-and-outs of the whole operation. And out of that fear, CEOs may be partially complicit in the position's decline. "They're playing this little chess game," Crist said. "They're no different than other humans. It's self-preservation."

Read also:

Boards don't know their next CEOs

How 10 CEOs work smarter, manage better, and get things done faster

Like On Leadership? Follow us on Facebook and Twitter, and subscribe to our podcast on iTunes.