Executive Leadership: The Effect of Boundary-Setting on Company Culture

By: Phillip Bogdanovich

Chief Technical Officer. Chief Financial Officer. Chief Marketing Officer. These jobs are self explanatory: the title-holder has ultimate responsibility for the function named in each. Although they are arguably the most powerful seats at the table, the Chief Executive Officer and Chief Operations Officer are much less well defined. My recent firsthand experience with this lack of clarity led me to reflect on the problem, its impact on the company, and how it could have been avoided in the first place. Here’s what I came up with.

Why Are CEO and COO Roles So Hard to Define?

The roles of CEO and COO have a considerable amount of overlap depending on who sets the company framework, and even more overlap if there is no framework. The terms of these positions are vague enough that it can be hard to tell where one executive role ends and the other begins, especially in early-stage start-ups where the CEO is often a founder or co-founder and accustomed to wearing many hats.

In the most general terms, the CEO is the senior member of the company leadership team, responsible for the health, vision, and direction of the company. The COO role is different in different companies. Beyond the self-explanatory part of the job (day-to-day operations), the COO is often responsible for sales, research and development, interactions between C-level staff, and many more daily operations related to driving revenue.

Problems Created by Lack of Definition at the Top

When CEO and COO roles aren’t defined clearly, it creates conflict, especially when the CEO has the emotional investment of a company founder. Recurring conflict creates uncertainty among employees. Who should they take directions from on a daily basis? Who should be driving process? How should members of the same department proceed when they receive different answers about their department mission, daily tasks and priorities, and so on?

The larger and more diffuse the company structure, the more pronounced this problem becomes. Inevitably, there is a significant negative shift in culture where employees are forced to take sides and choose their preferred leader (or the leader they think will offer the most job security). In companies with a flat organizational structure (like many start-ups), roles like CMO and CTO may be subject to this side-choosing dynamic as well.

The general consensus (and my professional experience) indicates that flat organizational structure leads to greater collaboration and faster movement. But even in a flat organization, everyone must be clear on company mission, roles, and responsibilities.

How to Fix the Problem

There’s a combat leadership principle that says you should plan for a crisis before there’s any indication of a crisis on the horizon. Waiting until you actually have a problem to plan for the problem is not going to work. Similarly, you need to establish and develop a principal hierarchy before your company has a need for that hierarchy. In other words, don’t wait for there to be tension about roles and responsibilities before you establish structure.

This may sound like common sense, but it is one of the most overlooked fundamental components of building a business. In the beginning when everything is new and exciting, it’s easy for founders to want to focus on the fun parts: the future, the product, new and interesting processes, marketing opportunities, etc. It is far less romantic to pay attention to day-to-day operational problems like standard operating procedures, employment contracts, and best business practice frameworks.

If you’re a company founder, it’s your job to define roles so executives and other employees understand their part in driving the business forward. If you join a company without this definition in place, make your continued employment contingent upon the company establishing a job description and a list of responsibilities for you. You need to understand how your performance will be measured and ensure that your reports understand their responsibilities as well. You need to build a box around those roles.

The CEO and COO role “boxes” are unique in their malleability. Not every company starts with a COO, but every company has a CEO from Day 1 (even if the title has a different name). The responsibilities the CEO takes will ultimately determine the other executives’ responsibilities, especially the COO’s. The COO may be brought on to be a mentor, to be groomed for the CEO role, or to act as an operational specialist who ensures the best chance for positive outcomes in the early stages of company formation and development. The list of duties for the COO is long and varied.

My preference as a COO is that the CEOs I work with remain focused on the company’s long-term vision and brand integrity (18+ months out). I find companies work best when the CEO is responsible for seeing over the horizon and visualizing the future, while the COO is responsible for defining and implementing the steps required to get there. This reduces confusion and leaves the day-to-day operations of the company squarely in the wheelhouse of the COO.

The vast majority of people do best when they feel like they’re working towards a purpose. People want an objective. They want progress they can measure. They want to perform the best they can in their respective roles, and they need boundaries and definition to accomplish any of that.

A company is best led by example. To enforce reasonable boundaries on employees, executives must set boundaries on themselves. Employees must be able to see that everyone (leaders and individual contributors) is working within a uniform system. The CEO is the face and vision of the company, but things can get muddy beyond that. When start-up crises arise again and again, having (and sticking to) a plan is a company’s best chance of survival. Build a box and grow a positive culture inside that box to give your company the best opportunity for success. Most importantly, lead by example.

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