Cameron Herold breaks down how to pay a COO based on five factors: their title, strategic insight, autonomy, people and skills they bring, and P&L responsibility. He earned just over $300,000 plus bonuses as COO at 1-800-GOT-JUNK and warns against inflated titles that don't match actual second-in-command work.
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Based on that actual title and all of those five things, the strategic insight, responsibility, the people you're bringing in, etc. That determines the pay that you should be given. So one of the questions that I'm asked so frequently is how much should I pay my CEO? This is actually quite easy and quite complicated at the same time. It's based on five core things and I want you to pay a very specific attention to this. And I've actually done a survey with hundreds of second in commands and we have a database of that shows all of the compensation of hundreds of these executives. I'm happy to share that with you too, if you'd like to see it. You can actually comment salary in the comments and I'll send you a link with a spreadsheet that shows all the compensation. But here's what it's based on again. It's based on the five core things. The amount that you should be paying your second in command is first off based on their title, but the title that you give them, right, they shouldn't all get a COO title because maybe they're just a vice President of operations, maybe they're a general manager, maybe they're a Director of operations, maybe they're an operations manager, maybe they're a project manager, maybe they're an executive assistant, but they could still be your second in command. So the title is based on the roles and responsibilities that they have, right? What they do on a day to day basis, what they're responsible for getting done, the people that they're managing for you, et cetera. Number two, it's based on the amount of strategic insight that they can bring into the company. So when I was actually coming in as the second in command for 1-800-got junk, I showed Brian all of the things that needed to get done because he'd never built a franchise company before and I'd done it twice before. So I was able to bring a level of strategic insight, a level of experience in that he didn't necessarily have. Number three, it's the amount of autonomy that you can have in your job, right? So if you're coming into a business and you're able to do the job without being managed day to day, without being told what to do, without being shown what to do, without having to have someone manage you and hold you accountable, that level of autonomy that you can have raises the title that you have. It's based on the amount of people that you can bring into the organization or skills that you can bring into the organization with you. So if you're a seasoned executive who's built a number of companies before, you're bringing relationships into this business that other people aren't able to bring in because you've done it before, you've built it before. And then lastly, the amount of P and L responsibility, or income state responsibility that you have as that executive, right? If you're able to manage the numbers, you're able to manage the budget, you're able to make spending decisions inside of the company that determines what your title is, right? Whether you become a VP or a C level title. So based on that actual title and all of those five things, the strategic insight, responsibility, the people you're bringing in, et cetera, that determines the pay that you should be given. Because if you're a $120,000 COO, you're really not $120,000 COO. You're probably more like $120,000 a year director of Operations or operations manager with a title that's too big for them. When I left 1-800-got junk 16, 17 years ago now, I. I was earning just over $300,000 plus bonuses. And I was actually a COO of a much bigger company. So I was a real COO. Also, to get a title like COO 20 years ago, you had to be a major player inside of a major company. We're now giving out titles too quickly. So that's why it's a complicated answer and also a very easy answer at the same time. And I hope you think about that as it pertains to what you're paying your head of marketing, your head of finance, and your head of it, etc. Because those people have the same ideas related to strategic insights, P and L responsibility, autonomy, the ability to bring people into the business, and P and L responsibility for their business areas too. If you like these videos, there's definitely a lot more you can be watching. Please subscribe. Please share this and we'll see you in the next video.
