Why Titles Aren't Free

“Titles are free” is something I hear a lot from managers. This statement usually comes at the end of a meeting where the manager and I are discussing making an offer to candidate, whether someone on their existing team should get promoted, or how we can convince an employee who just gave their notice to stay at the company. From the manager’s standpoint, giving away a higher title is an easy (and cost effective way) to get a candidate to sign/keep an employee motivated/retain talent.

While technically true (titles don’t cost actual money), I do think that managers are too quick to overlook some of the ways handing out titles can impact the organization in the longer term.

Here are a few scenarios I’ve seen play out in the past:

The manager sets the employee up for failure. Let’s say you agree to give a new hire with three years of experience a Senior title, even though internal leveling guidelines say that Senior employees should have at least six years of experience. When the candidate joins the company, they will now be measured against the same bar as their peers, even though this candidate lacks the same amount/type of experience as existing Seniors. Whenever this new employee makes mistakes or is slow to learn the necessary skills for their Senior role, the response from the rest of the team will likely be “this isn’t the level of contribution we’d expect from a senior employee” or “ this person isn’t ramping up at the same rate as our other senior staff”. This is a tough (and unfair) situation for your new hire to overcome.

The manager encourages the wrong behaviors. In this example, the manager makes a offer to candidate who comes back a week later with a counter offer from their existing company. This counter offer promotes the candidate to Senior Manager and the candidate says they have to have a title match or else they won’t join the new company. The manager, knowing that they need to get this role closed, decides to match grant the candidate the Senior Manager title, which the candidate ultimately accepts. But here’s why I cringe every time I see this happen: the candidate hasn’t earned this increased title through demonstration (or acquisition) of a skill or contribution to the company; they’ve simply used economic pressure to force the decision. Call me old-fashioned (or blunt) but this isn’t the type of behavior I’d want to incentivize on my team.

The manager sows discord with the rest of the team. There’s at least one person on your existing team — or in the company at large- who thinks they should be promoted or given a larger title. When these individuals see you bump someone else’s title (whether it’s a new candidate coming in, or an existing employee you are attempting to retain), these other individuals will ask “ why them and not me?”. Even though you might have good strong reasons for giving out this title, your team won’t necessarily understand or agree with the reasoning. And now you have a team at risk of becoming disengaged or starting to look for new roles.

The manager eliminates promotion opportunities for the employee. Let’s say your organization has three levels of leadership: Director, VP, and Executive. Once an employee reaches a Director or VP level, there is really not a lot of additional room for them to grow. You can’t have two CMOs in a company of 300 people and if your current CMO is performing well, there’s little to no chance you’ll exit them in order to promote a VP. Your existing VP is stuck, maybe permanently, at the VP level. If your goal is to retain them as long as possible, you’ll have a tough time using a promotion as an incentive.

Assume that a new title equals a promotion (even when it doesn’t).

The job description might be the same, their pay might be the same, their responsibilities might be the same but, nonetheless, someone (either the individual or a team member) at your company will view the increased title as a promotion. Change of any kind has a psychological impact on people involved. It’s important not to discount this when deciding whether to give out that new title.

Sometimes, the best thing to do in a given scenario is to hand out a new title

Let’s be clear, I’m not saying that managers should never give out a title to someone who is asking for it. There will be many instances where team and business needs dictate that it the best thing to do is give out a title, whether this is to help close a key candidate or retain an irreplaceable employee.

But instead of assuming titles are free, I think it’s important for managers to view titling decisions as a trade-off and understand some of the potential impact these choices have on your organization. It’s important that you communicate titling decisions to your team, make sure the new hire or employee understands the expectations of the role, ensure the employee has access to training materials that will help them close key skills gaps, chat with HR about whether now is the time to create a company-wide SVP level…these actions can help alleviate any of the potential negative impact of giving out that bigger title.

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