Can titles be compensation?


It’s a classic Dilbert cartoon: in lieu of a raise, I’m going to promote you to “senior whatever”. Not only does it happen (or it wouldn’t be so funny), but it’s commonplace. But the question is: is it wrong?

Well, if you listen to the CFO, no it’s not wrong. We can’t afford to pay Sam what he wants or deserves, so let’s give him something that costs us nothing. And there is something to be said for that.

And of course people want (even need) cool titles. As I noted over in another FAQ entry, titles are valued by employees and are important for many internal and external reasons. So they seem like a really perfect give-away. People want and value something that costs the company nothing. How cool is that? Almost as good a freebie as stock options

People realize when the title doesn’t fit the person

But as with most aspects of compensation you need to realize that you often get what you pay for. First of all, people aren’t stupid. Both inside and outside people realize when the title doesn’t fit the person, or when the title is clearly exaggerated. Look at banks, where every Tom, Dick, and Mary is a Vice President. Everyone knows that, in a bank, even the teller at your window is but a promotion or two away from being a VP. Take Wells Fargo, with 152,000 “team members”, I’m willing to bet that there are no fewer than 20,000 VPs.

This, of course, leads to title inflation. At a bank, if you aren’t talking to a “Senior VP” you are talking to a nobody. And it leads to a world inside the company where people are fighting over seemingly ridiculous title issues. The first time you make an unworthy promotion, all the people who were at that level feel devalued. They all now want to be a “senior whatever”. Pretty soon you have people running around calling themselves Chairman, CEO, and President, and trying to convince people they hold down three full-time jobs.

Here again, people aren’t stupid, they look at the person, their title, and do a quick compare. Most can smell something fishy if it’s there, and they immediately discount the title on the business card to something more realistic.

You can’t throw titles at people like rice at a wedding

All this means that you can’t throw titles at people like rice at a wedding. You need to dole them out more carefully. But it doesn’t mean you simply shouldn’t use titles as compensation. They can be very effective.

I recommend that you design a “job ladder” for on which you can place all employees. This ladder not only outlines clear and distinct titles for every position, but serves as a roadmap for the employer and the employee. With clear qualifications for each and every position, you can promote effectively, and get your money’s worth when you do promote. I’ll have more on Job Ladders soon, stay tuned.