If you have ever seen reams of resumes, you will have seen some pretty outlandish claims. I spent many years in a special area of B2B technology. This allowed me to know pretty much everyone at the upper ranks of the domain.
Think of it as an NFL head coach or assistant coach knowing all of the other teams’ coaches. So, imagine my surprise when I poured through resumes from people who were claiming roles and responsibilities that I knew factually to be nothing but outright lies.
This is a major problem in the technology industry. The problem is quite rampant in startups. And, I will describe how this happened as well as how to detect it easily.
What Led To Job Title Inflation?
Job title inflation occurs when a weak CEO or management team decides to give someone an inflated title in lieu of other compensation, benefits, and authority. This is the main cause of job title inflation.
For example, a product manager at some high flying company (e.g., Google, Apple, Microsoft) is recruited to a newly funded newco (new company) startup. The newco has a limited stock option pool it cannot really dip into too deeply at the early stages of growth. But, a strong product manager is required precisely at this early stage.
This dilemma is often resolved by enticing the product manager to come over to newco by giving her a “Head of Product Management” or (gasp) “Vice President of Products” job title. This has major repercussions down the road. The most obvious of which is that it starts a chain reaction of job title inflation.
As the newco grows, a real executive will be brought on board above the VP of Products. That individual will now be given the Senior Vice President of Products job title. A title leveling effort begins and it leads to a lot of office politics, organizational restructuring discussions, overlapping roles, and entire teams get de-focused.
Is Job Title Inflation Ever Good?
There are situations where inflated job titles are harmless - perhaps even positive. If a startup is fairly small, it is a good idea to reward a longtime, committed employee a fancier job title as part of a promotion.
An example would be a startup with a fairly flat hierarchy or management structure. There is a single VP level and a single Director level. In this case, it is normally harmless to promote a Director of Support (for example) to Senior Director of Support. The nature of the job has not changed. Thus, only a small salary increase is justified.
The employee will appreciate the title upgrade just as much as a salary increase (which will be very small). Further, it sends a positive message to the rest of the company that great managers will be recognized and rewarded.
Conversely, you should rarely (if ever) give a job title promotion to someone due to threats of leaving your company. In other words, it will be a disaster to use title promotion to retain key people
Key Signs of Title Inflation
To understand how to detect job title inflation, we need to first go over the various management jobs within an organization. Many startups have these roles but they are mashed together into fewer levels or tiers.
There are four (4) types of management levels at any tech company, in order of authority:
Line managers make sure that work gets done. They have little to no authority over budgets, hiring decisions, or corporate policies. In a large organization, line managers are found in task based functional areas such as customer support, telemarketing, and even IT/Help Desk teams.
Line managers mainly work on prioritizing tasks, supervising staff, and deal with personnel problems. Startups almost never have this tier of management. The next tier subsumes this level of responsibility.
This is the lowest level of management in most tech companies. Middle managers are typically in charge of remote/satellite offices, program units, or a fairly important subset of a functional team.
Although the lowest on the totem pole, middle managers are critical for a few reasons. First, middle managers have a strong voice in both hiring and firing decisions. Second, this is the first layer of management where costs become a concern. Middle managers are not only making sure work gets done but keeping track of results against budgets.
And, last but not least, middle managers are the most senior people at a company with a direct line-of-sight into the work of individual contributors, or line workers. That is, their day-to-day job is to have first-hand knowledge of the work itself. Not plans or ideas but the actual work.
Middle managers should be able to handle almost all field-facing issues from customers, partners, suppliers, and even competitors. Anyone who goes above middle managers is probably an investor, reporter, or some other type of non-customer.
These are your Vice Presidents and Directors in a company. The big difference between an upper manager vs. middle manager is that upper managers have responsibility and authority over results and budgets.
The middle manager is concerned with how the work is performed. She may have some control over how her part of the budget is deployed. But, the strings are controlled by the upper manager.
Upper management is where a person starts to contribute to corporate policy, strategy, and overall direction of the whole entity. In a large company divided into business units, these are the BU General Managers and Vice Presidents.
In a small startup (which, in most cases, will be set up functionally), these are the Vice Presidents of the various departments such as finance, marketing, sales, engineering, professional services, and so on.
The executive management layer is where the C-level executive suite resides. These people may have CXO job titles or be Vice Presidents but they are responsible for the business operations of the company.
Contrary to popular belief, these executives are not as powerful within the company as the public believes. First, these executives are very far removed from the data and work. They are heavily reliant on the layers of management beneath it to understand and act on shifts, changes, opportunities, and threats.
Second, the executive has a fairly small set of direct reports which, in turn, forces them to work across to other executives for a full view. Strangely, this makes the overall staff a lot less aware of the value brought to them by the executives.
And, third, the executives rarely interact with the field (employees and customers). You can almost bet that executives will mostly work on activities such as quarterly earnings calls, investor summits, annual conferences, industry events, and contribute to or attend monthly or quarterly Board of Directors meetings.
This is the reason why you will often see an outgoing CEO either pluck from the upper management level or a new CEO being recruited out of another company’s upper management level. The executive management level is sometimes a place where old executive go to vest shares and retire “on the job.”
Summary of the Four Tiers
Let us review and simplify the basic traits of each of the four levels of management.
Line Managers: Supervise staff; make sure work gets done; firing authority
Middle Managers: Supervise staff; monitors results against budget; hiring authority
Upper Managers: Manage other managers; full results-orientation and budget authority; accountability for P&L
Executive Suite: Leads operations, sets corporate policies, and contributes to strategy and annual planning lock downs
Back To Detecting Job Title Inflation
At a startup, the four levels of management is collapsed into just two levels in a vast majority of cases. The startup has Middle Management (who does line management also) and Executive Management.(who does upper management also).
When I interview a management candidate, I unearth the actual role the candidate performed by digging into the actual work and examples of an action based on the authority. This gives me the real insight into their performance or contributions rather than seeing a basket of claims.
For example, if someone’s resume lists “Head of Marketing,” knowing their total compensation package will tell me instantly some level of detail about their actual role. However, it is a bad way to recruit people based on parameters or filters such as compensation. You want to find the best talent and then work your way into negotiating a compensation package that makes sense.
Therefore, I will ask the candidate an innocent sounding question such as, “How did your People-to-Program spending change over the two years you were in charge of marketing? And, why?” You would be surprised at the types of mumbling, bumbling answers I get to this seemingly innocent question.
I do not know any real executive who will not either divulge the exact figures or, at the least, give me the approximate ratios. But, a middle manager role playing as an executive will not know the answer for their own company or former company.
There is no way to avoid people with job title inflation. The startup world has been doling them out for at least a couple of decades. In my opinion, it has been getting exponentially worse in the last several years. That is a topic for another day.
However, it is important to know exactly who they are and what they have performed in order to fit the right person into the important role you are filling.
This is especially critical when putting your executive team in place at a startup. If you shoot too high, you will be left with an executive who cannot function. But, he will keep busy by throwing one idea after another at the wall without knowing how to execute with severe resource constraints.
If you get a job title pumper for an executive role, they may end up becoming an overpaid middle manager (very bad) or individual contributor (disaster) who drives talent away. You will lose a lot of time and money experimenting. You will end up hiring a real executive anyway when 6-8 months passes and it becomes clear there is something big missing.
Since it takes at least 3-6 months to bring in an executive, that is almost one full calendar year you have thrown away.
Furthermore, it does a major disservice to the people who earned their accurate levels of responsibilities, skills, and achievements through painstaking years of service and hard work. It is always a losing proposition when people embellish and exaggerate who they are so … do not contribute to it.
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