Job Titles: Are They Really Free?

Increasingly, job titles are seen as a currency with which to attract, retain and reward employees when hard dollars are limited or unavailable.  A recent study from Pearl Meyer and Partners, When Times are Tough, Titles Matter, confirms this fact, noting that a number of the 388 responding companies use titles to recognize valued employees when funds are limited.

From Pearl Meyer...

“Flexibility is widely embraced by companies when assigning job titles,” said Beth Florin, Managing Director and President of the firm’s survey practice. “Managers typically have the autonomy to customize job titles in order to reflect different divisions, regions and employee preferences.”

Florin also suggests that organizations maximize the perceived value of new titles by communicating them more broadly within an organization, much the way promotions have traditionally been done.

All of this flexibility and visibility seems sensible as a means to maximize the impact of a reward that costs the organization nothing to impart and is appreciated by employees.

But are job titles really free? 

As the economy turns and these uptitled employees begin to consider (or wonder whether they should consider) their options, they will be assessing their current compensation package vis a vis the outside labor market from the vaulted perspective of the new designation.  Depending on the degree to which their role differs from that associated with the "generally accepted" use of that title, they may come to a very different conclusion about what they are worth than the organization's job valuation or pricing method says.  Before long, they will be scheduling a meeting with their manager ... or Human Resources ... to discuss what they believe to be an inequity in their pay.

And, suddenly, those new job titles aren't quite as free as they initially seemed to be.

I don't mean to say there is never a place for flexibility, even creativity, in assigning titles to employees' work. For many workers, the prestige and respect associated with a new title is highly valued and appreciated.  And even deserved.

I'm just saying we'd better go into the practice with eyes wide open as to the eventual implications and costs of such a move.

Ann Bares is the Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time.  Follow her on Twitter at @annbares.

Image: Creative Commons Photo "Free-Sign" by koka_sexton

Comments

[Wally Bock]

Nice work, Ann. There's nothing you do as a manager that doesn't have some kind of consequences. So it's best to think about that all up front.

Sometimes things work the other way. I had a client who got a significant raise in pay without the title upgrade (in her case to VP). She demanded the title as well and got it.

[working girl]

That's awesome and so true. Instead of gratitude you get attitude!

[Ann Bares]

Wally:

I think you're right - essentially everything has consequences and there really is no "free currency". Funny story about your client - apparently titles were more precious than dollars there, given their willingness to part with the latter but not so much the former.

Thanks for sharing and commenting here!

WG:

Love that phrase... "instead of gratitude you get attitude!" Very true!