When is a CEO not a CEO? – how titles can mislead

Early in my career, I had a discussion with an executive who offered advice on titles. He said, “The best tool a manager has is to give an employee a bigger title. It doesn’t cost me anything because I don’t have to give a pay increase, and it keeps the employee feeling valued and motivated.” This was my first exposure to title inflation and how titles can mislead. What he got right was that it didn’t cost him anything… at first.

Ideally titles provide information to people who work in an organization, and the outside world about the nature of the role – what is the work and how much accountability and authority accompany that role.  I have seen titles and title inflation can mislead in a variety of ways. For instance, in a company where I worked several years ago, a group of sales directors once wanted their titles changed to vice presidents of sales. Their argument was that we were selling to the presidents and senior executives of potential customers and needed the larger title to secure meetings. “We will sell more, and everyone will win.” Eventually, senior management compromised by granting them external titles, but back at the office, they would still be Directors… what happened next? These new VPs immediately leveraged the titles by updating their resumes and racing for the door to their next “real” vice president jobs outside the company.

It may seem obvious that the CEO of a small local service business is not equivalent to the CEO role at a multinational corporation.  However, for those outside an industry or the business community, the illusion of what the big title represents can obscure the reality of the work. We use titles as shortcuts to understand what people do, conferring status and enabling quick assessments of where they fit in society. It should not be surprising, then, that over the years the title of general manager has evolved to President, then to President and CEO, and finally to CEO, even though the role itself has not fundamentally changed.

I am not about to turn this blog into a rant about turning back the clock or advocating for “title deflation.” But I will focus on the point that when you are thinking about succession or hiring from the outside, it is important to look beyond the titles to understand the work in the roles themselves.

·         What is the nature of the work in this role?

·         What authority does the role holder have, and what are they accountable for?

·         What decisions can they make unilaterally, and what is the value/impact of those decisions?

In answering these questions, you should be able to assess whether the individual has the capabilities and skills required for the new role, regardless of their current title.

Organization design principles and an understanding of levels of work will provide you with the tools to make these assessments effectively. Instead of relying on the shortcut of titles, understanding the difference the nature of work required at corporate, general management or operational levels, and being able to objectively assess the level of work an individual is performing, regardless of their title, will enable you to make the judgements needed to ensure you have the right people doing the right work at the right levels.

If you would like to learn more about how understanding work levels can help you build the structure that will enable you to achieve your strategy, I’m excited to share that my new book, STRUCTURE THAT WORKS: The CEO’s Practical Guide to Organization Design, is now published and available on Amazon, or go to www.structurethatworks.com.