An employer (Company A) had acquired another firm (Company B) that was almost as large as them.
Company A had spent more than three years making sure that their job titles and market pricing of jobs was aligned to the external market in a consistent manner.
They had difficult conversations with many employees when their job title needed to change.
“We’ve recently completed a job title and responsibility audit. We discovered that your job title of Director Marketing isn’t aligned to the level of work you are performing. Your title will be changing to Senior Manager Marketing on July 1st. Your base salary isn’t changing and will remain at $X. The base salary range assigned to your Senior Manager Marketing job is $Y to $Z. And your bonus target is going to be X% beginning on January 1, 2025. That is X% less than the bonus target of Z% that you have for 2024. Here is a one-page summary of these changes. Do you have any questions?”
Over inflating job titles can seem like a free easy way to make employees feel good. But it comes with expectations and higher costs.
1 – The employees will compare their pay with Director level jobs and the associated base salary ranges in job postings.
2 – The employee will believe they are performing work at the Director level when they aren’t. And they will have the expectation that they can perform Director level work at their next employer. (That may or may not be true.)
3 – The inflation of their job title may cause their direct reports to have higher titles than are warranted. Example – The Director asks for a Senior Manager level promotion for one of their Manager direct reports.
4 – The Director level title may lead to a Director level market pricing decision. That means you are paying for a Director and getting a Senior Manager level of work performed. That isn’t a good long-term practice because your labor costs will be higher than necessary.
As Company A reviewed Company B’s job titles, they realized they had just acquired an organization with the same problem they had solved by fixing the inflated job titles.
Company A tried for years to get Company B employees to have difficult conversations. And Company B just wouldn’t accept that the job titles needed to change to match the level of work performed.
Company A eventually caved. And they increased their job titles (that had been fixed) to the level that matched that of Company B. So, the new standard was each job was titled one level above the level of work performed.
Don’t do this no matter how tempting it is. It always needs to be fixed eventually.
What other impacts have you seen when job titles are inflated?
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