Workplace

Head of? Director? VP? How to live with title inflation.

The war for talent is still raging, and so is title inflation. Here’s how to deal with it.

People standing at different heights

Some companies are willing to get creative with job title to entice talent.

Photo: Klaus Vedfelt/Getty Images

It’s not just the price of gas and groceries: In the tech industry, title inflation is out of control.

In a talent market where every bargaining chip matters, companies are losing candidates — and employees — to competitors willing to get creative with job titles.

“Promoting people and giving them almost double-promotions, without the experience, is a relatively new phenomenon,” said Corey Thomas, the chairman and CEO of the cybersecurity company Rapid7.

Thomas said he’d recently lost a first-time sales manager when they were hired as a vice president at another company. The manager was a high performer, but still gaining experience. “They were, like, 26 years old,” Thomas said.

According to Thomas, the VP role didn’t work out for his ex-employee, which came as no surprise. The rare wunderkind aside, executive roles typically require skills that are built in decades, not years.

Tech employers are using every tool at their disposal to recruit, and that includes inflated titles. As hiring slows across the industry, title inflation-wary CEOs might soon be able to catch a break — but until then, they may need to adapt to retain employees who are eager to jump ahead in the ranks.

Why companies inflate titles

Employers — and recruiters — have a clear incentive to make titles sound more attractive. When they’re tapped out on compensation, a loftier title can go a long way.

“People are emotional and ego-driven, so if it’s a title that seals that deal, oftentimes we’re happy to accommodate that,” said Shawn Cole, the president of the executive search firm Cowen Partners.

Cole said he discourages clients from going too far with a title that’s over-inflated to the point of being “stupid,” which only serves to solicit unqualified candidates. Excessive title inflation can hurt the reputations of companies and their recruiters, and could even call into question how qualified existing teams are, he said.

“I mean, think about a finance team with a bunch of stupid, inflated titles,” Cole said. “That has repercussions.”

But some title inflation is just good marketing, Cole said. In one recent example, a venture firm that hired Cole was struggling to fill a director role. Although the successful hire would earn a $1 million salary and $5 million in total compensation, Cole said the “director” title was off-putting to candidates.

“I just said, ‘Hey, I know internally, this title makes a lot of sense to you guys in your field, but when we go externally, this title does not make sense,’” Cole said. “We went to a ‘head’ title, ‘head of,’ and I’ve literally got people falling over themselves for the opportunity.”

Head of what?

“Head of” roles are one popular solution to the title conundrum. Hunter Walk, a partner at the seed-stage VC fund Homebrew, said the popularity of “head of” titles was “the biggest seismic shift” in job titles that he’d seen in his career.

“Everyone seems to have been ‘Head of Something,’” Walk told me in an email. “If you’re hiring folks, you really need to dig into what this means on their resume, rather than just assuming it’s a meaningful role.”

In startups, “head of” titles are now frequently used as a rank between director- and VP-level roles, according to Matt Birnbaum, talent partner at Pear VC.

“It’s a generic way of not giving somebody a VP-level title, especially at these earlier-stage startups,” Birnbaum said.

But “head of” can also be used to reduce focus on status. The $3 billion ed-tech startup Outschool, along with companies like Stripe, Gusto and Polygon, has embraced a simplified title hierarchy. Last year, Outschool’s CEO got rid of C-suite titles, changing his own title to “head of Outschool.”

Titles are valuable at the early stages of a company, and founders should avoid handing them out carelessly. Walk warns founders that a “bland” title structure — with simple titles like designer and engineer — is the best place to start. Inflating titles can hurt company culture and create strife when it’s time to hire above someone, Walk said.

“Let the first X people on the team think of themselves as ‘first engineer’ or ‘founding team’ or whatever,” Walk said. “But don’t create a bunch of titles which imply a management structure.”

Title inflation for engineers

Even in large companies, when it comes to technical teams, some degree of title inflation is par for the course now. A senior software engineer at Uber, who spoke on the condition of anonymity because she’s not authorized to talk to the press, said she was promoted to senior engineer within three years of starting her first engineering job.

Getting promoted to senior engineer at her last company allowed her to double her salary when Uber hired her. And many of her peers are advancing at the same rate, she said.

“It’s this weird thing where you’re basically getting a promotion externally,” she said. “Companies might lose out if they’re not giving this promotion.”

Looking ahead, the Uber engineer said she expects her career to “plateau” a bit after climbing early. Executives concerned about retaining early- and mid-career employees should consider adding more levels or offering other goals for employees to work toward, like bonuses.

Outside of the management track, late-career engineers already work toward roles like “senior staff engineer” and “distinguished engineer,” but additional rungs on the ladder would give younger engineers more reason to stick around rather than chase outside opportunities, she said.

“It would be a lot more satisfying for people involved if they could get designated promotions after every, like, two or three years,” she said. “Or at least raises.”

Cole sees this as a sign of the times.

“That’s the generation of the candidate,” Cole said. “They need constant pats on the back. That’s just an evolution. The baby boomers waited, like, 10 years for a title change, and the millennials want one now.”

Birnbaum agreed that managers need to get a sense of what employees want two and three years out, and have a plan for how to get them there. Creating a new title to appease a single employee can have negative “ripple effects” on the rest of the team, so managers should look at all the levers that might motivate an employee to stay on.

“Sometimes that’s title-driven, sometimes it’s money-driven,” Birnbaum said. “But a lot of times it’s around scope of impact, whom they get to work with, skills they develop and the journey along the way.”

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