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Title creep

Title creep

Giving employees fancy titles may be one way to delegate responsibilities and retain people, but the practice has its drawbacks.

There's an old maxim that organisations often have "too many chiefs and not enough Indians". So why are an increasing number of companies in the business world swelling their ranks of executives with "chief" and other impressive-sounding superlatives in their titles? To stop those same executives from leaving is one reason, according to the director of knowledge management at Vedior Asia Pacific, Victoria Bethlehem. She says titles such as chief risk officer, chief marketing officer and chief innovation officer reflect the extra clout that chief executive officers are delegating to their staff.

"Today, chief executives and managing directors - the smart ones, at least - realise that in order to run a successful business it is not a solo act any more," Bethlehem says. "Many division heads are being given the authority to almost run it as their own business. This encourages enormous loyalty, and a heightened sense of responsibility. If you want people to buy into that, a title is a part of it."

A worldwide survey of executives by global executive employment agency Korn/Ferry found that four in 10 respondents have observed an increase in the practice of companies inflating titles in order to retain top talent.For companies with flat structures, inventing a position with a prestigious title may be one of the few options they have to cool the heels of impatient and ambitious younger employees. "Younger people in the workforce want a title that is reflective of what they do. They don't want to inherit a title that's been there for years," Bethlehem says.

At the same time, young and old alike will see through job titles that don't deliver on their promise. For example, real estate agents placing jobs ads for a "director of first impressions" can mislead applicants into thinking they will be doing more than the job entails, namely greeting customers and answering the phone.

The disillusion evident in the Korn/Ferry survey, conducted late last year (46 per cent of recently promoted executives claimed their responsibilities remained roughly the same, despite their new titles) shows how the practice can backfire.

One alternative, according to management professor Sarah Kaplan of Wharton School at the University of Pennsylvania, is to attach such big-noting titles to temporary projects. "By making jobs ongoing, you make them bureaucratic," she says. By contrast, projects can be tailored to the interests and abilities of individual staff members and don't risk devaluing the entire title structure of an organisation.

The case for a permanent position is probably strongest where the purpose is to signal the strategic importance of an issue to the company. Many banks, for example, now have a chief risk officer. At St George Bank, the role was created in 2004 but only became an executive-level position two years later. CRO Greg Targett says the upgrade reflects the bank's growth and the need for financial institutions to review risk management structures and accountabilities in response to new risk-based capital reserve requirements.

Similarly, Vodafone Australia and other telecommunications companies have a chief marketing officer to show the importance of customer acquisition. However, for the people in these elevated positions, the news is not all good. In return for higher status and pay, companies will expect results.

According to the latest Australian Institute of Management Survey, CMOs command an average salary package of nearly $200,000. "If they can't deliver results fast enough, such as increase market share, improve brand awareness and preference and build a marketing organisation, then that CMO doesn't last long," says a marketing professor at Wharton, George Day.

What is it?

Using C-words as a rentention strategy.

How does it work?

Companies are adding "chief" and other impressive-sounding words to the job titles of staff they fear losing.

Who is doing it?

Banks

Telecommunications companies

What does it cost?

Big titles mean big salaries. The average package for a chief marketing officer approaches $200,000. And jobs that don't deliver on their titles will repel rather than retain talent.

BRW

©Fairfax Business Media

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