Manager or director? That is the question.
Titles communicate level of responsibility over a work function, so the process by which such labels are determined is important to compensation professionals. Since title has an immense effect on pay, status rank, power, authority, prestige and other elements of the total remuneration package, title assignments can be one of the most contentious elements in the human resources profession.
Manager versus director is a frequently encountered challenge. Whether a particular job is labeled one or the other depends on certain specific features. The category distinctions that permit differences to be clearly and consistently defined between manager and director as a title are many and varied. This list of conventional "cutters" may not be totally comprehensive or universally applicable, but it probably captures the most commonly used variables and allows some general observations.
- industry
- positional sequence of the modifier
- employer tradition
- sensitivity to unit size
Industry: Specific industries treat General Manager and Project/Program Manager titles as exceptions, giving them unique ranks and meanings. Public utility GMs can hold top executive powers over subordinate department directors and functional managers. The actual work of PMs ranges widely in job content and authority in different industry applications like technology, MIS, construction, R&D even HR. In most enterprise types, manager roles carry fairly consistent job values regardless of unit size. Industry also determines the size metrics that most accurately predict executive compensation.
Modifier positional sequence: Exactly where the word "manager" appears in the benchmark occupational label makes quite a difference. Many managers are "a manager in the field of" (one of many peers at the same organizational level) rather than the only manager over that entire organizational function. A Manager of Accounting might be one of many at a peer level, each specializing in a discrete slice of the general accounting occupational pie. The Accounting Manager, on the other hand, controls the whole thing. Some titles supervise numerous people while deferring to higher authorities for direction over the section. Others are individual contributors handling a responsibility area with few if any directly-reporting subordinates.
Tradition: Internal equity is always unique in every enterprise. Relative rank and organizational status doesn't always track with an outside economic reality where pay is set by external open market transactions. Surveys use benchmark titles because they can't capture individual variable practices for summary analysis any other way. Variable historical customs can create confusing title matches, depending on the balance of internally determined value between the roles assigned by top management. Two job titles may look quite similar but can be dramatically different in pay classifications and organizational status level. Accept that your tradition may not translate well for solid comparisons with other peer employers.
Size: Double the organization size and how are the incumbents in each title handled? Managers are typically spawned clones where fission takes place after great growth. For directors, growth brings an expansion of the same person's leverage platform. When an organization gets a lot bigger, more managers slots are created. Growth has different effects on size-sensitive senior management ranks like directors or vice-presidents. Those true executive incumbents see their power and pay expand. The sole individual department head or functional officer remains the same person while the value of their expanded directorship or VP role increases according to an industry-unique equation driven by size. Those senior executives often end up supervising many more subordinate managers, too.
As the organization gets bigger, you typically add more managers who are each employed at about the same price to do about the same thing with a slightly different twist. With growth, most directors and VPs remain the same person with much higher pay directly related to the size they impact. Instead of adding more executives, you instead usually give the same individual incumbent director or VP greater bottom line leverage.
OK, now where am I totally wrong? What important broadly conventionally accepted practice have I missed?
E. James (Jim) Brennan, former Compensation Editor of the Personnel Journal and Senior Associate of pay surveyor ERI, recently returned to consulting. Author of the Performance Management Workbook and frequent expert witness in executive compensation trials, Jim also serves on the Advisory Board of the Compensation and Benefits Review.
"Stony Brook University" image by Sam Levitan, courtesy of Creative Commons
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