Cafe Classic: Job Titles... Are They Really Free?

Editor's Note:  During this time of crisis and challenge, we are mining our archives to bring you Classic advice and ideas from previous tough times (because we've been around for awhile!).

Increasingly, job titles are seen as a currency with which to attract, retain and reward employees when hard dollars are limited or unavailable.  A study from Pearl Meyer and Partners, When Times are Tough, Titles Matter, confirms this fact, noting that a number of the 388 responding companies use titles to recognize valued employees when funds are limited.

From Pearl Meyer...

“Flexibility is widely embraced by companies when assigning job titles,” said Beth Florin, Managing Director and President of the firm’s survey practice. “Managers typically have the autonomy to customize job titles in order to reflect different divisions, regions and employee preferences.”

Florin also suggests that organizations maximize the perceived value of new titles by communicating them more broadly within an organization, much the way promotions have traditionally been done.

All of this flexibility and visibility seems sensible as a means to maximize the impact of a reward that costs the organization nothing to impart and is appreciated by employees.

But are job titles really free? 

When the economy turns and these uptitled employees begin to consider (or wonder whether they should consider) their options, they will be assessing their current compensation package vis a vis the outside labor market from the vaulted perspective of the new designation.  Depending on the degree to which their role differs from that associated with the "generally accepted" use of that title, they may come to a very different conclusion about what they are worth than the organization's job valuation or pricing method says.  Before long, they will be scheduling a meeting with their manager ... or Human Resources ... to discuss what they believe to be an inequity in their pay.

And, suddenly, those new job titles aren't quite as free as they initially seemed to be.

I don't mean to say there is never a place for flexibility, even creativity, in assigning titles to employees' work. For many workers, the prestige and respect associated with a new title is highly valued and appreciated.  And even deserved.

I'm just saying we'd better go into the practice with eyes wide open as to the eventual implications and costs of such a move.

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time. Follow her on Twitter at @annbares.

Image: Creative Commons Photo "Free-Sign" by koka_sexton