Two approaches to titles and promotions

From Titles and Promotions by Ben Horowitz:

Should your company make Vice President the top title or should you have Chief Marketing Officers, Chief Revenue Officers, Chief People Officer’s, and Chief Snack Officers? There are two schools of thought regarding this.

Marc Andreessen argues that people ask for many things from a company: salary, bonus, stock options, span of control, and titles. Of those, title is by far the cheapest, so it makes sense to give the highest titles possible… If it makes people feel better, let them feel better. Titles cost nothing. Better yet, when competing for new employees with other companies, using Andreessen’s method you can always outbid the competition in at least one dimension.

At Facebook, by contrast, Mark Zuckerberg… avoids accidentally giving new employees higher titles and positions than better performing existing employees. This boosts morale and increases fairness. Secondly, it forces all the managers of Facebook to deeply understand and internalize Facebook’s leveling system which serves the company extremely well in their own promotion and compensation processes. He also wants titles to be meaningful and reflect who has influence in the organization. As a company grows quickly, it’s important to provide organizational clarity wherever possible and that gets more difficult if there are 50 VPs and 10 Chiefs.

6 thoughts on “Two approaches to titles and promotions

  1. I think the key question is: Are titles meaningful, eg. do you use them to structure your org chart and define the levels of people’s responsibility (Zuckerberg), or should you view them primarily as a way to make people feel good even if there is no underlying meaning to them (Andreessen)?

    I side with Marc Zuckerberg on this for a few reasons:
    A) I dislike doing anything meaningless.
    B) I think it’s dishonest to bestow a title as if it matters, if you actually think it’s meaningless.
    C) If you give out titles just to make people feel good, the recipients will eventually realize that they are meaningless, in which case you’ve achieved nothing.
    D) People need to know how they are actually perceived and valued. If they feel that the way they are perceived doesn’t reflect their seniority / contribution / level of responsibility, that’s a conversation that you need to have. Giving them a title to make them happy avoids that conversation.

  2. I largely agree with you, primarily on points ‘a,’ ‘b,’ ‘c.’

    For point ‘d,’ this only addresses the perception of value between the employee and the manager (or the “bestower” of titles), not between the employee and the rest of the company. Far more important than the title is that the manager values the employee and that the employee knows this, but titles are a shorthand way to reflect that value to other parts of the company. Especially in companies that are too large for employees to all know each other individually, having clear (earned and deserved) titles helps communicate how employees in the company should be engaging with one another, which employees should be looped in on key issues and when, etc.
    I suppose one way around that communication issue is to leave titles alone and simply publish a very clear org chart, but many start-ups evolve so quickly that org charts have a limited shelf life.

  3. I wholly agree that empty titling needs to be avoided both at hiring stages, and as a team matures. You want stability in your organization, but if you try to achieve stability through title changes as a sign of appreciation, you can undermine the goal. Meaning, if everyone’s a VP, then no one is. Essential too is to make clear to everyone that they are of value, regardless of title. Effectively communicating that is essential to maintaining organizational stability in my opinion.

  4. “C-level” titles have meaning insofar as they communicate to everyone else in the organization where decisions are ultimately made. That said, I think C-level titles should be confined to three individuals: the CEO, the CFO, and the COO. Beyond that, it becomes difficult to tell exactly who is in charge of the decision making (with the notable exception of healthcare companies where there is some obvious utility in having a Chief Medical Officer).

    I’ve always been fuzzy on how companies determine who is a “VP.” In its simplest, and therefore easiest to understand form, there would be three C-level executives, a President, then a VP. That seems rarely to be the case.

    All of that said, there’s a certain allure that goes along with an important-sounding title. If you can give someone a title that both makes them feel important but also communicates something to other employees about what that person’s role actually is or actually entails, then you have a win-win scenario — that is, you’ve made the individual happy and you’ve also added clarity to the business.

  5. Great points above!

    Titles are also important in external engagements with partners or PR. Someone representing SA often needs a universally understood title to convey to partners his role in the company. The title needs to be internally and externally simple and understood.

  6. Pingback: Promote fast | A Founder's Notebook

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