In today’s workplace, it is not all about the paycheck. Employees and employers alike are defining the employment experience to include the full spectrum of total rewards. Titles are very much a notable element of every rewards package. While many proudly boast that title does not matter to them, it does matter to a great many more and deserves to be respected as a commodity with great value that should not be given away for free.

The Pitfalls of Title Inflation

Titling temptations are everywhere, and are especially great if you are a new, growing company that is asking a lot of each employee or if you are a nonprofit that is not in a position to offer high wages but can reward with a big title for free.

There are always exceptions, but do not fool yourself into thinking that a big title is always a reward; it can also carry with it a heavy burden of conflict and confusion that has a lasting effect. Here are the most common pitfalls.

No Support of Career Advancement

When I see a 24 year old with a director title and two years of experience, I immediately think two things: (1) They are a hard-working, high potential employee, and (2) they are not operating at a director level and will soon become disgruntled about pay and the diluted voice they have in the business.

Envision this same high-performing employee two years later: they will likely not be able to move to the next level in their company because there is not much room for growth. There is probably a greater contingency that believes a vice president title doesn’t make sense for a now 26 year old with four years’ experience (except maybe in banks or Silicon Valley) and this person will feel stuck with no meaningful career path.

They decide it is time to look for a new opportunity outside of the company; but people won’t consider them because they don’t have a true director-level position available, or because they cannot figure out why a director would apply for a lower level position. Once this employee finally connects with someone that understands their value and believes that they are okay with a lesser title, they land a new job. But it forever looks like it was a demotion or a step down on their resume or LinkedIn profile.

Dissatisfaction About Pay

Many employees present reports to employers and believe the data supports a request for a huge pay increase. Title inflation is the number one contributor to this issue, along with many people simply having an “over-inflated sense of self-worth,” as one of my favorite contrarian colleagues so gently put it.

When setting pay, it is important to match based on job duties, not title. Always pull survey data based on the actual duties performed and the years of experience expected to effectively deliver on those duties. The years of experience needed for the job is truly relevant when setting compensation, but maybe not as much for the employee that has worked hard in a director job for two years and doesn’t know what’s next in line for them. When they type “director” into, it seems pretty clear to them that they are paid low compared to the market.

Confusion Inside the Organization

When titles do not generally line up with the “rest of the world,” it can lead to confusion. Inside the organization, other employees start to develop an unrealistic expectation about the cadence of career progression for themselves—after all, the precedent has been set that it takes just two years to become a director! As an organization grows, it risks becoming too top heavy with nobody that is willing or interested in flawlessly executing the day-to-day activities that the business was built on.

Choose Titles Thoughtfully

Don’t set someone up to fail by offering them a title that—in their own eyes, the eyes of their peers, or the eyes of the community you do business in—they cannot effectively deliver on in a truly meaningful way and within a reasonable time frame. Reflect deeply on the full spectrum of total rewards opportunities available to your employees, and take advantage of the opportunity to invest in your employees with a long-term perspective.

Julie Bingham is an advisor at FirstPerson.

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