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Jun 14, 2013

Job titles are frequently seen as cheap alternatives to real compensation.

Every HR executive knows that many a challenge can be prevented with the proper timely endowment of a fancier title. The reality, of course, is that awarding a new job title as a form of compensation in lieu of cash can create new and different problems:

  • A promotional increase is demanded;
  • The wrong messages are sent
  • Discrimination claims result;
  • Internal equity is disrupted;
  • Pay compression occurs;
  • Appetites are whetted, etc.

A “win-win” solution – or calls for “me too”

Sometimes giving a troublesome worker a fancier jumped-up title satisfies a critical need of theirs and produces a faithful and compliant producer more efficiently than any incentive that only touches the bank account. That is the perfect win-win resolution.

At other times, the new title sets off a flurry of “me-too” cries from former peers who now feel overshadowed by their rival’s greater prestige. Jealously lays behind many a petition for “fairness” and “equity.”

Occasionally, the more impressive position name solves the problem by enabling the complainer to wrangle an even bigger promotion to a legitimately larger job elsewhere with substantially more of all good total rewards things, like a Senior VP title, big salary and generous bonus, stock options, fat expense accounts, corporate apartments, company jets and such.

Without that title change from Most Annoying Clown to Clown Director, the gullible rival firm might never have recruited the clown away, to your great delight.

Titles are sometimes substantial, sometimes symbolic

Titles also carry cachet and communicate prestige, such as when major political donors are rewarded by plum diplomatic assignments. Those are title rewards with major potential consequences.

As in the corporate environment, some such postings can work well. It is ideal if the accepted role actually demands the particular competencies and KSAs (knowledge, skills,and abilities) held by the individual who receives the position. In that case, the practicalities of politics intersect with solid recruiting techniques and competent placement decisions.

But Joe the Plumber, despite his great contributions to your election campaign, may not be the best representative to serve the national interest of America in a sensitive diplomatic post where complicated challenges exist and major risks require special competencies. On the other hand, there are places where it can be completely safe to offer a deceptively important title to a place-holder who fits a suitably acceptable image and fills a largely symbolic function. Emeritus Pope and Vice President of the United States could be examples.

Let me know if anyone spots a highly compensated opening for a Supreme Comp Guru.

This was originally published at the Compensation Café blog, where you can find a daily dose of caffeinated conversation on everything compensation.Dilbertnew