Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at email@example.com.
Q. We never worried about titles, but we’re recruiting outsiders, and titles seem to matter a lot. How do I manage titles? How many layers of management should we have?
—Founder of a company growing from 50 to 100 people
You are noticing something very interesting—how the importance of titles changes as a company scales. In the early days at Yahoo! there were not titles. Cofounder David Filo wanted everybody to be contributors. That works for a time, but the bigger a company gets the more structure it needs. It becomes like Lord of the Flies without any order.
That said, when it comes to titles at early-stage companies, less is generally more. If someone has a “manager” or “senior vice president” title, that has to be for the right reasons—reasons that have to do with scale and scope.
This can be very complex. Founders have to think about what they are trying to achieve with titles. Titles are tied to your culture. Sales-oriented companies prioritize titles more because having the right title helps get you in the door to the customer at the right level.
Any company should be intentional when it gives titles. Remember when you promote someone, everyone is watching and wants to know when their turn is. Furthermore, titles that may seem simple can unleash complicated issues. Take something easy like the word “manager.” Some people love seeing the word manager because they believe it signifies leadership. But sometimes someone can have this title and have no one working under them, or just a small number of people. When assigning titles, it’s necessary to consider the span of control, or how many people report to the person. Too few people reporting to a manager yields too many managers in an organization and an infinite number of layers, which you don’t want. But there can also be too many people reporting to one person. It is hard to give more than 10 direct employees the attention they need (with time for one-on-ones, oversight, etc.).
Founders should be cautious because titles set precedents, and they open you up for comparables in the market. Having a certain title helps determine relative pay—both within the company as well as within the industry. We see compensation rise, not just across a company but across an industry, as companies aim to stay competitive. It’s worth noting that having bigger titles also puts your people in more of a position to get poached by bigger companies.
Everyone should consider that titles can last a long time. Even if you have a re-org you can’t just strip a title from a person you want to keep. The best advice I have is to proceed thoughtfully.