Cash is king, equity is sacred, and job titles are free…or are they?
Updated: Nov 21
Previously on Scaling Start-Ups,
Founder: Having to tell our VP of Sales that he is not scaling with his role was not easy 😓
Me: It is never easy, but I am sure he appreciates your courage to have an honest conversation, work with him to make a plan and explore potential pathways.
Founder: How could start-ups avoid inflating titles? Could this be avoided? Or it is just the nature of start-ups that are growing fast? 🤔
Me: There is no silver bullet but there are approaches you can take to avoid inflating job titles...
Job titles are free…at least in the short term
In the early stages of start-ups, when the budget is tight, in order to attract great people to join or stay with you, job titles cost nothing to give away.
However, if you have ambitions to be the next big thing with operations across the world and employees in the hundreds and thousands, it is important to consider the downstream effects and consequences of handing out inflated job titles right now. Your current VP of 50 people is unlikely going to be the VP for that same team when you are 500 or 5000 people.
Understand what part of the future are you giving away with inflated job titles
Let’s assume your growth projection is to grow to a business size of about 800 - 1000 people. You can get there at 3 speeds:
🏃♀️ run and get there in ~10 years
🚗 drive and get there in ~5 years
🚀 fly and get there in ~2 years (or less 😱)
Regardless of speed, make sure you begin with the end in mind because correcting for mistakes along the journey will slow you down. Let’s illustrate a couple of scenarios.
Scenario 1: Scaling to 800 - 1000 in 2 years
This is a blog about scaling start-ups, so I am assuming you want to fly to your destination in ~2 years (Is this a good idea?🤷🏻♀️I would love to hear what you think at the end of this blog).
Assuming you are a team of 30 at the point of scaling, you will be looking at ~15% MoM (month on month) increase in headcount to even get close to 800 people.
According to Greiner's curve, as a start-up scales, it goes through 6 phases of growth. Moving forward from each phase requires a significant step change during inflection points (aka crisis points). Typical inflection points occur circa 50, 100, 200, 400, 800, etc employees.
So, within Scenario 1’s time frame, you will be experiencing circa 4 inflection points. With each inflection point, you will unlock new management layers and roles with different scopes of accountability and impact. Broadly there are 4 types of management roles:
In Scenario 1, new management roles are unlocked every 5 months as the business grows. This means that if you have given a manager the title of VP in Month 5 with MG1 responsibilities, you better be sure they are capable of taking on new accountabilities every 5 months to keep up with the growth of the company.
*Assumption: growth is smooth line with zero attrition, no sudden spike of increase in employee (e.g. acquisition) and financially feasible
Scenario 2: Scaling to 800 - 1000 in 3 years
Let’s say you came to your senses and decided probably 3 years is a more reasonable speed without breaking the operation and culture of the business.
This time, you decided to grow at ~10% MoM and get closer to ~800 people in 3 years.
The difference with this forecast is, that instead of 5 months, your managers have 7 months to grow their capabilities to step into the next managerial role.
As you can see, it really isn’t too distant into the future when that VP role of 500 people will be necessary. Be careful of the title you give away today that you may have to take back tomorrow.
To avoid job title inflation, start by mapping the future roles you need, today!
When you are a ~800 - 1000 people organisation, below is most likely how your titling would look corresponding to the scope of accountabilities of each management role. This is the long-term, big picture that you need to have in mind to aid you when making people decisions (e.g. hiring, internal move or organisational structure). Avoid solving short-term pain points with decisions that create long-term challenges in the future.
There isn’t a single answer on how to solve title inflation in start-ups. Rather, you need to consider what is the right approach for your start-up. Keep in mind the future trade-offs you are making for today’s gain. Below are 2 potential approaches you can consider.
🔐Approach 1: Protect future job titles and unlock them at the right time
Usually, we hire for our immediate needs and hand out titles without planning for the future. For start-ups that are growing quickly, planning for immediate and future needs must happen hand in hand.
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