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Cash is king, equity is sacred, and job titles are free…or are they?

Updated: Nov 21, 2023

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:


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.


Managers have an average of ~5 months to grow into the next managerial role*

*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.



Managers have an average of ~7 months to grow into the next managerial role

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.


Typical managerial roles and job titles for an organisation size of over 400 people

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.


In this approach, you need to have a long-term business strategy (rough draft is fine). Based on that, map out the skeleton structure of the future organisation, which will give you an idea of the management roles you need in the future and the corresponding job titles. Based on that, it will give you a good idea of when certain roles should be unlocked.


For example, you know that in 2 years time, your business strategy includes sales operations and people around the world. This requires a VP or Director of Sales (MG3) who has the capability to set a 12-month functional strategy, align work across multiple departments, and grow your sales capabilities at the company level. You may decide to unlock this role early to have an immediate impact on the long-term strategy. This is what we call lead hire.


On the flip side, imagine 2 years into the future: you are struggling to deliver your growth strategy because you haven’t hired this role. You may find yourself scrambling to hire the VP or Director of Sales (MG3) at the time when the challenges are imminent or actually happening - this is what we call a lag hire.


Another example could be: you have salespeople growing revenue in multiple countries and are hiring country-specific Sales Managers (MG1) to manage each team. Your Country Sales Managers are the immediate hires because they are critical to executing the current strategy.


To avoid handing out inflated management job titles having a clear business strategy is crucial (a 3-month plan is NOT a strategy!). This will ensure you unlock the right managerial role (along with the correct job title) that can deliver on the current and future business needs.



🥾Approach 2: Bootstrap your job titles


When you are growing rapidly, you have a ‘different’ company at every inflection point. This means that every 6 - 12 months your organisational structure changes.


You might decide on a bolder approach - bootstrapping your job titles! You can give the VP of Sales title to an MG1 role while you are at ~50, someone who can manage your current sales team for example. The person will either grow with the business or you hire someone new in the future to replace them when the role transforms into an MG2 or MG 3 role.

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