Chief Receptionist Officer? Title Inflation Hits the C-SuitePublished: May 30, 2007 in Knowledge@Wharton
We're all familiar with titles like chief executive officer, chief financial officer and chief operating officer. We have even grown used to chief technology officer, chief marketing officer and chief diversity officer.
But what about chief talent officer, chief cultural officer, chief innovation officer, chief privacy officer, chief reputation officer, chief apology officer and chief geek, to name just some of the more contemporary titles that have cropped up in today's companies? What happened to corporate hierarchies where there were only a few chiefs and many, many subordinates reporting to them?
On the surface, this looks like title inflation. An overabundance of C-level job descriptions -- like the increasing number of "A"s routinely passed out in classrooms -- is cheapening the prestige and achievement that top titles and high grades once signaled. Yet chief you-name-it titles can also be a reflection of corporate restructuring, says Betsey Stevenson, professor of business and public policy at Wharton. Job title inflation, she suggests, "seems to go hand in hand with the flattening of the organization. People want to be distinguished in some way from everyone else, but in a flat organization there is less hierarchy and therefore less opportunity to be distinguished. One good thing about hierarchy is you can climb a corporate ladder. If there is no ladder, there is nothing to climb."
Before coming to Wharton, Stevenson worked for a company that struggled with this issue. "Employees wanted to feel they could get promoted, but because the company had a very flat structure, there were no jobs to get promoted into. So the company started to invent titles for people they valued and wanted to keep." Indeed, one way companies can compete in the marketplace is to offer key employees "a little more money but also a more prestigious title that would help their resumes down the road," says Stevenson.
According to Peter Cappelli, director of Wharton's Center for Human Resources, "the original title inflation goes back to the 1970s during wage and price controls when you couldn't give employees an increase higher than a certain level, but you could give them a promotion. Your compensation wasn't going up, but your [job title] was. That began to die in the 1980s when we started restructuring and flattening the organizational chart. There just weren't that many promotions anymore. Then, in certain industries, when labor markets got tight, you began to see title inflation again."
Along with corporate restructuring over the past decade have come less job security and fewer benefits for employees, who then feel less loyalty to their employers and greater responsibility for managing their own careers, including their promotions. Because companies "just don't have enough titles that are significant sounding, they generate new ones as a reward," says Cappelli. "Before, people just wanted to be promoted up the food chain, but now they are looking for functional recognition so they can move on if they have to." Companies, he adds, have figured out that "many times it is cheaper to give people a title increase than a raise increase." And if the issue is hiring, "it's easy to offer a potential employee a title that he or she asks for if it means he will come on board."
Long before the proliferation of chief you-name-it officers, companies and individuals came up with creative titles, some serious and some irreverent, as a way to distinguish their roles and to send a message to their constituencies. In the 1980s, Guy Kawasaki called himself chief evangelist at Apple Computer -- a title that seemed rather quirky at the time, but would hardly raise an eyebrow today. On the Yahoo website, co-founders Jerry Yang and David Filo are listed as chief yahoos, along with a CEO, CFO, chief sales officer, chief strategy officer, chief accounting officer, chief communications officer, chief data officer and "chief people yahoo." In other companies, chiefs now run the gamut from chief blogging officer and chief hacking officer to chief customer insights officer, chief sustainability officer and chief knowledge officer.
These titles and others are often tied to recent events or trends, such as chief ethics officer, reflecting the post-Enron concern with corporate corruption; chief security officer, showcasing the need to keep all systems and information flows secure from theft and terrorism; chief reputation officer, a response to attacks on companies' brands by bloggers, reporters and competitors, among others; chief privacy officer, reacting to public outrage over companies' failure to protect private data; and chief apology officer, issuing apologies for poor service (think airlines) and promising to do better.
Indeed, says Wharton management professor Sarah Kaplan, the reason many companies give out chief titles is "to signal the importance of that particular issue to the corporation. So you have a chief diversity officer because the company realizes that diversity is an important initiative. And the way to signal that is to create a C-level job to implement it." In addition, "it might also be signaling that the job is more than just an operational one, that there is something about it that is strategic," she says. For example, the title of chief learning officer suggests that "learning is important as opposed to just having someone in the HR department look at training. It is an elevation of the importance of the role."
The only problem with this, Kaplan adds, "is that now [all the companies] are doing it ....Now everybody is strategic. So at some point, companies will have to create some other term."
Wharton marketing professor George Day agrees that the purpose of some chief titles is to emphasize the importance of an initiative or a function within the organization. He cites one large consumer goods company that recently appointed a chief branding officer as a way to say, "'Look, our brands are a huge asset; we have way too many of them, and we aren't coordinating them across countries and businesses.' It's a signal that this is going to be a high priority." At the same time, he adds, "I don't think this title will be very prevalent simply because branding should be the CEO or CMO's job. They should be keepers of the brand, and everything the company does and communicates should revolve around that brand."
The chief marketing officer job, Day says, comes with its own challenges, including high expectations. "Naming a CMO suggests that the company is looking for more than what the incumbent senior vice president or director level was offering. It's taking this particular function -- marketing -- and saying that it is now strategically critical. A CMO not only has to be very adroit about building a brand, but has to learn how to contain costs, improve productivity and communication," and most importantly, drive organic growth.
The cost of a high-sounding title? Job insecurity, Day says. "CMOs are probably the most vulnerable. If they can't deliver results fast enough, such as increase market share, improve brand awareness and preference and build a marketing organization, then that CMO doesn't last long. Excessive expectations are probably the single biggest problem for the CMO."
"Not Everyone Can Be above Average"
As for the lower-level C titles, Wharton management professor Ben Campbell suggests that the dynamic is different in small firms as opposed to larger ones. "There is more value there to these titles. When I was studying startups in the semiconductor industry in California, I would talk to engineers who, at one point, were project engineers in big companies. They worked on just one small project at a time and didn't have any big-picture responsibility. Then they joined a startup and all of a sudden they were ... chief technology officers, and they were being asked to do a much broader range of tasks. They had a much more strategic view of the company and as a result, developed a lot of skills they wouldn't have developed in the bigger companies. So in this sort of situation, there is real information in the title. It's saying, 'Here is somebody who is a strategic thinker and has strategic responsibilities.'"
Campbell agrees with others that in terms of job tasks, inflated titles can be "meaningless. They don't contain much information so there isn't much value in demonstrating what people are actually doing on the job. Where this does have value is in retention. Titles are a very cheap way, almost costless to the firm, to recognize and elicit high commitment from key employees. It is a very public statement that this employee is important to our company."
Especially in big companies, Campbell says, too many title promotions can lead to cynicism about what these new titles really mean. "A company does need to be frugal. Not everyone can be above average. Firms should be deliberate about how they give these title awards out to employees, because each additional person who gets a C-level title dilutes the currency" of the title structure.
In Kaplan's view, "I personally think that projects are more effective" than creating permanent C-level positions. "By making jobs ongoing, you make them bureaucratic. That will be what people discover with [these chief positions]. When you have a one-time special project you can get a lot more action than when you have an ongoing job."
Job Inflation down the Line
Inflation, everyone agrees, hasn't occurred just at the C-level. Stevenson remembers that in her old firm, "they changed a lot of people's titles from 'senior analyst' to 'vice president.' Senior analyst actually means something, but in the investment banking world, it is a pretty low rung. So people got new titles even though nobody's job changed." Or, as Cappelli says, in the investment banking and brokerage industries, just about everyone is a vice president, including "the guys opening the door and serving you coffee."
Wharton marketing professor Len Lodish agrees. Vice presidents in the financial services industry "are typically sales positions. That's no big deal. And now even the title of president has been hit with inflation. The number of presidents within organizations has risen significantly in the last 15 years, especially as the pressure increases on companies to stay competitive when it comes to hiring and retaining employees." Yet it's still "just inflating titles. The companies aren't organized any differently; they are just giving people different titles. Being president doesn't mean what it once did."
One new title that Lodish puts up for consideration is "chief customer advocate.... That's what every CEO should be," he says, "but that's not necessarily the way it is." Others, partly in jest, suggest chief wiki officer -- for the employee in charge of making sure that the Wikipedia entry for his or her company is both accurate and positive -- and chief malfeasance officer, which speaks for itself.
Stevenson offers one final explanation for title inflation. She wonders whether the people pushing for higher titles are "the same ones who, as students, pushed for 'A's and caused grade inflation. Now they are making it into the corporate world and they want big titles." She recalls a psychological study that looked at students from 1970 through today and concluded that the more recent entrants into the job market are significantly more spoiled and self-absorbed than their predecessors. The people who are getting inflated titles, she says, "could be part of what is an increasingly narcissistic generation."