Employee Compensation is Frequently Hindered By Job Titles

by on June 15, 2009 · 0 Comment POSTED IN: HR Info Center

Reign in job titles to enhance employee compensation

One of the biggest sins in employee compensation revolves around the failure to control job titles. This is one of the two major cancers of employee compensation. In many companies, title is tied to lots of aspects of a compensation program like job descriptions or market research, salary administration. Even stock and bonuses can be tied to title.

In addition, the amount of time you spend on developing and maintaining your employee compensation program will be dependent on the number of job titles you have. Even in the consulting business, the very first question asked is how many titles are we talking about. Even before asking how many people are involved.

So titles should be generic but descriptive. There’s some balancing that has to take place. If you have individual employee skill sets that overlap about 70%, call them the same job if you can.

Generally the ratio of job titles to the number of employees is around one to three. But that’s going to depend a lot on the size of your organization. You may have one to two in smaller organizations or a ratio of one to five in larger organizations but generally, one to three.

It’s also possible to accommodate a two-title system here. And by that, you should have something called the system title. These are the titles that you actually put in your human resources system even if it’s on an excel spreadsheet. And these should be the generic but descriptive titles. And the working titles are what people may call themselves. It’s what they put on their business card.

Now, generally, do we really care what people put on their business card? Not really, as long as we have the right system title. As long as they’re not misrepresenting themselves even on their business card and calling themselves a director or vice president when they really are not. So you can work with two-title systems to enhance your employee compensation program.

Edited Remarks from “The Seven Deadly Sins of Employee Compensation Plans (and How to Fix Them)” by Rick Olivieri

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