TO MR. SENIOR VICE PRESIDENT: If you want to pay less for one position, create a fancy job title for it.
This one I learned with a very bright internet entrepreneur. I noticed that at his company a lot of people who by compensation level would be classified as “managers” (or in the already-inflated “VP”) in other companies were offered Managing Directors titles. I thought it was funny, because I couldn’t close the gap in one formula I learned:
SATISFACTION = REALITY – EXPECTATION
This means, if what you receive is higher that you expect, GREAT! If lower, TOO BAD – and It doesn’t matter the content, is all relative to what your expect (so there are mainstream professionals that advocate “set low expectations”).
(do you agree?)
I’m COMPLETELY against the “set low expectations” movement, but that sounded counterintuitive, once people with fancier titles would expect higher salaries. So I was talking to this entrepreneur and asked him: “don’t you have problems managing your employees’ expectations? Because if you keep inflating someone job titles, soon they will notice that the pay is out-of-market and demand more”. He answered: “Could be. But people put a price on the title. Think about, if you are offered two jobs, and once call you “Associate” and the other “MD”, which one sounds better to the market? They think about their resumes, their family, showing off to friends… People precify this option, add the emotional value and project their cashflow based on offers they can get on the long run”.
PEOPLE ADD EMOTIONAL VALUE and PROJECT THE FUTURE CASHFLOW THEY CAN GET. Great view. So I asked: “So, you hire people knowing that your value proposition to them is a better “market pricing” – so people are not necessarily committed to the company on the long-term, right?”. He said “right, but I am a growing business, and by this way a) I need people now b) I can by doing that I can bring people to work with me that I couldn’t do otherwise and c) people are not the loyal to companies anyway, so I don’t lose much”.
Amazing, don’t you think? TITLES ARE CHEAP AS HELL!
(better than giving money or raises, thing that people forget two days after receiving)
OUR GOAL IS TO INCREASE PROFIT. REDUCE COSTS! So if you don’t want to give someone a raise (aka INCREASING COSTS), be generous!, consider giving a fancier title.
All the best,
Alexandre Winandy – Sr CEO and deputy team leader of writing operations of www.highimpacthr.com
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photo credit: Mark Faviell Photos via photopin cc
