Using Job Titles Instead of Pay to Compensate Employees

Writing a lot about compensation today! I also have a piece up about 3 ways compensation policies can cause employee turnover as well in case you want to check it out. . 

This past week I was talking with a friend and he explained that his job title had recently been changed from “XYZ specialist” to “XYZ manager.” He laughed and said that, of course, it didn’t come with a pay raise. I know those kinds of “promotions” are common, but I also explained to him that even if a raise didn’t come right away, having a title like that could lead to higher pay down the road.

For starters, even if there is no pay change, the recognition of your hard work with a title change can give you a sense of satisfaction with your work. Dan Pink’s book Drive talks about the three areas we need to hit in order to create an engaged workforce: autonomy, purpose, and mastery. This recognition hits squarely on the mastery piece, especially if the title change is conveyed appropriately. We want to feel like masters of our own domain, and that transition in job title can be one way of realizing that.

Perhaps even more importantly is the future potential value of that job title. If my friend was looking for a job and has “XYZ specialist” on his resume, employers and recruiters will assume he’s earning in a specific range. However, with “XYZ manager” on the resume, recruiters will assume that his range is even higher, potentially increasing job offers and opportunities. For example:

  • Specialist market range is $60k to $80k
  • Manager market range is $70k to $90k

That job title change could be worth up to $10,000, depending on how it’s leveraged in the future. This is a pretty significant bump for the receiving individual!

I do want to caution you that I am not promoting title inflation at the expense of the workforce. This isn’t about throwing titles at people that haven’t earned them or trying to avoid paying someone what they have earned by changing a few letters in their job title.

Instead, I see it as just one more tool we have to help create more connectivity between the employee and the company by recognizing their contributions. This is a one-time opportunity and can’t be used year over year to avoid paying someone for what they’ve accomplished.

What do you think? Have you done this? Would it work for some of your high performers?