Momentum Podcast: 142

Don't Give Away Titles

by Alex Charfen

Introduction

This one's actually more important than it seems. The title you give someone actually matters in your company, regardless of what you've heard from any book or consultant or nice story about how you don't really need to have titles and you can lead from any level and all of those things. Those are true. It's true you can lead from any level. But it's complete myth that in a growing organization you don't need titles. They are critically important and you should not give them away. This is one of the worst habits that entrepreneurs have. I see it all the time.

Episode Description

Far too many entrepreneurs give out titles without thinking about it. I can't tell you how many companies I have run into where there are six people and five c-level executives. Titles matter. Titles provide a roadmap for losing your company and how your chain of command and communication flows. Titles indicate to the people working in your company, and the people from outside working with your company who does what. Titles let your company interface with larger companies because you will match up departments with departments in the most appropriate way. If you give away titles, they don't matter and none of this is possible. 

Full Audio Transcript

I'm Alex Charfen. And this is the Momentum Podcast. Made for empire builders, game changers, trail blazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off, and don't know why anyone would want to. We challenge complacency, destroy apathy and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop. And we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few, who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters. Clearly the most important people in the world. Because, entrepreneurs are the only source of consistent, positive, human evolution and we always will be.

Don't give away titles. This one's actually more important than it seems. The title you give someone actually matters in your company, regardless of what you've heard from any book or consultant or nice story about how you don't really need to have titles and you can lead from any level and all of those things. Those are true. It's true you can lead from any level. But it's complete myth that in a growing organization you don't need titles. They are critically important and you should not give them away. This is one of the worst habits that entrepreneurs have. I see it all the time.

I talked to an entrepreneur recently who was considering joining our program, and he has six people on his team: a VP of sales, a VP of customer service, a VP of operations, a VP of finance, and a VP of I can't remember what her title was but she's essentially his assistant. So there's one CEO, and five VPs. So everybody in the organization's a leader and only the leaders have no team. And he's given everybody vice presidential titles and it's already causing him problems. Because when we were on the call, talking about his business and the possibility of him joining our company, he mentioned that he needs more sales reps but he doesn't know if the one that he has is a good leader. And I said, "But he's your VP of sales." He goes, "Well yeah, he was the only person in the department." And I said, "So what are you gonna do? Take away his title and bring in somebody else and make him a sales manager? Are you gonna demote him to sales person? How're you gonna change that?" And he said, "Man, I probably should have thought about that before I started handing out titles."

I didn't want to tell him he should have. But I did. And I explained, you should never give a title away again because I think it's one of the most important lessons that entrepreneurs learn. When we give away titles, we make them unimportant. When we give away titles, we make the hierarchy in our company and the corporate governance unimportant. When we give away titles, we make promotions infinitely less important because there's really no difference. Yet, when we put somebody in the position they should be in, but give them the title that is appropriate for what they're doing right now, it becomes a road map for our company. Anyone can know that if the person has a title of salesperson, they probably know what's going on. When you hire new people in your organization and you start growing, which I hope you will, I want you to explode, the titles in your organization will actually tell those new people who to go to for what. It will give them insight into who in your organization they should be talking to so that they can move forward. It will help them understand how to grow within your company.

And this might be even more important. As your company grows and you get into the multiple millions and you start working on bigger projects, the people in your organization, their titles are going to matter to the people in your partner organizations. When you start doing projects with larger companies, when you start getting advisors and vendors that are in larger organizations, when you start doing affiliate deals or endorsements or partnerships with other companies, titles will matter.

In 2009, our company, our tiny little company in Austin, who at the time had about 20 people, signed an agreement with the multi-billion dollar organization, Remax, we had 20 people, they had close to 100,000. But, I've done this before. My company had real titles. We had real people in real positions that they were filling. We did have at the time a director of operations. We did have at the time a director of sales. We did have at the time a director of marketing. And we matched those people up with Remax's people so that we could get our deal done, so that we could execute the project we were working on, and it worked flawlessly.

At one point, Mike Ryan, the vice president for Remax told me that we were one of the easiest vendors they had ever worked with and that our company was so simple to match up with. And there was a reason: I'm a Fortune 500 consultant. I knew how to create my company so that it would plug and play with a larger company. I knew what they would be looking for when they talked to us. I knew that they were going to want to see a real corporate structure on our side. I guarantee you, if I had told Remax all we have is C-level executives and I had rattled off a bunch of titles and they could feel and sense that people weren't in the right position, our deal would have had a hard time getting started. But with a tiny little team, partnering with a multi-billion dollar organization that was thousands of times our size, we were able to help them change the foreclosure crisis. We did tens of millions of dollars in business with them.

At one point, I was at a Remax conference and I had just shaken hands with Dave Liniger and given him a hug, and I turned to Gail Liniger and I said, "Gail, thank you so much for everything you and Dave had done for our family." And she said, "Alex, thank you so much for saving Remax." Our tiny little company, one of the founders told me we saved Remax. And we were able to do that because we had a team on our side that wasn't accepted by a larger corporation, it just blended in and worked with a larger corporation. And I can't tell you how many times somebody at Remax would ask me, "How many people do you have?" And over the course of our engagement with them, the number went up. It was 20, then 40, then 60, then 80. But whenever I named the number they would say, "Really, is that all?" They were always shocked at how small we were, because we acted like we were so much larger. They were always shocked by how tiny our team was compared to them, because we felt like we matched up so well with them. And a huge part of that was because I never gave away titles, and I made sure the right people were in the right roles.

There's more reasons you don't want to do this. You know, entrepreneurs, I've looked at some companies and they're laughable in how they've titled things. You know, one entrepreneur and five C-level executives with no other team. It just doesn't make sense for you to be the CEO with a COO and a CTO and a CFO and a CPO and a CMO, when all you have is five people. We all know they're not C-level executives. You shouldn't have given them those titles. And, there's this site that will haunt you when you give away titles. I don't care how close you are with your team, I don't care how long you've been doing this, I don't care how many times you've given away the title and it didn't hurt you, when someone in your organization discovers salaries.com and they go look up CTO when what they're really doing is entry-level application management or entry-level software management for you, but you've given them the title of CTO and they go figure out that that's a two or three hundred thousand dollar a year position, you're gonna have an uncomfortable conversation.

When you give someone the executive vice president title and they go out to dinner and they find out that another executive vice president is making far more than they are, you're gonna have an uncomfortable conversation or even worse, you're gonna have a team member who thinks they should be paid more and doesn't tell you. And they're waiting for you to come to them and give them the raise they think they need that you're not even aware they know. Or you're not even aware that they expect. When you give away titles, you will make it infinitely difficult for any other organization to work with yours because there's not a clear road map as to who does what. And when you have ambiguous or unclear titles when there isn't clear corporate governance and a hierarchy that indicates chain of command, people working with your company won't know who to go to. And as result, they're going to go to you.

So the more you give away titles, the more pain you buy yourself. The more you give away titles, the more interaction you're going to have to be in, explaining to people what to do. And the more you give away titles, the more confusing your organization will be to the people in it and the people dealing with it.

So when it comes to giving people titles, be real. If you hire an executive assistant, executive assistant's one heck of a title. If you hire a sales person, sales person is a heck of a title. If you hire somebody to keep your books, they are a bookkeeper, not a CFO. And until someone's actually filling the position and the title that you're going to give them, hold it back. It doesn't matter if you're a CEO and there's not another C-level executive or VP in your entire team, you don't need to balance it that way. Give people the clearest title you can. Give people the most accurate title you can for where they are right now. Give people the title that lets everyone else know what they're doing, and your business will change. Because giving away titles might feel good, giving someone status might indicate respect, giving someone a big title might make them excited, but the problem with that is, even though it feels good and it might indicate respect and it might make them excited, it makes everyone else confused. And growing a business is confusing enough. You have enough to do. You do not need to be the gatekeeper for your entire team because no one can figure out who does what, due to the way you've given out titles.

So if you're growing your team, and you're bringing people in, give them the clearest, most accurate title you can and everything will get easier for you. And if you're growing your team and you're ready to grow as fast as you know you can, stop leaving opportunity on the table and take things to the next level. Reach out to us. If you're at or approaching a million dollars in run rate, you may qualify for our growing scale mastermind that has dozens of the fastest growing companies in the world, that are out there changing everything. I look forward to talking with you.

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With gratitude,

Alex

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