How Do We Change Job Titles Fairly?

Dear Title Fight:

Job titling is usually fraught with risks. However, there are really two issues you need to address.

The first relates to the relative level of internal responsibility. The second issue is centered on compensation and external market competitiveness.

Internal levels of responsibility: It’s OK to have two different titles within the same salary grade. It doesn’t matter if the titles carry different levels of perceived authority or responsibility. What matters is that human resources and leadership have a defined and specific set of criteria for these positions.

Levels can be set, maintained and realigned as needed, using factors such as: the scope of a leader’s decision-making, the impact of those decisions on the organization, breadth of management, functional or subject-matter leadership. Factors such as years of experience and reporting relationships are marginal to the analysis. Numbers of direct or indirect reports and salaries should be irrelevant.

Make sure your criteria are specific enough so that one manager doesn’t report to another manager who occupies the identical grade level (such as a department head). These guidelines should determine the most appropriate titles for people, based on their level in your organization.

Compensation and market competitiveness add further complexity. The market value of a job typically determines where a job is placed, relative to grade. This helps you set the actual pay. Use appropriate and selective market data as you develop pay ranges.

However, pay ranges typically address only base compensation. Having two management positions in the same pay range is thus not only fine, but may be appropriate from the standpoint of the competitive labor market.

Keep in mind that a job grade affects its base pay only. It does not necessarily dictate how you handle other compensation elements, such as participation in bonus plans, eligibility for stock options or long-term incentive programs, and executive perks.

Instead, these elements can be defined based on grade, title, level in the organization, or any other relevant factor. Just as your firm will have a set of criteria for internal levels, it ought to have a set of criteria for participation in compensation programs. This avoids inequities or anomalies. Defined criteria will provide clarity around these decisions and enhance transparency.

SOURCE: Bob Fulton, The Pathfinder’s Group Inc., Chicago

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The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.