Titles and roles at small companies
In the first year of our business while we were still a startup company I hired a sales rep. He was our first sales guy. He said, “Can I be the VP of Sales?” I said, “Sure!” That was just one of the many dumb things I’ve done in my life, and later when I had other sales people but I didn’t want him to manage them I had to demote him. That was an uncomfortable situation, but it had to be done.
A few years later we had grown enough that I needed some managers, but I really had no idea of what the different titles meant. I knew what titles meant when i was a junior officer in the Navy, but that was no help. Every other work experience I had was just with individual contributors and managers. I tried to research it, but it was all very confusing to me.
After more than a decade owning and running our business, I figure I’d write down my thoughts and observations. I’m sure its wrong in some cases, but it’s the guidelines that I use.
Individual contributors are some of the most vital people in organization. They’re the sales people that bring in business, the technicians and engineers who do the work, the project managers that make things happen, as well as the finance and admin people who send the bills and collect the money.
Managers have to first be outstanding individual contributors. Then they have to gain the skill set of a teacher and leader of people. Manager should understand the role of the group of people and be able to optimize the efforts of the individual contributors.
Directors have the skill set above and beyond managers to be able to take action to achieve goals for the good of the company. They should be able to see when something is done correctly or incorrectly and take independent action to improve their own work as well as the work of the managers and independent contributors who report to them.
Vice presidents have the skill set above and beyond directors to be able to take vague orders from executives, create a plan of action, and make things happen. They should be experienced in both the industry and the company. They are the backbone of the organization, are difficult to replace, and almost indispensable.
Executives are either owners or report directly to the owners of the organization. They bear the responsibility for the success as well as the culture of the organization. The commitments that they make to customers, vendors, and employees are given with the backing of the company itself.
Members of the board are important because they are able to take an outside view of the organization and to ask the difficult questions of the executives and VP’s regarding strategy and execution.
The owners of the organization are directly and financially responsible for the success or failure of the organization. If the company makes money they make money and if a company loses money they lose money. The actions of owners may not make sense to employees of the company but in many cases they have a completely different perspective of what is going on.
In a small company the owners, members of the board, and executives are often the same people. Hopefully they have a decent working relationship and use their skills and expertise together to keep the company profitable and headed in a positive direction.
For many years my belief regarding the title of the person depender on the number of direct reports the person had. But over time I’ve come to believe that it’s more in line with how much responsibility for the success of the business that person has. For some managers, directors, or VP’s, that means they have a lot of people reporting to them. For others, they might have few direct reports, but be very influential in the direction of the business.
If there is a key engineer, salesperson, or financial person whose skills are unique and above and beyond everyone else’s, it doesn’t hurt to give that person a title to show how much the company appreciates their contributions overall. Just watch out for giving out too many titles like director, VP, or executive, else they become meaningless.
And when hiring a new person or promoting someone, its always safer to give them a lower level title and then promote them after they prove themselves capable and loyal to the organization.
Finally, this flows into an observation I’ve had over the years. Some people who work for an organization are rapid learners, and their skill sets and abilities increase over time. The managers have to recognize this and reward that person through raises, promotions, and recognition, or else the person will get dissatisfied and leave.
And that sales rep that I trained in the industry then demoted? He went to go work for a competitor and did very well there.