Here's a hot potato - job titles! In the context of startups job titles are usually considered a minefield. Most people look for a career in startups due to the potential to play a larger role and wear multiple hats. And because small organizations should avoid managerial layers and hierarchies, job titles are often perceived as irrelevant bureaucracy. The result is that early stage companies usually pay very little attention to the structure and process of job titles. There are companies out there like Medium and Zappos who have managed to go completely without titles. But in the context of those firms removing titles is just a small part of an organizational vision about eliminating hierarchies and having a more dynamic structure - an organizational approach called Holocracy, which requires its own set of highly disciplined leadership. However, most of us still operate in traditional environments where we rely upon org charts and static roles, and if you're building or operating in such an environment I'd like to point out some important notices about job titles and why you should think about them early during your company's lifecycle.
Communicating opportunities. The main purpose of a job title is communications. Often this communications represents external and internal expectations about each team member. External expectations involve authority and expertise within your company. Internally they can be more granular and could be responsibilities and ownership, management of other team members, reporting lines, salary bands, etc. In a small team this communication is often not critical as everyone knows who does what, but as your organization grows this communication helps to channel internal conversations to the right people in your daily operations. These are all benefits which can help your day-to-day business. However, the most important communication carrier job titles represent are internal career paths and growth opportunities. Communicating such career paths is an essential component for creating a meaningful existence for your employees, as it shows a way forward. Employees are less likely to feel their wheels are just spinning. People, who understand their career paths, can set goals on what to achieve and learn to take the next step. By measuring and increasing transparency in their progress they become more self-fulfilled, more motivated and long-term engaged. Hence, if you define, manage and communicate job titles well, you have created a parts of a long-term and transparent development plan for the organization to minimize employee turnover.
It doesn't matter = It does matter. People care about their job title. That's a fact. Many will say they don't, and that it's the actual job responsibilities and growing within the team that is important. This is often true during the recruiting process, meaning you won't win a certain candidate simply by giving them a specific title. Don't try that, as any decent candidate should be smart enough to see through the labeling and truly understand the expectations on the role and make the decision based on that. But a large part of people's identities lie in their job, and its title provides a quick summary of your professional life to yourself and to others. It's something people attach to their own identity and person. It's how you professionally introduce yourself to others. And it's how you professionally think about and see yourself. It's often communicated online not only with your LinkedIn, but also Twitter, Facebook, etc. Hence the title matters much more for the employee than the company. Anything of such importance for the employee should be managed with caution and respect by the employer. Don't wing it!
Don't inflate. Early in a company's lifecycle the first hires often get heavy titles such as Chief of X or VP for Y. The logic makes sense, because there are no others in the organization and each person have to fill some pretty large shoes. However, as mentioned above, the titles are also carriers of expectations. Over time as your organization expands the early hires you brought on will have to grow and qualify into those expectations. Many times people punch above their weight-class and rise to this challenge, but not everyone and often it takes some learning and time. Hence, a heavy title early on involves a reasonably high risk for the employee in case they do not fit into those expectations over time. Even if your early hire, dubbed CMO, was awesome at tactical marketing activities and did exactly what you needed during the first 12 months, they may not have the leadership or strategic experience to build a full-fledged marketing team with vastly different requirements. In this instance when you need to hire a more experienced marketer you will have to re-label your early CMO to Director of Marketing. Even though the person was great, it can easily be interpreted as poor performance and a demotion. The signal this sends into the organization can kill motivation. And the exact opposite exists; in case you hired that first marketing person as a Director or Marketing who turned out amazing and later on was promoted to CMO. It's so much easier and more effective to promote and push people up in the opportunity latter, rather than down. Hence, just because it's early don't inflate titles. Make sure early employees can continue to rise in your organization, align job titles to realistic expectations of their skills, and be very cautious labeling team members as CxO and VP titles.
Avoid being unconventional. If I've convinced you about the importance job titles functioning as a tracker for people's career, it may be easy to understand why I'm generally not a fan of "X Ninja" or "Y Guru". These alternative titles may reflect a casual and playful company culture but that is something a company could address in many other ways (values, communications, design, etc.). But they basically mean very little in the larger context of aligning people to a long-term professional path. They are simply confusing. People searching for a new job may not find them and it's much harder for people to fit those titles into their overall career path. Unconventional titles often also tend to be inflated and pretentious (what's next after becoming guru?). Hence, don't try to outsmart titling and create your own reality. Your company operates in an ecosystem where you provide employment opportunities for top talent, and you have to consider how title semantics actually fits into such a context.
In summary, I really hope to see more companies pushing the envelope on the Holocracy and other organizational structures, which tries to solve challenges with politics and organizational agility. But as long as you operate in a more traditional environment, I can't stress enough not to act sloppy around job title labeling for the purpose of looking non-bureaucratic. Instead use it to your strength, by communicating the purpose of job titles to your organization and set the right expectations.