For any title level in a large organization, the talent on that level will eventually converge to the crappiest person with the title.
The rationale behind the law is that the other employees in the company with lower titles will naturally benchmark themselves against the crappiest person at the next level. For example, if Jasper is the worst Vice President in the company, then all of the Directors will benchmark themselves against Jasper and demand promotions as soon as they reach Jasper’s low level of competency.
Further down, he gets into diverging opinions about how to proactively defend against (or disregard) this.
From Marc Andreesseen:
Andreessen argues that people ask for many things from a company: salary, bonus, stock options, span of control, and titles. Of those, title is by far the cheapest, so it makes sense to give the highest titles possible. The hierarchy should have Presidents, Chiefs, and Senior Executive Vice Presidents. If it makes people feel better, let them feel better. Titles cost nothing. Better yet, when competing for new employees with other companies, using Andreessen’s method you can always outbid the competition in at least one dimension.
At Facebook, by contrast, Mark Zuckerberg purposely deploys titles that are significantly lower than the industry standard. Senior Vice President’s at other companies must take title haircuts down to Directors or Managers at Facebook. Why does he do this? First, he guarantees that every new employee gets re-leveled as they enter his company. In this way, he avoids accidentally giving new employees higher titles and positions than better performing existing employees. This boosts morale and increases fairness. Secondly, it forces all the managers of Facebook to deeply understand and internalize Facebook’s leveling system which serves the company extremely well in their own promotion and compensation processes.
He also wants titles to be meaningful and reflect who has influence in the organization. As a company grows quickly, it’s important to provide organizational clarity wherever possible and that gets more difficult if there are 50 VPs and 10 Chiefs.
I tend to agree with Zuck on this, at least for startups. "Titles cost nothing" is true with respect to doling them out, but the cognitive tax accrues in the hour to hour, day to day, month to month interactions. If Jeff is always worried about how his actions might lead to getting to the next level, if someone thoughtlessly gives Lauren's side more credence in an argument because her Slack bio says "Staff Engineer" instead of merely "Senior"… do all of these things lead to a higher functioning organization? For startups, at least, it's not worth the cost, given that you're on borrowed time to begin with.
Wed, Nov 8, 2023