Inflation and the Wizard of Organizational Success
By Joy Lynn Hyer, SPHR, SHRM-SCP, CCP, Senior Compensation/Survey Analyst
Published August 1, 2023
While the US inflation rate continues to decline, there’s another type of inflation that employers should be concerned about. It’s one that recruiters and human resources professionals know all about. Job title inflation is the practice of assigning an employee an extravagant title that exaggerates the skills and responsibilities of their job.
Title inflation happens for several reasons and is not a new practice. During the last recession, many organizations awarded inflated job titles because they were unable to reward employees financially. Now, it’s happening again as a result of the Great Resignation and corresponding recruiting challenges. Unfortunately, this practice may end up creating more issues than it solves.
Some employers are using it as a recruiting strategy. According to a recent study by Pearl Meyer, 54% of employers are leveraging job titles to attract prospective employees. It also revealed that one-third of those surveyed are using titles to reward current employees, a 74% increase from their 2018 survey. However, without a related pay increase, the new title is not likely to be an effective retention tool.
Title inflation can be detrimental to an employer’s culture, create confusion among applicants, cause internal conflicts among employees, and be frustrating for a new hire whose duties and responsibilities do not match the lofty title. This can lead to longer than usual times to fill open positions, higher turnover, and decreased employee morale and motivation.
Before you consider this strategy to attract, retain, and motivate employees, here are some questions to ponder.
- Do your job titles accurately convey your organizational hierarchy?
- Do the responsibilities of the job match the title?
- Are compensation rates commensurate with the title?
- Will an inflated job title alone recognize or reward current employes?
- Will your job titles help retain current employees?
- Will your job titles attract prospective employees?
- Will prospective employees understand the job they’re applying for?
- Will qualified candidates be deterred from applying because of the title?
Title inflation can mislead employees and applicants and unintentionally damage an organization’s reputation. Be open and transparent with your titling practices, and don’t let inflation get out of control.