Want to Keep Your Early-stage Employees? Don’t Give Them Fancy Titles
In 2017, I was about to make our first business hire. This person was to lead one of our most important functions.
I met with our investors to run it by them. “He looks good on paper, and we are supportive, but whatever you do, don’t make him a VP,” they said.
I pushed back but agreed to follow their advice. Six months later, I understood that advice and was grateful for taking it.
Let me explain why — and a better approach.
Titles aren’t free
Many first-time founders have been through this.
You need to hire someone to lead a function in which you’re not a subject matter expert (that’s why you need to hire them).
Because you’re not a subject matter expert, you can’t estimate how good other people are at the job. The benchmark is low: likely you or someone else on your team doing the job part-time without much prior experience. So you overestimate talent.
You find a person that wants to join, but only as a VP. Compared to your low bar, you think they’re the shit, and hey, since titles are free, you make them a VP.
Six to twelve months pass, your company starts to scale, and now you’ve learned what you truly need in a VP-level executive. You realize you hired someone that is a senior manager or director at best.
You raise your A round, and all your investors tell you to hire a real VP. You need the title back. So now, you must either demote and demoralize or fire your prior hire.
It’s a bad outcome for everyone.
Have an honest conversation
Here’s the truth: In the early days, before you find a strong product/market fit and business model, you probably don’t need and can’t afford a VP-level person.
What you can do instead is hire a senior manager, director, or even a “head.”
You can have an honest conversation with the person you hire, telling them that you might need to bring a VP above them at some point unless they prove they can execute and earn that position.
Then, if that person joins and can’t execute at a VP level, you bring a VP and save their job.
That’s what we were able to do, thanks to our great advice from investors.
Remember: Titles are are easy to give but almost impossible to take back. Preserve people’s jobs and morale by not giving them titles for which they’re not ready.