US News says that companies sometimes give titles instead of raises to save money. So instead of giving Bill an extra $1,500 a year, they leave him at the same salary but make him a "Senior Manager" instead of a "Manager."
Banks are notorious for making everyone a "vice president" -- even people with little experience -- versus giving them a decent pay bump (or at least I assume that's why -- maybe it's really because people think they're better taken care of if they're dealing with a "vice president".) I wonder if there are other industries that do this as well. Maybe financial services (for the same reasons banks do it)?
I've known people who really wanted a title increase -- so much so that they would forego a salary bump. But I'm assuming that most people (me for sure) would rather have the money. How about you?
I would enjoy a pay bump more, but still being relatively new, I'd take a title. If he company continues not to give raises then can move on and perhaps the title can help me get a bigger bump up on my next job.
Posted by: Green Panda | December 17, 2008 at 07:20 AM
I prefer the salary increase. Having said that, when I am working on projects that involve overseas companies, I find that a new title helps. Especially in asian corporate culture, it takes a week to recieve an answer to simple engineering inquiries when they come from a "process engineer", but make that title "technology supervisor" and days are cut off. My compnay has found that "manager" level titles demand next day responses and "v.p." will get same day responses in most cases.
Of course rather than hand out a miriad of titles to every engineer, our compnay has created a small number of business cards which has our title set to technology supervisor or manager depending on years of engineering experience for instances with dealing with our asian partners. It helps that our department will print business cards on an as needed basis rather than order them from a provider.
Posted by: ladam8518 | December 17, 2008 at 08:10 AM
I think changing a title (level up) without a salary increase is akin to buying premium fuel when it's really regular gas (the name of the gas has changed, but when it comes down to it you're still getting regular gas).
Posted by: Scordo.com | December 17, 2008 at 08:29 AM
One advantage to getting a higher title is that it can help you get another job at a higher grade with another company. Switching jobs is often the best way to increase your salary.
If someone was willing to make me a Vice President without getting a pay raise, I actually think I would do it. The amount of money I could make by switching jobs would be a lot more than the raise I would get from my company.
Posted by: Fred @ Online Banks Blog | December 17, 2008 at 08:42 AM
This very thing happened to me several years ago. At our company a promotion generally came with a 2% increase in addition to the merit increase.
I sat down with my boss who said "I have some good news and some bad news". Got a promotion, but not the 2%. My feeling is that promotions are nice but they don't pay the bills.
Posted by: headknocker | December 17, 2008 at 09:17 AM
A more senior title usually implies more senior accountability. Personally, I doubt I would accept more accountability without more compensation.
In the banking/investment industry the formula used to calculate your bonus (or even the bonus structure itself) changes when you move up a level to VP. Therefore your salary may not increase, but your bonus could increase from 10% to 30% of your income. Stock options and employee share ownership incentives may also change at that level.
When I was starting my career in banking (many moons ago!) I worked in a branch and we had an employee who's job was to deal with irate clients and client concerns. Pay scale wise, he was paid equivalent to a head teller, but his title was manager so clients would believe they were dealing with someone who had authourity.
Posted by: Money Minder | December 17, 2008 at 09:42 AM
I'd prefer to be the highest paid sh!t shoveler in the world than the lowest paid CEO. :)
Posted by: SUSAN | December 17, 2008 at 09:47 AM
You can call me a slave as long as you pay me well. Screw the title, give me the money.
Posted by: Kevin @ The Money Hawk | December 17, 2008 at 10:30 AM
Depends on the industry. In mine titles of senior counsel or partner get you more credibility instantly because they are seen as some stamp of approval. Helps in generating new business. That said, a title isn't going to pay the bills. But I wouldn't write off entirely the benefit of a no pay-increase but change in title promotion. Depending on the field, it can be a benefit (albeit typically marginally).
Posted by: | December 17, 2008 at 10:30 AM
Think it depends on the persons ego. I could easily see how a bigger title means more to some people, they can brag about it. For me, I could care less what my title is if I had the salary I desired. I work at a small web start-up, and relatively can have any title I desire. For me it means nothing, just a title. Think most people would rather have the money.
Posted by: Craig | December 17, 2008 at 01:44 PM
I would rather get a raise, than a title. I agree, in banking there are alot of VPs, but sometimes the title is a "marketing title" vs. a "corporate". If it is a corporate title you are legally able to sign certain docs on behalf of the bank. Marketing titles help customers feel they are talking to someone with authority.
Posted by: third fourth | December 17, 2008 at 02:19 PM
Assistant to the regional manager.
Posted by: | December 17, 2008 at 07:41 PM
In the IT industry, especially consulting, titles actually don't mean that much. I've seen people promoted to "manager", even though they don't have anyone reporting directly to them. The manager title is provided just because it's the next step on the ladder. Technology in general doesn't try too hard to equate titles with skillsets, knowledge, or experience. The title only fits with how much money you make. And in many companies there is a lack of titles for those who don't pursue a career path in management. It's as if HR decided that everyone, even an experienced engineer, has to be a "manager" at some point just to move up.
Posted by: Brett | December 17, 2008 at 08:40 PM
My knee jerk response is a fancy title won't pay the mortgage. We could assume in this economy that people are more likely to welcome an increase in pay than a fancy title. But depending on where someone is on their career path, they might be able to create future opportunities for more wealth if they leverage an impressive title into a higher paying position at another company.
Posted by: Wayde McKelvy | December 18, 2008 at 02:02 AM
I work at a 100% commission-based company with about 1000 employees, and have been offered various management positions throughout the last five years, but have declined them all. Why? Because unless they make me VP of Sales for the entire company, I'll earn less (managers are salaried). Plus, I love the camaraderie of us peons. I've worked management positions at other companies before and hate the fact that big brother's watch glass is always on you...so I just laugh when pompous middle managers have an attitude, and tell them, much to their dismay, that I've been offered their job (or better) over 5 times!
Posted by: Erik | December 18, 2008 at 07:35 AM
Take the pay increase and just start calling yourself some type of manager name and change it on your email signature.
Posted by: Andrew | December 18, 2008 at 09:31 AM
in short
money talks, titles require a reader.
Posted by: aaron rosier | December 18, 2008 at 10:17 AM
I was a General Manager / Managing Director for a British company with 600 people. I took a lateral move to become a CEO for a small private manufacturing company, about 1100 people when I joined.
Now there is a huge market downturn and I am laying off the operation to scale down to 300 people (we are having a 70% drop in sales- it's really ugly).
I figure I should be able to get a VP or CEO / COO title in the future and this is great experience.
The company is in SE Asia and I'm 35 years old. I'm the same guy who wrote several posts on how to keep growing your career, the Engineer.
-Mike
Posted by: Mike Hunt | December 19, 2008 at 11:14 AM
Susan,
I'm pretty sure the lowest paid CEO makes more than the highest paid sh!t shoveler in the world :-)
Posted by: Santos | December 19, 2008 at 04:06 PM
Santos,
I'm not sure about that... a lot of CEO's are taking $1 salaries now that they've gotten taxpayer money!
-Mike
Posted by: Mike Hunt | December 20, 2008 at 12:51 AM
...and then is the folks like me. I took a step back in title and "prestige", only to being offered a 14% salary increase to do it. I'm past the ego-building stage in life. I'm more about landing where my skills and gifts have the greatest impact in the organization. I look forward to going to work, produce results, and see the $$ come payday. That's okay with me.
Posted by: JeffrO | December 20, 2008 at 10:19 PM
Really? I'm surprised that it's all about the money. If I get a payrise, nobody would know that I am valued, whereas with a promotion it's clear that I am.
I'm sure research has suggested that most people are not primarily motivated by money - people who are good at commission work are often (but not always) an exception to the rule.
Posted by: plonkee | December 22, 2008 at 08:37 AM