With compensation budgets tight, employers turn to titles to entice talent

Dive Brief:

Companies are increasingly relying on job titles to attract, retain and reward talent — a strategy that has skyrocketed from pre-pandemic days, according to management advisory firm Pearl Meyer.
Of the more than 400 public, private and not-for-profit organizations that responded to a survey, 54% said they are leveraging job titles to attract prospective employees, a 35% jump from 2018. Nearly four in 10 (37%) of respondents said they are actively applying titles as a way to retain key employees, up from 27% in 2018.
In the face of a potential economic slowdown, a growing number of companies (13%, an increase of 62.5% since 2018) said they’re deploying job titles to retain and reward existing employees “when funds are limited.” Recognizing that employees find meaning in rewards beyond pay is a positive development, Susan Sandlund, the firm’s managing director and leadership practice lead, said in a statement announcing the findings. But organizations should also “focus on career development opportunities and keep a close eye on maintaining positive corporate culture [as] these elements are proven retention tools,” she said.

Dive Insight:

Competition for talent has spurred employers to inflate job titles as a way to lure candidates and keep key employees, one executive search professional previously told HR Dive.

Part of the perceived need to do so is generational, with younger employees seeing impressive titles among their peers and pushing more quickly for advancement, he said.

While the popularity of colorful pre-pandemic titles like “customer service ninja” and “office guru” — eye-catching but often ill-fitted — may have faded, any job title that doesn’t correspond to actual duties may pose problems such as morale issues.

Like duties, compensation shouldn’t be an afterthought either, Sandlund suggested. While “job titles can be practical tools for employers and compensation professionals,” she said, employers should not rely on them “as a strong retention tool unless they are backed up by a pay increase.”