This is another “oldie but goldie” from Ben Horowitz:
In this great post, Ben first establishes that the best way to mitigate the Peter Principle and “The Law of Crappy People” is by having a clear and disciplined promotion process that’ll maintain a consistent quality bar for people sharing the same title across the company.
He then turns to deal with the tricky issue of the size of titles: should your most senior Product person, for example, be titled Chief Product Officer? or simply VP of Product? perhaps even Director of Product for this matter?
He proposes two approaches:
The “Andreessen Approach” – takes an economic view to titles and argues that of all the different asks employees make of you company, this is one of the cheapest ones to grant. Furthermore, it allows your to keep title in your arsenal. to be used as a tie-breaker when competing for talent.
The “Zuckerberg Approach” – intentionally grants titles that are lower than the industry standard as a way to avoid accidentally granting new employees higher titles and positions than better performing existing employees. It boosts morale and a sense of fairness, acts as a forcing function for managers to deeply internalize the promotion process, and creates a self-selection component in the hiring process.
Though Horowitz seems to side closer with the Andreesen camp, I personally side closer with the Zuckerberg camp. First, because I place a big premium on its benefits (self-selection, reinforcement of clarity, fairness). Second, because I think that there’s another dimension in this comparison that Ben overlooks: as I mentioned when I discussed Turning Your Team, we’re naturally going to find ourselves in situations where people have not scaled as quickly as their roles and we need to hire above them. But in many cases, being able to do so while keeping the original employee with the company can have tremendous benefits. With an “Andreessen Approach” we don’t leave any “title whitespace”, and therefore force the existing employee to either take a formal demotion, or leave the company. And since we’re all prone to loss aversion, the latter is much more likely to happen.
But Ben’s final thought is the one that matters the most: Regardless of which camp you’re in – titles and promotions matter. A lot. If you won’t spend enough time thinking about them, your employees will (obsessing about the resulting inequities).
And therefore, my question to you is: which camp are you in? Team Zuckerberg, or Team Andreessen? 🙂 And seriously now: what have you found to be the key principles of an effective promotion process?