Title Inflation and the HQ Policy

I’ve been honored today by a reader who wrote in a question about “title inflation”. Said reader gave permission to post this conversation, but I’m changing the names in order to protect the innocent and the guilty.

The reader’s name will be called “Frank”. Frank works for a branded consumer appliance company in Shenzhen; I do not know if its a factory or a sales-office however. Frank wrote:

I just saw your blog post about “Title Inflation” in China offices. [links added by me] This is a subject that I am wrestling with …. I work in a Shenzhen office with about 50 China nationals as staff. Our issue is that our US based corporate office wants to standardize job titles with the China office. This is leading to a competitive dis-advantage as our hiring pool is based on “better” titles than corporate is willing to use. Have you seen anything similar? Do you know of any resources available I can use to argue my case? Thank you in advance.

My response:

I’m honored that you contacted me about this. [...]
Question: is HQ suggesting that existing personnel’s titles be changed to fit the new policy? If this is the case,… you have a potential disaster on your hands. Even if the issue is just for new hires, you will have big problems. I have heard of many companies that strictly use their HQ definition on titles…and there is not usually much problem there. I have never heard of any company retroactively changing title names.

If you cannot convince your HQ from revising the policy, then one solution – which is rather a bad side-step solution – is to change English title names, but not the Chinese. This is sort of like fooling your HQ, but it will at least keep your workers from revolting…maybe.

I also included links to some articles that mention Title Inflation, which are included at the end of this post. Evidently, I misunderstood what is happening at Frank’s company. The HQ policy was that future pay increases should not mean increase in title role, unless an employee was being promoted to a position which fit with HQ’s role definitions.

Frank wrote:

[...] HQ is not suggesting we adjust current salaries, only on a go-forward basis. This does mean however, that a promotion would not result in a title change, only an increase in salary. In a hierarchical culture where career advancement and titles are so important, cash is only part of the total package. [...] I did see a link to a book “China CEO, voices of experience from 20 International business leaders” that talks about this briefly. They also suggest using a different title in English versus Chinese …. I truly do not like that idea.

Actually, I understood that adjusting current salaries is not in the cards…that would spark armed rebellion anywhere. Frank’s company HQ policy makes sense, as long as it does not create a situation wherein two or more people have the same actual position responsibilities, but have different title “levels”. Salary adjustments should be performance based, while title roles reflect responsibilities.

However, other problems can arise because of the HQ policy. Off the top of my head, I see two potential problems:

• Employees “drawing the box” tightly around their title, and thus refusing to take on more responsibilities, even with higher pay.
• Inability to use higher title to motivate an employee to take on more responsibilities, when cash salary increase is not an option due to budget reasons.
• Increased pressure to spend much more resources on employee development because advancement non-salary advancement is now more limited.

Anyone else have advice for Frank?

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Reference Materials

From Huffington Post, March 23, 2009
http://www.huffingtonpost.com/tom-doctoroff/china-vs-japan-two-cultur_b_178263.html

From Workforce.com
http://www.workforce.com/section/09/feature/24/80/98/index.html

Published by DDI International:
http://www.ddiworld.com/pdf/leadershipsuccessinchina_chapter1_bk_ddi.pdf
(This link is for a PDF article that has a short paragraph about title-inflation in China. I actually think most of what DDI is over-priced and over-rated, but it is a name which demands respect from corporate HQ types.)