A methodology to define which roles qualify as “Executive”

In today’s Reader Question, a while ago, one of my former colleagues reached out as he was about to embark on a new project : “I’ve moved on to a technology company from manufacturing and enjoying the challenge. Just curious if you have an example of criteria for defining Director or VP roles within any of the organizations you have supported? We find ourselves growing and the old approach to assigning titles had no criteria.”

Now that is an interesting question ! I’ve never seen any formal or rigid criteria to define Executives but here is what we did in my previous companies.

First of all, establish the “proper” grades for each role based on the job grading methodology of choice within the organisation (Hay, Towers Watson, Mercer, Birches etc).

Basically a top manager would be someone leading a major function in the organisation and reporting to the CEO or COO. So maybe the head of Facilities Management would not be a Director/VP if he would report to HR or Finance.

Usually a large population to manage, a strategic function to lead in support roles (even if headcount may be lower than in operational roles), and the role/job responsability being focused on setting the direction for that function also were taken into account.

This pretty much defines your top management. There usually was a formal panel to vet which roles were to be considered as Executives, and then any addition would be approved by the Board.

In many cases the Executive definition stops there. But the company may be large or quite complex.

Then it is a question of the organisation deciding how “deep” down it wants to go in order to define Executive/VP/Directors roles. One level below top management ? Two levels ? You can check the headcount statistics. You should see a natural “tightening” in numbers of people in certain grades, which can be a good indicator of potential “VP-worthy” level. Of course there are exceptions, for example the Personal Assistants of top management are scarce and direct reports to top management, but definitely not Director material…

Finally we would check with our compensation provider to see which roles they consider as “Executives” or not. They usually also have quite good feedback and benchmarking information on titles especially if they are industry-related. For example a VP in Microsoft was really one of the top positions in the company, while in banking, a lot of people are VPs.

Implementation sometimes presents its own set of challenges, especially if you find yourself “downgrading” certain roles.

So we would also look into having a “business title” (the external one for the business card) and one or two “internal titles”. The simplest internal title is a somewhat coordinated title that sometimes also reflects a job grade eg all “managers” are grade 5, all “senior managers” are grade 4 etc… while the full “official” internal title defines the actual role help by the person.

And in some cases we had a “personal title” as well, linked to a “personal grade”. This one was usually a way to manage legacy after a re-grading exercise, where some people may have been in a grade higher than the one that they should normally be for the role. Instead of demoting them we would red circle them, let them keep grade, salary and benefits, and when they moved on to another role, replace them by someone in the “right” grade which then did not need a “personal grade” as this was equal to their actual job grade.

How about in your companiesĀ  ? Which criteria, if any, were used to define Executives ? Please share your experience in the comments section !

 

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