Who's the chief?

Virtually all large companies will have a chief executive officer, a chief finance officer and a chief operating officer. Many will also have a chief technology officer and a chief marketing officer.

by Knowledge@Wharton
Last Updated: 23 Jul 2013

But according to Knowledge@Wharton, companies are becoming crowded by an increasingly diverse array of chiefs as the title is attached to more and more job functions. These include chief talent officers, chief cultural officers, chief innovation officers, chief privacy officer, chief reputation officer, chief apology officer and even chief geek, according to an article published on the web site this week.

The superabundance of chiefs may seem on the surface to be a symptom of what Knowledge@Wharton calls ‘job inflation'. Like teachers who liberally bestow ‘A' grades on too many of their pupils, companies are cheapening the prestige of the top positions by throwing C-level titles around like confetti. But according to Betsey Stevenson, professor of business and policy at Wharton, this may be an inevitable reflection of corporate restructuring. She says that job inflation "may go hand-in-hand the flattening of the organisation. People want to be distinguished in some way from everyone else, but in a flat organisation there is less hierarchy and therefore less opportunity to be distinguished. One good thing about hierarchy is you can climb a corporate ladder. If there is no ladder, there is nothing to climb."

According to Peter Capelli, director of Wharton's Center for Human Resources, title inflation goes back to the 1970s, when wage and price controls meant that companies could not give employees a salary increase beyond a certain level, so began to use promotions as a way of making up for it. Companies, he says, have figured out that "many times it is easier to give people a title increase than a raise increase".

Sarah Kaplan, a Wharton management professor, says that the reason many companies give out chief titles is to "signal the importance of an issue to the corporation. So you have a chief diversity officer because the company realises that diversity is an important initiative. And the way to signal that is to create a C-level job to implement it." In addition, Kaplan says, "It might also be signalling that the job is more than just an operational one, that there is something about it that is strategic." The problem with this, Kaplan adds, "is that now [all the companies] are doing it…now everybody is strategic. So at some point, companies will have to create some other term."

Stevenson offers a more psychological explanation. She asks whether the people pushing for higher titles are "the same ones who, as students, pushed for ‘A's and caused grade inflation. Now they are making it into the corporate world and they want big titles." She cites a study that looked at students from the 1970s to today and concluded that recent entrants into the job market are much more spoiled and self-absorbed than their predecessors. The new chiefs could be "part of what is an increasingly narcissistic generation".

Source: Knowledge@Wharton
Review by: Nick Loney

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