Title inflation is hurting employee career growth and company morale

• Title inflation has been on the rise for two years, enticing workers with meaningless labels.
• It's a Band-Aid-sized fix for large sores plaguing employees, like pay disparity.

The war for talent and continued economic uncertainty have prompted many firms in the past two years to attract and retain workers with hefty — but meaningless — titles like "head of innovation" or "senior vice president." That can surely boost an ego, but these titles often come without added responsibilities, promotions, or pay raises.

In fact, while the fancy labels have lured in or helped retain many employees, they've been detrimental to the workers and companies, Shawn Cole, the president and a cofounder of the executive-search firm Cowen Partners, said. In many instances, title inflation is a Band-Aid-sized fix for large sores plaguing employees, like pay disparity and feelings of being undervalued, and have led to problematic organizational charts, Cole added.

Luckily, Cole said, "we've seen a significant cooling" of title inflation within the past few months because companies no longer feel that they have to rely on it to compete. "That's beneficial for both parties because it brings us all back to reality," Cole added.

However, the puffed-up titles don't just go away once they're created. Since 2019, the word "lead" has tripled in early-career tech jobs, "principal" titles have increased by 57%, and use of the word "junior" in titles has been cut in half, Insider reported.

Insider spoke with Cole and John Winner, the founder of the sales and consulting startup Kizen, to understand how the boosted titles hurt employees, job seekers, and companies.

Companies are using title inflation to attract and retain talent and cut costs

The past three years have been tough for the workforce — with a confusing mix of record job openings and high-profile layoffs. But workers are becoming more and more cognizant of what they're looking for in a new role. And employers are becoming more inclined to give them what they want, Winner said.

"Companies are really doubling down on investing in talent and career paths earlier on for people" to identify and retain employees who are excited about what they're building, he said. Oftentimes, that comes in the form of title promotions to indicate growth.

But when a title is inflated "without any other changes in responsibility, or adding more responsibilities and not paying the person more, that's hurtful for employees," Winner said.

And when companies offer new titles without added duties or increased salaries, it can hurt a job seeker's chance at financial growth because of the guise of professional growth, Cole said.

What's more, employers are leveraging inflated job titles to cheat employees out of $4 billion a year in overtime pay, according to a study by researchers at Harvard and the University of Texas at Dallas. That's because federal law requires employers to pay workers for their overtime hours unless they're classified as salaried managers, and some companies are using the loophole by giving inflated titles to low-wage workers.

It's also confusing companies

This trend isn't harming just employees but also companies, Cole said.

"They may have invented titles that don't really fit within the org chart, and now, theoretically, they're stuck with them," he said. "If they want to do a title reset or a reorg, that becomes problematic."

They've also created roles that work only in a specific setting, as opposed to ones that are transferable across departments or companies, he added.

Sometimes, in an effort to boost a single employee, the tactic has damaged company morale, Winner said.

"If it's not consistent across departments, people will start questioning the title structure as a whole," Winner added.

Employees should be wary of inflated titles

It can be enticing to opt for a seemingly higher title, but job seekers should be aware of the way inflated titles come across on applications, Cole said.

For example, it puts interviewers in an uncomfortable position because they have to verify whether the "director" role listed meant they actually directed anything or figure out what their inflated title equaled in another workplace, he added.

"Some folks just aren't going to get interviews because a hiring manager's going to see a title and they won't take the time to look at their job responsibilities," Cole said, "or be thoughtful about how big their company was to try to understand how it translates."

In one analysis by recruiting platform Datapeople, assigning the title of "senior" to positions that are actually junior financial analysts resulted in 39% fewer qualified applicants, Insider reported. In these cases, junior-level candidates see the high title and assume they're unqualified, while senior-level applicants read the job description and understand they're overqualified.

"It makes for a very inefficient recruiting process," Maryam Jahanshahi, the head of R&D at Datapeople, previously told Insider.

Instead of falling for glamorous names, job seekers should focus on building their résumés to reflect transferable skills without being entirely dependent on the title, Cole said. While it can feel validating to get a title bump, there are better ways to determine whether a company appreciates your role, including benefits, flexibility, and salary.

"Both parties are fooling themselves if their only way to make employees feel appreciated is by making up fake titles," he said.