Every company that is successful eventually runs into a problem which my favorite business-comic strip Dilbert pokes fun at in the two latest strips:
Think about it. How many large companies do you know of where there isn’t a massive layer of mysterious “vice presidents” (or some other equally meaningless-sounding title of doubtful seniority)?
This isn’t to say that all these positions are filled with useless people, or that distinctions like “senior vice president” and “executive vice president” and “associate director” aren’t important, but this proliferation of senior-sounding titles is indicative of companies facing a “mid-life crisis”, where the promise of massive growth and exciting future job prospects are no longer certain enough in order for a company to retain all of its talent.
As a result, companies are forced to create these new levels of management to keep their good people, either because there are not enough positions of seniority for these people to be promoted into or because they are being drawn by other companies/competitors who have already made the jump into “vice president land”.
This practice, in and of itself, is not in and of itself a bad thing. After all, why shouldn’t a successful company make a minor concession like this to retain talent? But, the problems emerge when:
- These new positions add new layers of bureaucracy that muddy up what used to be a very clear decision-making process and make the company less agile
- These new positions create “organizational bloat” — where costly and inefficient “manager” positions are created which don’t actually manage anyone or which manage departments/groups of little value
- These new positions allow senior managers to play politics with promotions and/or lower promotion hurdles, lowering the talent/efficiency of the company overall
While there is no easy way to tackle all of these issues (and, in my mind, the fact that companies feel they have to create these new “vice president” positions feels like a cheap cop-out to me), it is something for all general managers/consultants to be aware of as many companies suffer from the dilemma of keeping a company lean and efficient and yet retaining the talent/size that they need to grow.
(Image credits – Dilbert)