Peter Principle

Titles and promotions

March 16, 2011: 11:15 AM ET

It's not silly formalism. Startups that don't develop a consistent approach to job titles and promotions do so at their own peril.

Shatner as Captain James T. Kirk, in a promoti...

Kirk didn't have the appropriate title for rapper Big Daddy Kane. Image via Wikipedia

By Ben Horowitz, contributor

"Hmmmmmmm . . . now what's a title to fit me?
a champ like Tyson, a captain like Kirk, no Employee of the Month
'cause yo, I do work"
-Big Daddy Kane

Often when I meet with startups, the employees have no job titles. This makes sense, because everybody is just working to build the company. Roles needn't be clearly defined and, in fact, can't be, because everyone does a little bit of everything. In an environment like this there are no politics and nobody is jockeying for position or authority. It's rather nice. So why do all organizations eventually create job titles and what is the proper way to manage them?

Why do titles matter?

Two important factors drive all companies to eventually create job titles:

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