The Relevance of Employee Titles
CEO, CFO, VP: Are these acronyms even important in the early days?
Q: What do employee titles mean?
A: This is one of those things many new entrepreneurs waste a lot of time on. They start a company and immediately get caught up in who should be president, CEO or vice president, not understanding that in the early days, titles aren't important. Titles can become more useful as a company grows, but initially it doesn't mean much to be director of business development or VP of operations for a two-person company. When you start out, don't get caught up with titles-spend your time getting new business and making sure you deliver quality in the business you have. As your company grows, there will be plenty of time to organize your titles and positions.
That said, let's take a look at how larger companies use titles. Unfortunately there isn't a lot of consistency here. Some companies give several titles to a particular person, some have a person for each title, and some change the title of a position to fit the skills of a particular person. Here are a few thoughts to help you understand titles more clearly:
Board of directors: A board is a group of people elected by a corporation's shareholders to oversee its business and appoint its officers. The person who leads this group is the chairman. The CEO of a company often serves as chairman. The members of a board are called directors. Many companies also use the director title for middle-management positions such as director of human resources or director of operations.
CEO/president/COO/CFO: In many companies, the CEO and president titles are filled by the same person. In the cases where they are not, a good way to think about it is that the president is an inward-facing position and the CEO is an outward-facing one. The president is responsible for running the company-managing the employees, overseeing sales and marketing, making sure the bills get paid, keeping the employees motivated, etc. The CEO is responsible for dealing with the press, vendors and strategic partners. He or she spends more time on the overall strategy of the company. The CEO would typically spend time networking, looking for chances to tell the company's story and finding business opportunities. Another way to look at this is that the CEO is responsible for articulating the company's vision/strategy and the president is responsible for executing it. In some companies, the president and COO (chief operating officer) are different people. In those cases, the two positions usually split the responsibilities described above. Many companies also have a CFO (chief financial officer) who is responsible for the overall financial health of the company.
Vice president/director/manager: These are names for different management positions. In a large company, a vice president usually manages a division or at least a large group of people. In a small company, the same basic position could have any of these titles. For example, if you work for a 15-person accounting firm and your job is new business development, you would probably be equally effective as manager, director or vice president of business development.
Information technology: This function can be pretty confusing because there are so many names for it, and different titles for the people who run it. Most people think of this as the group that is responsible for keeping the computers and network running and managing corporate data. The organization often has different names: IT (information technology), IS (information services or information systems), MIS (management information systems) or CIS (corporate information systems). The person in charge of this function can have many titles: chief information officer, director of information systems, vice president of information technology, etc. Some companies would also include these responsibilities under the CTO (chief technology officer) title, but most would view that position as responsible for overall product architecture or technical direction-an outward-facing job.
Remember that different companies have different philosophies about titles. A vice president in one company may have the same responsibilities as a director in another company who may have the same responsibilities as a senior manager in a third company. In your company, you want to pick the title that makes the most sense to you and your customers.
Keith Lowe is an experienced entrepreneur who is a founder and investor in companies in several industries. Lowe also mentors new entrepreneurs; serves as past chairman of the board for Biztech, a nonprofit high-tech business incubator; and is a co-founder and officer for the Alabama Information Technology Association.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.