Let’s talk about job title inflation.

Mark’s company is growing fast.

In fact, they’re eclipsing last year’s total revenue before the end of Q3 this year.

With three locations and robust marketing activities bringing in new customers, sales are humming.

But Mark is wearing multiple hats: owner, CFO, VP of Sales. It’s starting to wear him down, and he’s now becoming a bottleneck on the administrative side. Administrative work isn’t getting done until much later than it should, and sometimes missing pieces are only discovered by accident.

It’s costing him time and money — and he knows it.

His solution? Shift tasks to his existing team.

Sounds great, right?

His first move is to have his purchasing clerk trained by their outside CPA to be their CFO (Chief Financial Officer).

Womp, womp.

He’s giving his purchasing clerk tasks and responsibilities that typically belong to a CFO with a degree in accounting and many years of experience in the field. He expects them to contribute to the organization as a CFO, helping with risk mitigation, long-term strategic planning, investment strategy, budgeting, forecasting, cash flow analysis, growth planning, and more, but that’s not going to happen.

You cannot expect a person to just pick this stuff up and run with it. It’s detrimental to your organization, and it’s detrimental to your bottom line.

That, my friends, is job title inflation.

You’ve given someone a title they’re ill-equipped for and created an expectation (both inside AND outside the company) that they know what they’re doing. A title like Chief Financial Officer comes with the expectation of years of experience, high-level capabilities, and a well-honed business acumen.

Other people will expect you’re playing at that level, too. And when you aren’t (because it will be very obvious), that misalignment is going to cost the organization. It’s not going to instill confidence in anyone relying on that CFO’s numbers or decision-making, and it will serve to tarnish the company’s reputation (along with that of the over-titled incumbent).

Think this is an outlier? I wish it was.

Here’s just one other example, but I see this All. The. Time.

Sally’s firm’s growth stalled after recording its highest revenue ever last year. Like other firms in her industry, they struggled to attract and retain top-notch talent – which was costing them time, money, and the ability to deliver client projects on time and at the level of quality clients expected.

Basically: it was a revolving door, especially with their office manager position.

They hired a new office manager and charged him with doing client billing: the gatekeeper of top-line revenue activity in the financials.

This is the number one most sensitive task as it relates to company revenue, but
this person doesn’t have adequate training to be able to do it…yet.

This person is also being asked to take on the payroll processing activities, but he has no financial background (he does have an MBA, but I’m certain payroll was not one of the courses in that curriculum!). There’s a lot of compliance and reporting that has to happen in the payroll area, as well as a lot of money flowing through there (it is the #1 highest expenditure for the company each month).

If hours and bonuses aren’t recorded properly, if someone is let go, or if someone isn’t onboarded properly, it’s a big deal – for the employee AND for the company.

You can’t afford to make mistakes in these sensitive areas. You can’t afford not to record your billings properly (affecting the money you bring in) or mess up your biggest outbound cash item.

Office managers can do these tasks – but the huge caveat is that they need either to show up with the skills or we need to provide proper training before giving them free reign. Giving someone a title doesn’t give them the ability to do the job tasks.

Most business owners don’t think about these danger areas until mistakes are made and it costs them real money. Hear what I’m saying: let’s think about it now. The risk to your company is real. Is this risk of financial loss a risk you are willing to take?

Job title inflation is a significant problem for business owners, especially in financial functions. It’s easy to fall into the trap of adding new titles to make a department feel more advanced or make people feel more important. Business owners often give titles in lieu of giving raises or in addition to very small raises. But there are so many risks and downsides that can eventually hurt your bottom line.

So, here’s what you should do instead of inflating job titles:

Give roles the right titles and invest in your team’s development and training.

Or better yet, hire the right person in the right role. If you need a controller, hire a controller. It’s not worth the money you’ll save by cutting corners, along with the frustration of having to hire (and fire) multiple times for making a wrong hire.

Focus on efficiency and productivity inside to help you close the revolving door. This starts with investing in training for your team members. Start by assessing what the needs are and put training in place to address the skills gaps.

Take care of your people! Show them how much you truly appreciate them and the skills they bring to your company.

And call us. We can help you determine who you need to hire, where your organization’s gaps are, and what level of financial management professional you need on staff (or outsourced) to help you achieve your business goals.


Your CPA Shouldn’t Be Your CFO!

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