In less racially enlightened times the description, “too many chiefs and no indians” was used to describe a top heavy management team or work situation. While I would not recommend using this particular phrase today, entrepreneurs would do well to mind its message. Beware of approaching investors when everyone on your team is a Chief Officer.
Over the past few decades large corporations have created many new executive roles. Mostly of the “Chief” variety. Often, these individuals have been charged with addressing a recent (market) development or challenge. As an example, many pandemic-impacted firms now have Chief Medical Officers. Similarly, untold others have executive teams that include a Chief Sustainability Officer. It’s trend that has flourished, allowing large companies to address pressing problems while rewarding and attracting talent. Gone are the days of the big three, the CEO, COO and CFO. Today, the list of Chiefs has expanded to include:
Chief Revenue Officer
Chief Digital Officer
Chief Marketing Officer
Chief Technical Officer
Chief Legal Officer
Chief Talent Officer
Chief Design Officer
Chief Diversity Officer
Chief Growth Officer
Chief Remote Officer
Think I exaggerate? According to LinkedIn, hiring for the above-listed titles increased from between 15% and 90% during 2020. Some of these titles may eventually fade away, as has the once popular, Chief Listening Officer, a gray-haired, C-Suite attempt to understand social media. Others will persist. But should they persist in your start-up?
Cash starved start-ups sometimes view titles as a cheap employee benefit. Take this example: “Joe” is pretty good at bookkeeping and spreadsheets and works long hours on many other tasks . . . but he’s underpaid. With no money to pay Joe more, why not reward him with the title of CFO? It doesn’t cost anything.
Actually, it does.
When investors see C-Suite titles, they assume the individuals so designated were chosen because they have the abilities and experience needed for their roles. These Chiefs should be able to manage and evolve as the company grows. Presenting an unqualified CFO or CMO will reflect poorly on you and your investor proposition. And consider the impact on your other employees when “Joe” must be demoted or replaced. It’s an awkward situation that could easily have been avoided had Joe been given a more realistic title.
My advice? Offer executive titles sparingly and maintain a low Chiefs/Total Employees ratio.
Mr. Dragone has spent the past twenty years as an acting/consulting CFO for a number of start-ups in a wide range of industries. Peter’s prior experience is that of a serial entrepreneur, managing various start-up and turnaround projects. He was a co-founder of Keurig, Inc.