This article originally appeared in the Indiana Chamber Technology and Innovation Council newsletter on July 26, 2017. 

Since I started my first company, Purified Audio, in 1998, I’ve learned a lot, including the importance of small details like job titles. Titles might seem like a minor concern, especially at a one or two-person startup, but the truth is, getting them right is essential to the foundation of any business. This has been especially true, with my current venture, pi lab – and Edwin the Duck, which has gained international media exposure

Giving clear and accurate job titles to both yourself as the business owner and the employees you eventually hire sets the tone for your growth and helps to establish clear swim lanes. However, there are also some pitfalls to be avoided. If you’re trying to decide what your title is, or the title of your new hire, here are some points to consider about the message those titles send to both your employees and the outside world.

What’s in a name?

In the broader business community, a job title is one of the first things your peers want to learn about you. The job title sends a message about the level of responsibility someone has and what duties they’re responsible for at the business.

For example, if someone is called a manager of some department, that implies they’re in charge of managing other employees, while a director might be a one-person department making lots of decisions. It’s important to consider the connotations of a job title, not just pick something that sounds official, impressive, or trendy.

Chain of command

The other goal achieved by giving accurate job titles to yourself and employees is to establish the organization’s chain of command early on. Whether you’re making your first, second, third or 10th hire, ask yourself what their specific tasks will be and to whom they will report. By defining the role and then establishing the title, you ensure the title is comprehensive and specific to their duties.

Lastly, remember that some job titles are accompanied by salary expectations for qualified candidates. Before putting out a call for applicants, make sure you’ve done the research about comparable positions at your competitor companies and know what you’ll need to offer a talented person.

Don’t just talk the talk

Especially at a start-up, the desire to appear robust and competitive can lead to some serious job title inflation. What many entrepreneurs don’t realize is that the disconnect between yours or an employee’s actual life experiences and the implications of a title can be jarring for prospective clients and partners.

For example, if a client thinks they are meeting with your company’s chief information officer, and they walk into a meeting with a 22-year-old who is fresh out of college with no work experience in IT, that sends a message about your business’ competence and legitimacy. Just because someone is your first hire in a specific department or skill set doesn’t mean they should automatically get the highest-ranking title.

Don’t give people job titles for which they aren’t qualified. Just keep it real and genuine, and the titles won’t matter so much, because your success will speak for itself.

Job titles only get more important as a business grows. At first, most people on a team are usually part of sales and generating revenue, but they might take on other duties too as necessary.

With more staff on hand, job titles are essential to delineate who has what duties and who is accountable to whom. Without that organization, your internal team will be less efficient and outsiders like clients will have a hard time understanding how your business functions.

About the Author

Matt MacBeth is co-founder and CEO of pi lab, creators of Edwin the Duck. MacBeth and partner Don Inmon were the 2016 Indiana Vision 2025 Dynamic Leaders of the Year. See story and video. pi lab is a two-time TechPoint Mira Award winner with its Edwin the Duck product — Mobile Tech Award (2015) and Scale-up Company of the Year – $100K-$5M (2016).