It’s no secret that I’m not a fan of big-company HR practices. I’m more of the First Break all the Rules type. Despite my general skepticism of many standard practices, we still do annual performance reviews at my company, though I’m thinking seriously of dropping them. (See Get Rid of the Performance Review.)
Another practice I’m not hugely fond of is “leveling” — the creation of a set of granular levels to classify jobs across the organization. Leveling typically results in something that looks like this:
While I am a huge fan of compensation benchmarking (i.e., figuring out what someone is worth in the market before they do by getting another job), I think classical leveling has a number of problems:
- It’s futile to level across functions. Yes, you might discover that a Senior FPA Analyst II earns the same as a Product Marketing Director I, but why does that matter? It’s a coincidence. It’s like saying with $3.65 I can buy either a grande non-fat latte or a head of organic lettuce. What matters is the fair price of each of those goods in the market — not they that happen to have the same price. So I object to the whole notion of levels across the organization. It’s not canonical; it’s coincidence.
- Most leveling systems are too granular, with the levels separated by arbitrary characterizations. It’s makework. It’s fake science. It’s bureaucratic and encourages a non-thinking “climb the ladder” approach to career development. (“Hey, let’s develop you to go from somewhat-independent to rather-independent this year.”)
- It conflates career development and salary negotiation. It encourages a mindset of saying, “what must I do to make L10” when you want to say, “I want a $10K raise.” I can’t tell you the number of times people have asked me for “development” or “leveling” conversations where I get excited and start talking about learning, skills gaps, and such and it’s clear all they wanted to talk about was salary. Disappointing.
That said, I do believe there are three meaningful levels in management and it’s important to understand the differences among them. I can’t tell you the number of times someone has sincerely asked me, “what does it take to be a director?” or, “how can I develop myself into a VP?”
It’s a hard question. You can turn to the leveling system for an answer, but it’s not in there. For years, in fact, I’ve struggled to find what I consider to be a good answer to the question.
I’m not talking about Senior VP vs. Executive VP or Director vs. Senior Director. I view such adjectives as window dressing or stripes: important recognition along the way, but nothing that fundamentally changes one’s level.
I’m not talking about how many people you manage. In call centers, a director might manage 500 people. In startups, a VP might manage zero.
I am talking about one of three levels at which people operate: manager, director, and vice president. Here are my definitions:
- Managers are paid to drive results with some support. They have experience in the function, can take responsibility, but are still learning the job and will have questions and need support. They can execute the tactical plan for a project but typically can’t make it.
- Directors are paid to drive results with little or no supervision (“set and forget”). Directors know how to do the job. They can make a project’s tactical plan in their sleep. They can work across the organization to get it done. I love strong directors. They get shit done.
- VPs are paid to make the plan. Say you run marketing. Your job is to understand the company’s business situation, make a plan to address it, build consensus to get approval of that plan, and then go execute it.
The biggest single development issue I’ve seen over the years is that many VPs still think like directors. 
Say the plan didn’t work. “But, we executed the plan we agreed to,” they might say, hoping to play a get-out-of-jail-free card with the CEO (which is about to boomerang).
Of course, the VP got approval to execute the plan. Otherwise, you’d be having a different conversation, one about termination for insubordination.
But the plan didn’t work. Because directors are primarily execution engines, they can successfully play this card. Fair enough. Good directors challenge their plans to make them better. But they can still play the approval card successfully because their primary duty is to execute the plan, not make it.
VP’s, however, cannot play the approval card. The VP’s job is to get the right answer. They are the functional expert. No one on the team knows their function better than they do. And even if someone did, they are still playing the VP of function role and it’s their job – and no one else’s — to get the right answer.
Now, you might be thinking, “glad I don’t work for Dave” right now — he’s putting failure of a plan to which he and the team agreed on the back of the VP. And I am.
But it’s the same standard to which the CEO is held. If the CEO makes a plan, gets it approved by the board, and executes it well but it doesn’t work, they cannot tell the board “but, but, it’s the plan we agreed to.” Most CEOs wouldn’t even dream of saying that. It’s because CEOs understand they are held accountable not for effort or activity, but results.
Part of truly operating at the VP level is to internalize this fact. You are accountable for results. Make a plan that you believe in. Because if the plan doesn’t work, you can’t hide behind approval. Your job was to make a plan that worked. If the risk of dying on a hill is inevitable, you may as well die on your own hill, and not someone else’s.
Paraphrasing the ancient Fram oil filter commercial, I call this “you can fire me now or fire me later” principle. An executive should never sign up for a plan they don’t believe in. They should risk being fired now for refusing to sign up for the plan (e.g., challenging assumptions, delivering bad news) as opposed to halfheartedly executing a plan they don’t believe in and almost certainly getting fired for its failure later. The former is a far better way to go than the latter.
This is important not only because it prepares the VP to one day become a CEO, but also because it empowers the VP in making their plan. If this my plan, if I am to be judged on its success or failure, if I am not able to use approval as a get-out-of-jail-free card, then is it the right plan?
That’s the thinking I want to stimulate. That’s how great VPs think.
# # #
 Since big companies throw around the VP title pretty casually, this post is arguing that many of those VPs are actually directors in thinking and accountability. This may be one reason why big company VPs have trouble adapting to the e-staff of startups.
Great! Gives a reality check for someone to know where they fit.
Enjoyed it as always…not to miss out learning points from you.
Dave – this is well put. If you’re in a functional department (let’s say marketing), is their a level about the VP level that you’d define? For example, let’s say there is a CMO and VP of Marketing. If the VP of Marketing is making the plan, what is the CMO doing in your eyes?
Very good read, thank-you.
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Enjoyed the article, thanks for posting!
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Great piece Dave!
And Ray – great question about CMOs vs VPs. In my experience, at small companies/startups, they are they same. I.e., CMO is a feel good title. At a larger company, you might have a VP of Demand Gen, who makes the plan for DG, and a VP of Corporate Marketing, who makes the plan for brand. You might also have regional or BU heads of marketing, reporting to a CMO.
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The VP requires creativity creativity and foresight to envision a future state. Directors require creativity but can get by with less foresight.
I have found the difference between VPs and Directors is that VPs think cross-functionally whereas Directors think almost exclusively about their functional area.
Good article and good points about grades and level structures. When you create clusters such as VP, Director and Manager, you are doing the same concept as grading and structures do… Even your concept in my humble opinion, has some gaps… (you can have a Hands on Operations Director according to the role, and at the same time, an creative and strategic Marketing or Brand Manager, for e.g.)…. everything is relative and sometimes can’t fit in the grade, levels and even your classification (see, I totaly agree with your clusters). All these tools just help us to better compare and pay correclty without burn cash or loose talents to the market. Rgds from Brazil !!
Thank you, Dave. This blog helped me to understand the purpose of different roles in a company.
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Great information shared about managing director and management thanks for it
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