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Assigning a high-ranking title to an employee can be a way to provide a perk without having to spend any money—particularly for small companies. In small companies, one person sometimes makes up an entire department, such as sales or human resources. And giving that person a title of vice president, for example, can be an easy way to reward the employee without necessarily providing other benefits a vice president might enjoy—such as a higher salary and more responsibility. But as your company expands and more employees are hired, these "overtitled" employees may find themselves underqualified for what their jobs really require.

According to a study conducted by Salary.com, 30 percent of survey respondents are overtitled, and 80 percent of employees who claim to be underpaid are overpaid, fairly paid or have titles that don't match their jobs.

"A lot of managers out there don't manage anybody or anything," said Bill Coleman, Salary.com's senior vice president of compensation, to Inc. magazine. "They are not rationally linked to a corporate hierarchy."

And overtitling can lead to unhappiness with pay structure. For instance, if an overtitled vice president of sales searches the Internet for what other vice presidents of sales make, chances are there are many who make a lot more than he. Overtitled employees often don't realize their job duties are not always in sync with their titles, giving them an inflated view of what they contribute to an organization.

To avoid overtitling employees, create standard qualifications for each job title in your company. In addition, try to make job titles more specific. A vice president of human resources may really be a payroll manager, for example.You also can consider eliminating titles altogether, reserving the title of "principal" for the major responsibility holders.

The U.S. Department of Labor provides an occupational database to help employers determine job titles. For a link to the database, log on to www.professionalroofing.net.

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• Department of Labor's occupational database