Earlier I wrote a post about how your job title doesn't matter for doing good product work. However, your job title does matter in different contexts - influence and responsibility.
Most people would probably agree - in the perfect world, your responsibility and influence should depend on your competencies and the amount of value you add. However, we don't live in the perfect world and today - your title still matters when it comes to the level of decisions you get to make at work and the amount of influence you can exercise.
Why do you need influence as PM?
Let's first talk about influence. As PMs, to move our products forward we need to take decisions. Some decisions we can take, while others might be beyond our pay grade. For those latter decisions, we need to align with our senior stakeholders and often get approval (ie "to sell the idea").The amount of influence we have defines what percentage of decisions we can make ourselves vs those we need to get someone's approval. And the easiest way to get more influence is to have a more senior job title. So it's not for vanity, the title actually matters to get the job done more efficiently. Speed matters greatly in product development, so if you can move quicker by taking decisions directly - you will increase your chances of product success.
Another way to get more influence is to become a subject matter expert. That usually takes much more time and a healthy degree of self-promotion within an organisation to get the right reputation. Still, even then, people often look at the job title, especially people who are further out of product development.
Job title implies responsibility
Why do people with the more senior job titles usually get more money? For many reasons. One of which - they are accountable for the bigger chunk of the outcomes.Seniority comes with the responsibility that is reflected in the job title. As a senior product leader, your main responsibilities are to empower your team, coach them and unblock progress when needed. It's trickier than it sounds as you are accepting all the risks for the final outcomes. Remember the golden rule of product leadership: you give all the credit and take all the blame.
The job title should reflect the reality of the role
A common mistake many organisations make, especially startups, is using job titles as a recruitment tool. They can't pay market rates for the professionals they need so they try to appeal to people who want to advance their careers and get that promotion, even if on paper.Usually, this starts with confusion and ends in frustration. When the title is mismatched with the actual job - the person tries to do work while their org needs another kind of work from them. Some examples: a person acts strategically while the company needs tactical deliverables. Or a "product leader" taking the decision that is quickly overturned by founders or C-level.
Moreover, such practices create a vicious cycle in the job market. Imagine a person who got that senior PM title while in reality were doing something completely different. Then they would go on the job market and might be hired to their next company based on their CV. Quickly after their arrival at the new workplace, they would be expected to perform on a much higher level based on their previous job title which will be extremely difficult and stressful.