Cheap is Expensive for Engineering Teams
Leverage Smaller, Higher Paid Teams for Exceptional Value
Welcome Leaders!
Let’s face it, size matters for some product & technology leaders.
Either they measure their success by their department’s headcount or they’re a one-trick pony who’s only solution to a problem is to throw mediocre bodies at it.
Instead, what actually gets the results are much smaller teams with far higher quality engineering talent. In fact these teams can have a really profound impact on your business.
Let’s dig into why.
Cheers,
That old phrase “cheap is expensive” is more true about software engineers than almost any other role I’ve seen in an organization.
Large teams full of average, slightly underpaid engineers are easily outperformed by small teams of high-caliber (but expensive) engineers by a factor of at least 4x to 6x.
But this is a concept that most executives rarely fully appreciate and almost never factor in properly to the success of their business overall.
Here’s why quality / expensive engineers are so disproportionally valuable to a company:
Let’s look at a scenario where a new product is to be launched.
The “Big & Cheap on Paper” Team
8 or so C or C+ engineering & product staff getting paid 10% below-market rates
They waste 1 year of the companies time trying to get the product right
The product stinks, customers don’t like it, features hardly ever launch on time
Lot’s of sales / marketing effort is lost with the crappy product resulting in no growth
Company tries to fix things with a new mediocre team for another 2 or 3 years
Now it’s 5 years later, millions spent, and nothing to show for it
Lots of board meetings with fake-hype PPT slides wasting investors time
The “Smaller but More Talented” Team
3 or so A & B+ engineering & product staff getting paid 20% above-market rates
They deeply understand the business problem and launch a great MVP in 3 months
9 months in and the product is done, customers love it, the team always delivers on time
Sales & Marketing are excited to advertise & sell it and growth steadily goes up
Company moves on to new product lines and generates even more market interest
5 years later, 3 or 4 product lines with good growth on each
Board is thrilled and is thinking about expansion, M&A, et. Investors are putting in more dollars
Think about this: all it took to change the fortunes of an ENTIRE COMPANY was hiring just THREE good developers instead of 8 bad ones.
The compounding positive business impact of much smaller, but more talented engineering teams cannot be understated.
The main reason most leaders & executives don’t understand this concept has to do with incorrectly assuming that a below-average engineer will have about the same negative impact on the company as a below-average role in another department.
But as it turns out the approximation isn’t even close.
Let me explain:
If you hire a bad sales rep they cannot ruin the entire sales process for the other great reps. If you hire a bad recruiter the good recruiters will still keep crushing it. If you hire a bad marketer the good marketers will still deliver great campaigns.
However, if you hire a bad developer they will screw the product up for everyone. In fact, their mediocrity in terms of problem solving, design, coding, testing, documentation, technical debt or literally anything else in their job description will INFECT 💉 & bring down the whole product engineering team.
I’ve seen it happen.
So if your company builds software, you’ve got to be incredibly careful about hiring ANY bad developers because even 1 can seriously ruin a team or at least slow it down massively.
Engineering Teams are Like an Orchestra
The closest analogy to engineering teams is an orchestra. 🎵
Imagine a beautiful symphony is being played by the worlds most talented and greatest orchestra on violin, cello, piano, percussion and so forth.
But now imagine that in the middle of this symphony there is just one person playing the loudest and most screechiest trumpet 🎺 you’ve ever heard in your life.
What if it’s so bad that there’s no way you’re able to un-hear it.
Well, I can tell you this, when the audience (customer) leaves at the end of the night they’re definitely going to want a full refund for the show.
It’s the same with bad engineers.
They will take your beautiful & well functioning company and wreck it.
They’ll accidentally cause such a giant negative ripple-effect everywhere in your organization that you’ll be unwinding the cluster f**k for years to come.
Why Leaders Don’t Accept this Reality
Let me offer 5 reasons why execs don’t come to grips with the above realities:
Leaders want to be nice and think they can teach bad engineers to be better
Leaders are under pressure to hire fast and deliver software
Leaders think they need a certain headcount to accomplish certain projects
Leaders think headcount equals company growth
Leaders want influence and they think they’ll get it via larger teams
The reasons are actually many and the list can go on but we’ll pause here and address these top 5.
1. Being Nice & Teaching: Ask yourself if (as a leader) your company has the time to teach / train mediocre engineers. Maybe some companies have the 1 to 2 years to spare to take the team from a D to a B, but most don’t.
2. Under Pressure to Hire: Ask yourself if (as a leader) you want the pain of managing and running a bad team for years, or the handful of months of pain of the CEO being upset that the team hasn’t been hired yet.
3. Headcount for Projects: Ask yourself if (as a leader) you’ve been building certain projects using a certain headcount for the wrong reasons. For example, do you really need an 8 person scrum team to get every project done? Probably not.
4. Headcount Equals Growth: Leaders often have a silly notion that growing headcount means the company is growing. The reality is that only growth equal growth. Headcount is incidental in many ways to real company success.
5. Influence Through Larger Teams: the truth is leaders do accumulate influence through having larger teams (and therefore larger budgets). But if you want to be a great leader it’s about delivering results, not headcount. And most leaders that can’t deliver results get found out eventually.
How to Focus on Quality & Not Quantity
If you want to be an elite leader and build smaller, higher quality teams that deliver huge value to your business then the first step is unfortunately the most difficult:
This first step is changing your mindset from thinking “the more people, the better” to thinking “the fewer better people, the better.”
Once you are able to make this mental shift consider these additional factors to help you focus on hiring for quality & not quantity.
Get comfortable spending above market rates. 💰
Don’t give in to timelines: there’s a reason people say hire slow, fire fast.
Stop assuming you’ll teach C & D players — you probably don’t have the time.
Nail down high standards and stick to them with HR & other stakeholders.
Think about the fewest people you need to complete projects…not the most.
Toss out influence-building via larger team sizes — instead focus on delivering results.
Rethink your assumption about the smallest standard scrum team.
Prioritize hiring engineers who understand tech AND business & customers.
View high-cost talent as an investment not an expense.
Avoid hiring even 1 bad engineer for convenience even if you have 10 great ones.
It’s tempting to just slot people into position.
But remember that it’s not about filling positions, it’s about getting the job done.
That might be just 4 people instead of 40.
The art is in figuring out the least amount of people necessary.
Conclusion
Have you noticed that startups are always talking about how fast they’re going in product & engineering?
That’s because their teams are small, so they’re able to move at high speeds for sustained periods of time.
The larger a team gets the slower it becomes because there’s a lot more overhead & coordination to deal with.
For example, Amazon engineering teams go 3x, 5x or even 10x slower vs. a small startup because of all the overhead involved at such a large company.
Small companies however will often make the mistake of underpaying for developers and accepting C+ level talent.
These companies should actually be trying to get much more out of the limited set of positions they have available.
But I’ve noticed these businesses are in a headcount game with their peers. “We have 200 people,” might feel good to say, but it doesn’t equate to real growth.
Real growth and success comes from delivering results consistently over time.
And the ideal for that of course is smaller teams, more highly paid, but with A and B+ talent. Thousands of engineering projects have proven this to be true.
Remember, cheap is expensive in the long run with engineering teams.