Managing Engineering Teams In Recession Times

April 20 5 min read
men at a table - Managing Engineering Teams In Recession Times

It’s almost a year since this article called ‘It’s not business as usual and investors are admitting it’ TechCrunch first underlined the urgency of understanding efficiency as a business critical modus operandi.

Although the title of the article is gloomy enough to help us draw conclusions, its content is even gloomier. Y Combinator, the largest and definitely most renowned startup accelerator had written an internal email to its investors with bullet points to help navigate the downturn crushing tech. 

Since then, June 2022 was even harsher: ‘Just $198 billion worth of initial public offerings (IPOs) and follow-on sales have been priced so far this year, a 70% drop from a year ago’, noted Economic Times.

Almost a year after that, Fortune says that the recession is inevitable, and that layoffs in finance and tech will only spread to other industries. While the reality looks far from ideal, we do have a handful of solutions that weren’t this widely available to us in the 2007-2010 recession. 

This framework of solutions can help you with employee modularity, such as outstaffing, and is the key to navigating the upcoming crisis as safely as possible. But first, let’s run the numbers:

There’s a 1.7 to 1 rate in the US/EU talent payment comparison, making talent in the EU much more accessible even in the middle of these uncertain times. 

Therefore, with the money that’s necessary to hire one professional in the US, you can pay 1.7 out of two professionals’ fees in the EU. 

But however prepared you might be, many industry leaders from the tech scene seem to understand that we’re approaching a moment of crisis. For those who weren’t CEOs, VCs or product owners in the 2007-2010 era, things are about to get interesting. 

There are methods to mitigate damage from the start, but they do require a deeper understanding of the tech ecosystem and its ways, since we’re not just about to deal with recession, but with recession in a completely different socio-economic context, where the laws of high-skilled, high-performance workforce have undergone a paradigm change.  

But first…

Is The Tech Industry That Special? 

Sure, investors do want to minimize their losses and will focus on more efficient businesses that are associated with lower rates of failure. This will, in turn, slow progress when it comes to innovative and out-of-the-box approaches, as we’re going to experience a return to the business safe space. Tangible results will become the rule, as investors will grow skeptical and prudent. 

But while this is the case in every industry, tech does come with differences. 

First Of All, The Talent 

It’s definitely a specific situation, as tech professionals (and any connected ones, from marketers to product managers) have become increasingly and scarily more aware of the difference they make in terms of business. 

Pair this with the fact that we’re already facing a global talent shortage, and the fact that Millennials and GenZ are keen on changing the balance of power in the workplace, and you’ve got yourself a proper pickle. 

Highly skilled talent doesn’t grow on trees, and their fees will probably increase with the upcoming crisis, as every change in inflation tends to translate into more needs for the professionals whose work your entire business depends on.   

As opposed to the 2007-2010 crisis, talent is now aware of the power it has, and is willing to use it as leverage to increase their quality of life (or at least to prevent decreasing it). 

Your Problem? 

Even if you’ve got a company that’s not in the situation to have cutoffs, your growth will most likely have to be stalled because of your impossibility to hire new talent in an unpredictable economic market. 

As if this weren’t tragic enough, the cost of sourcing talent will also go through the roof. As the laws of economics dictate, most of the highly skilled, performance-oriented talent will be kept by companies, which will result in a surplus of unskilled, underperforming talent that will crowd the recruitment market

In turn, the cost per hire will increase drastically because of this artificial imbalance, which will make you as a company owner managing engineering teams in recession times less likely to be able to afford a scale-up, even supposing that you’re one of the fortunate ones who own a product or service that only increases in demand with recession. 

The Solution?  

I wish I knew.

There isn’t a one-hat-fits-all kind of solution for managing engineering teams in recession times. You know your business better than any other analyst out there, and you’re able to identify what makes it run more smoothly and with fewer bottlenecks. 

But there are a few recommendations that you may want to consider, whichever your leadership style, your scale-up plan or your company size. 

Be Cautious. Reduce Your Blindspots 

If you are managing engineering teams in recession times, getting rid of any kind of blindspots that can affect productivity and business capacity is a must. Economic uncertainties are the best at making us more introspective about what works best and what needs improvement. 

If we think about the business ecosystem as a set of interconnected capital assets, measuring stock and production is what helps identify processes that need to be addressed one way or another. 

Be Pragmatic. Focus On Functionality First

Think of your business as a simple chain reaction, a domino if you will. Now, inside of it you’ll be putting all of the internal processes that take place in your company. 

Wherever there isn’t any kind of causation between a process and a result, that needs to be carefully analyzed. As a result of this analysis, one of two things can happen: either the process gets improved and streamlined by becoming interconnected with the rest of your business domino, or it has to go. 

If you are managing engineering teams in recession times a third solution isn’t viable, unfortunately. Not if you want to keep your profit margins, anyway. 

Be Fast. Improve Your Decision Making

Aaah, the old Occam’s Razor. When it comes to business engineering in times of recession, what would have taken months of testing, assessing and carefully reviewing becomes a spur of the moment decision

That’s not to mean that you should forget everything you know and rely on a weird sense of intuition. 

On the contrary. As a business professional, whether you’re a VC or a startup founder, you’ll know when a decision sounds like a good idea and when it sounds like bankruptcy. 

All of the years of economic growth and the business capital and experience you’ve accumulated will be put to the test in the years to come. 

The Occam’s Razor postulates that one shouldn’t overly complicate beyond reason the number of entities that are required to explain something. Of course, it’s a more complicated notion in math than it is in business, but its principle stands. 

Instead of Conclusion

Overly complicating easy decisions leads to slowing down processes, which tends to affect the entire business domino. 

For instance, let’s say you’ve been debating for years whether it’s the right move to work with an outstaffing company. Under normal circumstances, you’d still have the opportunity to take a lot of tests and reach a conclusion the old fashioned, empiric way. 

But in this context, understanding that scale-ups are nearly impossible in recession times, and that talent will become even more difficult to handle than it has been during the past few years, an outstaffing partner sounds just like the simple solution you should’ve had in mind all along. 

And finally…

Not sure how an outstaffing business partner can help you reach your goals? Schedule a meeting and we’ll tell you all about it.