Navigating economic downturns as an engineering leader isn’t easy. From above comes the pressure to deliver on ambitious goals with limited resources. From below, the well-being of your team is at stake as they deal with layoffs, heavier workloads, and an uncertain future.
It’s not just about doing the thing right, but doing the right thing, as Peter Drucker says. Lean software engineering teams need to focus not only on efficiency but on effectiveness to make sure that every second counts. Here’s how successful engineering leaders do it.
Watch the Video
Engineering leaders Michelle Salvado, Mike Stahnke, and Vilas Veeraraghavan discuss how they maintain efficiency and effectiveness in a down market
Set Realistic Expectations
Economic downsizing provides the perfect opportunity to manage stakeholder expectations. As an engineering leader, you're tasked with delivering the same or greater value with a leaner team and limited resources. Maintaining open lines of dialogue with cross-functional partners helps them understand what can be achieved and the necessary trade-offs.
Rather than making excuses or deflecting blame when timelines slip, be upfront about the impact. This level of transparency not only builds trust but also provides stakeholders with the context they need to recalibrate their expectations accordingly.
If you’re in the middle of a replatform and juggling three business outcomes but your team has just been cut by 20%, it’s time to revisit whether those OKRs are even possible. By owning up to these lean engineering challenges, you create a collaborative environment where you can explore solutions together. The earlier this conversation happens, the better.
Don't Underestimate 'Keep the Lights On' Work
Your systems don’t magically erase technical debt when teams shrink. In fact, the percentage of time and effort spent on maintenance and operational tasks often increases for leaner engineering teams, simply because that’s often work that can’t be postponed or deprioritized.
When teams are spread thin, issues like technical debt that may have been backlogged take on greater urgency as the risk of system failures or performance degradations increases. Prioritizing this "keep the lights on" work becomes paramount to ensure operational stability and mitigate risks.
Many leaders fail to account for this phenomenon, underestimating the effort involved in KTLO. They assume that the fewer engineers will still be able to dedicate the same amount of time to focus on new projects and initiatives.
Engineering leaders must continue to ensure that maintenance work is properly accounted for and prioritized alongside new development efforts. Failing to do so can put the entire business at risk of downtime, performance issues, and lost revenue or productivity. These outcomes are the exact opposite of the effectiveness that lean engineering teams are trying to achieve.
Promote Ruthless Prioritization Across the Organization
Engineering leaders can't make prioritization decisions in a vacuum. There must be open communication and buy-in from key stakeholders about what gets prioritized and what gets delayed or descoped.
First, product managers need to clearly articulate the strategic rationale and customer impact behind their roadmap priorities. Then engineering leaders can provide realistic estimates of what's feasible given their reduced team bandwidth.
Sometimes, the tough call is to delay major projects or initiatives, no matter how exciting or innovative, in order to double down on keeping critical systems running smoothly. This relentless prioritization requires breaking down silos between engineering and product to make aligned, data-driven decisions in the company's best interest.
There are no sacred cows when it comes to prioritization during a downturn. Every unit of effort, no matter how established or recent, must be re-evaluated against the new reality and the key business problems engineering is trying to solve.
“During the economic crisis in 2008, my company decided to move toward VMs (managing that orchestration ourselves vs. going to the cloud, which was still nascent at the time)," says Vilas Veeraraghavan, VP of Engineering at Truckstop and former tech executive at Bill.com, Walmart, and Netflix.
"At that point we didn’t have a platform team, and we couldn’t hire any more engineers with backend capabilities. We eventually decided to delay the project by a year because the efficiencies just wouldn’t be realized without the hiring. But at the same time we developed tools internally to automate much of the VM orchestration and invested in our own people to improve their skillsets in those areas. When we got back to the project, we had much more traction to deliver value.”
Build Trust with Your Remaining Team
In the wake of layoffs and headcount reductions, transparency, authenticity, and empathy from leadership can make all the difference for the team members that remain.
When layoffs occur, employees will be looking for clear communication about the rationale behind the decisions, the criteria used, and the overall impact on the organization. Attempting to obscure or downplay the situation will only breed distrust and resentment. By being upfront, acknowledging the difficulty, and showing genuine care for those affected, leaders can maintain credibility and foster a sense of unity within the team that remains.
If trust is broken through poorly handled layoffs or a lack of transparency, the consequences can be devastating to team morale and the developer experience. By prioritizing authenticity and open communication, engineering leaders can navigate uncertainty while maintaining the trust and cohesion of their team.
Use Metrics to Help Justify Team Effectiveness
Hard data and objective metrics are invaluable tools for engineering leaders — in peace and in wartime. When budgets are tight and scrutiny is high, being able to quantify your team's performance is crucial for justifying headcount and resources. "Metrics on efficiency, productivity and employee satisfaction are more important than ever,” explains Mike Stanhke. “They provide objective justification for the team's effectiveness to leadership. But they should be positioned as investments or opportunities to improve as a team, not as punishment."
Productivity metrics like cycle time, throughput, and burndown rates provide a clear view into your team's output. Having historical benchmarks allows you to measure the impact of headcount changes and process optimizations. Developer sentiment surveys, while limited, reveal areas for improving morale and engagement. Defect rates and system health indicators show the effectiveness of your quality practices. Together with allocation data about how teams are actually spending their time on new value vs. KTLO, these metrics create a multi-dimensional picture of your team's capabilities.
Once you have the metrics that matter, use them to ground conversations with your team. You should celebrate successes, but also have open discussions about areas for improvement. Position metrics as investments in upskilling, streamlining processes, and eliminating bottlenecks – ways to make the team more effective.
Lean teams operating in a constrained environment have no choice but to maximize productivity and morale. Metrics provide the guiding insights to keep your engineering organization focused, motivated, and delivering maximum impact.
DORA Metrics Are a Start. Here's What Comes Next.
