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Budgeting Troubles and Headcount Costs

Managing Up
Managing Expectations
Strategy

9 March, 2021

Jeff Miller
Jeff Miller

Senior Director, Platform Engineering at Yello (formerly known as RECSOLU)

Jeff Miller, Senior Director of Platform Engineering at Yello, discusses how to approach budgeting while advocating for optimal resources for an engineering team.

Problem

The vast majority of engineering cost is equated with headcount costs which directly impacts the size of the engineering team. I’ve been with companies that peg the development budget to the annual revenue and those that favor a less proportionate approach. Whatever the company’s approach, I always advocate for sufficient resources that would allow an engineering team to operate at its best.

I was recently in a situation where the consistent demand required that I advocate for a 100 percent increase in the size of our team. While the cost of the increase was significant, it would allow the engineering team to move to a more sustainable business model. However, the business had many other variables to consider.

Actions taken

For quite some time the feedback I was getting from the team and other departments was that no one could get their projects prioritized because the engineering team didn’t have enough resources. We were losing out on revenue in different areas because we couldn’t address some of our platform challenges. It was an alarming sign that we should augment the existing team.

In the early stages of the budgeting process, I made the preliminary projection and advocated for the team size that I thought would incorporate the needs of the different departments. That number would also help engineers on the team to feel heard and stabilize the platform. The platform frequently experienced outages, and while I managed to somewhat improve stability, I felt that I could use the momentum and reassure the business that if we were given resources, we would use them wisely.

I approached the executive team with a proposal that would address the problem of insufficient resources. As the engineering team, we were consulted by a number of executives, and we made our case, but that was all we could do in terms of convincing leadership. The decision was made between the Board and CEO not to approve our proposal.

Our arguments conveyed legitimate concerns that we were lacking bandwidth to tackle tech debt and ensure the stability of the platform. In general, I am cautious about using a concept of tech debt, and when managing up, I try to focus on positive outcomes (for example, a greater amount of uptime, more efficient onboarding of new clients is, etc.). When talking to the business and advocating for additional resources, I would showcase what we were failing to prioritize due to our limited resources and what were the business ramifications of those decisions.

Finally, any changes in budget allocation will have the most immediate effect on the (size of) team. As a manager, I would pay particular attention to communicating the message and delivering it to the team.

Lessons learned

  • Prioritize and make do with the budget you are given. Merely complaining about not having enough people is most often counterproductive.
  • On one occasion, when our budget remained flat, and the business was up double digits in revenue, a coach of mine told me, “You are not making the decision. Your responsibility is to make the most of what others have decided upon.” An external problem (Board/CTO/execs are not making the optimal choices) became an internal problem that I could take action on.
  • I could have made a better case if I understood the CEO’s motivation in this particular case. I should have invested myself more in understanding how they were going to come to a decision instead of accepting the decision and wondering why it was decided the way it was.

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