I know it’s rich for me — a software engineer without a budget — to tell leaders how to spend their money. Startups, in particular, are always hyper-aware of how much runway is left, and how quickly that runway starts disappearing as the burn rate goes up, especially in the early days. However, if you’re well-funded and getting beyond your first year, or if you are a software company seeking growth, there are some simple strategic investments you can make to set yourself up for long-term success. Conversely, at one point or another in our careers, I think most of us have seen our leadership make some rather boneheaded decisions to save money that we know won’t pay off in the long term. I’m here to highlight some of the ones I’ve seen or heard about.
(Trouble viewing the table above? See https://gist.github.com/gdfast/74301faaabf17ba4f32b1c3d6d077d8d)
The Shortsightedness of Under-investing In Your Employees
I have noticed some companies try to save money by keeping employee salaries below industry medians and limiting benefits, perks, and other compensation. Relatedly, some companies try to keep management light, but then employees don’t have access to good career guidance and advocacy. Or maybe managers are micromanaging their employees’ time and urging them to work late with no end in sight. Retention will drop accordingly as employees move to companies that treat them better or offer higher compensation, and there are many that do in this current economic boom.
What these companies fail to realize are the exorbitant costs of finding and recruiting new talent and training new hires, as well as the opportunity cost of valuable work dropped by outgoing employees. Morale takes a hit, too. You don’t have to pay as highly as Google does, but seeking a fair compensation should not be the main reason an employee leaves.
The Shortsightedness of Under-investing in Tools and Infrastructure
Engineering is the value-creation center of your organization. Plenty of companies convince themselves that they can’t afford more build servers, more QA and tools developers, third party software support, a license for their ideal database, and so on. These companies fail to realize that most of the time, employee salaries and compensation will greatly outweigh their other capital expenditures.
Therefore, you should do everything in your power to enable your engineers to spend all their time building features that are valuable to your customers. When a customer hits a surprise deployment bug you know you’ve seen and discussed before, you’ll realize just how valuable your enterprise Slack license can be. Invest in a build farm because 10 minutes of developer coding time costs more than 10 minutes of computer compilation time, and lowering that compilation time adds to coding time. Spread across your organization, you’ll gain back people-years of newfound development time. And in 2019 (and beyond), 99 times out of 100 you would be fairly crazy to build your own database tech when there are hundreds of options in existence (unless that’s your business, of course). Embrace the fact that human time is more expensive than computer time.
If you have seen practices that choose short term savings over long term efficiencies, or otherwise are penny-wise and dollar foolish, I’d love to hear about them.
