Why You Still Can’t Hire (Or Even Talk To) The Best Engineering Leaders

Julia Fleenor Avatar

Bloomberg reported on how Apple has avoided layoffs by hiring more efficiently and prudently. Over the past few years, Apple has more than doubled its revenue per additional headcount. The Bloomberg headline tells only half the story. Across all of the six large technology companies analyzed, the revenue per employee remains exceptionally high by the standards of normal businesses (meaning, those not on Wall Street heavily tied to investment banking or trading). 

Even at the levels of the lowest company, Meta, a company with added sales of $800,000 per new employee is an outlier in the grand spectrum. These revenues have long fueled the outsized salaries and stock packages for engineers and executives — and have raised a wide moat between tech giants and other industries that aspire to technology greatness. Culturally, it is a challenge to offer outsized pay packages to Xooglers and former Amazon executives when that would entail a 50% or 100% pay increase for your team of developers in a Midwest city. Likewise, hiring the top engineering leaders is so expensive that most companies outside of tech blanche and their compensation committees can’t handle the disconnect. Which leaves them out of the money on the world’s best talent. 

This is also why we are seeing a rapid rise in fractional executive roles which can give any company relatively affordable access to top talent from big tech and Silicon Valley without having to pay the full freight. For their part, smart fractional executives see this as a way to have a more interesting life, learn more, and to de-risk their existence (or, if they don’t need the cash, as a way to build a cash flow-neutral lifestyle). The mass layoffs may have a temporary leveling effect. But even at reduced headcount revenue levels, tech punches so far above its weight that sheer economics will make it difficult for these companies to lift and shift their organizations over into Silicon Valley mode. 

So, no, you probably can’t hire an exec from one of these companies and expect to keep them around unless you are a well-funded tech startup with a lot of equity to cough up in a promising field like AI, fintech, or Robotics, or you are a fast-growing SaaS company with depressed stock that has a real prospect for future gains. This does not describe most companies — even most startups. Revenue-per-headcount does not lie and it can’t be overcome in the long run. It’s better to have a quarter or an eighth of really great talent than nothing at all. 

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Julia Fleenor Avatar