More Engineers = Less Output? The Costs of Growth.
Growing quickly is lauded as a great thing in the news. But is it always a great thing?
Welcome to the Scarlet Ink newsletter. I'm Dave Anderson, an ex-Amazon Tech Director and GM. Each week I write a newsletter article on tech industry careers and specific leadership advice.
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I initially started this article by digressing into talking about capitalism and AI and how everything is going to go off the rails sometime soon. But once I hit a thousand words (and I wasn’t done), I realized that I'd better just send it in a completely separate article. So that’s what I’ll be doing sometime soon, I think.
Instead, I wanted to talk about growing company productivity
Headcount growth (or shrinkage) is all over the news for tech companies. Microsoft is doing layoffs again. Some AI company is tripling in size again.
In mainstream news, the messaging is generally as follows. Headcount growth is a sign of a growing business, and cutting headcount is a way of juicing profit margins, particularly for older, stalled companies.
However, I spent a lot of my career at swiftly growing teams at Amazon. And so when I read news of companies tripling in size year after year, I think about efficiency.
Business growth and headcount growth
Amazon, like these hot new AI companies, experienced incredible headcount growth for many, many years.
When I first joined Amazon, I had a 6-person team as a Level 5 Engineering Manager. I owned four distinct systems/areas for our payments business. It felt like a reasonable amount of work for my team to handle, although our backlog was relatively large.
Fast forward four years (I moved to another team after two years), and there were more than a hundred engineers working in the same space. Not to mention at least one Level 8 Director, many Level 7 Senior Managers, and piles of Level 6 and Level 5 Engineering Managers.
Every organization I joined experienced the same type of explosive growth. These critical systems needed to scale for drastically increased traffic, integration with more systems at Amazon, new features, new geographies, and more.
Every requirement added a new list of tasks. Those tasks became more difficult as our system became more complex. This is the nature of building and expanding software systems. Unless it’s artificially stopped (which rarely happens), the growth in complexity and the cost of incremental tasks inevitably increases.
What does that mean? It means every year tasks become more expensive in terms of engineering hours. Which means you’re either doing much less each year, or you need more headcount.
However, I imagine most of you recognize that increased complexity increases cost. I doubt that would surprise you.
“It’s hard to change this API in AWS because we’re freaking AWS. When ten million customers use your API a trillion times hourly, changes take time.”
But what many people don’t think about is the human costs of headcount growth.
New employees add overhead to your existing employees.
More employees add coordination costs between employees.
When you scale an organization to increase productivity, you are not only increasing the technical complexity of your software, but you’re also becoming less efficient due to the human costs of growth.
Counterintuitively, this means that an increase in headcount can decrease your efficiency at the exact moment a company needs to be the most productive.