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Leading through a downturn requires a different approach. Here’s how to realign your leadership to suit this new set of challenges.

Many software engineering leaders will only have known how to lead through the boom times. The era of hypergrowth that is now coming to an end was rife with cheap investment cash and large hiring budgets, while the biggest challenge many engineering managers faced was how to scale their services to the moon.

Leading a technology organization through an economic downturn presents a very different set of challenges, but it is also an opportunity to transform adversity into a positive force for organizational health and growth. In times of uncertainty, the way a leader navigates these changes can have a profound impact on the team's morale, productivity, and long-term success.

Here are six ways to realign your approach to better fit leading through a downturn.

Organizational health and growth

Certain things get more difficult during an economic downturn. Hiring becomes more purposeful, promotions become scarcer, and raises may be smaller.

Despite these changes, the fundamental motivation of teams to do good work and be recognized for it remains a priority. It is crucial to reassess the organization to ensure that the right people are in the right roles. This evaluation is not only about skill matching, but also aligning individual strengths with the evolving needs of the organization.


Now is a great time for a changing of the guard. While there may be fewer new teams or projects spinning up, encouraging engineers to challenge themselves in other roles in the organization can cross-pollinate good ideas, create opportunities for growth and mentorship, and build resiliency within the organization. 

Set ambitious goals for the team

Motivation often thrives on challenges. During a downturn, setting ambitious but realistic goals for the team can help keep them focused on what’s relevant for the business.

It’s likely the organization is more cost sensitive, but that doesn’t have to be a bad thing. Looking at your systems’ operational excellence with an eye on resource efficiency can help your organization when it needs it the most, while simplifying your applications, infrastructure, and deployment pipelines. High-leverage and measurable initiatives can be to right-size your cloud compute instances, optimize databases and storage, implement auto-scaling, or even rearchitecting to take advantage of the spot market for non-critical workloads. There are many interesting challenges here for keen engineers that can have a real impact on a cost conscious organization.

Tackling these problems not only boosts morale, but also repurposes time that might have been spent on recruiting and onboarding new team members. Don’t forget to conduct regular retrospectives, celebrate wins here, and continually groom your backlog for continuous improvement. 

Strengthen your bench

Addressing underperformance is not just a matter of maintaining productivity; it's about continually raising the bar and signaling that this is still a world-class team.

Ensure your team is working through their growth plans and that they’re aligned with where the organization’s goals are. This can mean opportunities to upskill with AI, shift more of your compute resources to the edge, or simply improve automation for back office tasks. It doesn’t have to be fancy, but it does have to have an impact.

Also, by carefully identifying and addressing low performers, you can start to be more strategic about the roles that you are able to backfill to deliver the most impact. This can be difficult for managers, but is vital to keep top talent and build a high-performing team during a downturn.

Don’t forget about culture

Creating a positive and supportive culture is equally vital during a downturn. Recognition, both in words and actions, plays a crucial role in making team members feel valued and safe. Openly discuss the team's fears, actively listen, and create a trusted space for dialogue.

To cultivate a resilient company culture, remind your team of the organization’s values and mission often. These should be in writing and regularly revisited in town halls, new aims, project kick-offs, wherever you can! Back these up with principles that reflect your organization's world view. This is where it’s important to be opinionated and differentiate your organization from any other.

A healthy team needs a healthy leader

It’s easy to put your own growth at the bottom of your priority list during difficult times. Your team needs you to be growing and on top of your game. Treat your own growth and performance like anything else you plan for the team. Do you have the right mentors and coaches supporting your growth? The stronger relationships you have in the organization, the easier it will be for your teams to work across boundaries. 

Consider leveraging the time you used recruiting and interviewing into time for self improvement. It’s easier for engineering leaders to become less technical as they progress, but you don’t have to let that be the case. Consider joining a scrum team for a sprint, ship some pull requests, and understand the toil the team feels in shipping through your pipelines. Ask for 360-degree feedback and build a real plan to improve where you think it will have the most impact. Your team will see you holding a constantly increasing bar for yourself and self-improvement will become part of your team’s culture.

Final thoughts

Leading a technology organization through an economic downturn requires a combination of strategic thinking, empathetic leadership, and proactive measures. 

Through purposeful reorganization, open communication, and a commitment to continuous improvement, technology organizations can emerge from economic downturns stronger, more resilient, and better positioned for future success.

Rethinking your engineering budget during a downturn
Episode 03 Rethinking your engineering budget during a downturn
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