ENG ORG SENIORITY-MIX MODEL

Summary from the TLDR newsletter

One of the trademarks of private equity ownership is the expectation that either the company maintains its current margin and grows revenue at 25-30% or instead grow slower and increase its free cash flow year over year. Engineering costs have a major impact on free cash flow in many organizations. One of the largest contributors to engineering headcount costs is an organization's seniority mix. This article looks at how various policies impact an organization's seniority mix. To create a healthy seniority mix, stop hiring at senior-most levels, implement a 'backfill at N-1' policy, and cap the maximum number of individuals at the senior-most level.