18% Increase in Engineering Executive Demand While Time-to-Fill Will Double in 2026—Are We Promoting Leaders Before We Have Engineers?

[eng_director_luis]

I’ve been navigating a leadership transition at my company (Fortune 500 financial services), and the data coming out of 2026 is deeply troubling. We’re seeing an 18% projected increase in demand for engineering executive roles while simultaneously facing hiring cycles for senior positions that are stretching to 40-50 days for specialized roles and 58-62 days on average according to JRG Partners’ 2026 Talent Gap Report.

The Math Doesn’t Work

Here’s what’s keeping me up at night: over 25% of working engineers plan to retire within five years, and 45% of current senior engineering leaders in the US are eligible for retirement in the next five years. Meanwhile, we’re creating VP, Director, and CTO positions faster than we’re backfilling the IC and mid-level roles that should be feeding into those leadership pipelines.

At my company, we just promoted two Directors to VP roles. Great people, absolutely deserve it. But now we have four open Director positions and a pipeline of senior engineers who are nowhere near ready for that leap. We’re essentially promoting people out of roles we can’t refill.

The EV sector alone is projected to require a 30% increase in engineering executive hires by 2026 according to Addison Group’s 2026 Workforce Planning Guide. Advanced manufacturing, defense & aerospace, fintech—every sector is competing for the same limited pool of experienced technical leaders.

The Internal vs External Debate

Research shows that two-thirds of top executives are internal hires, and internal recruits have up to 41% higher retention and reach full productivity faster (Bank Director survey data). But many organizations are adopting what they call an “80/20 rule”: 80% promoted from inside and 20% external hires to bring in fresh perspectives.

The problem? When your internal pipeline is thin because you haven’t invested in mid-level development, you’re forced to hire externally at premium rates—and those external hires often struggle without the institutional knowledge and cultural alignment that internal candidates bring.

What I’m Seeing on the Ground

In my teams:

1. Junior engineers (2-4 years experience) are being thrust into senior roles because we have no one else
2. Senior engineers (5-8 years) are being asked to manage teams when they’ve never managed anyone before
3. Engineering managers are being promoted to Director without the organizational design or strategic thinking experience
4. Directors are becoming VPs based more on attrition than readiness

And the scariest part? We’re not alone. Every peer I talk to at other financial services companies, tech companies, even startups—everyone is facing the same leadership pipeline crisis.

The Questions I’m Wrestling With

1. How do you balance promotion velocity with readiness? Do we slow down promotions and risk losing ambitious talent to competitors who will promote them? Or do we promote and accept the learning curve?

2. What’s the right internal vs external mix? The 80/20 rule sounds good in theory, but when your internal pipeline is underdeveloped, is 80% even realistic?

3. How do we develop leadership skills at scale? Mentorship works, but it doesn’t scale. Formal training programs are expensive and time-consuming. What’s actually working for you?

4. Should we be creating more IC leadership tracks? Staff Engineer, Principal Engineer, Distinguished Engineer roles that provide growth without requiring people management—is this part of the solution?

5. Are we measuring the wrong things? We track time-to-fill, but should we be tracking leadership pipeline health, mentorship ratios, or succession plan depth instead?

The Uncomfortable Reality

An estimated $78 billion in lost revenue globally is attributable to unfulfilled critical engineering leadership positions annually (DAVRON’s Engineering Talent Shortage Analysis). But I wonder if the real cost is even higher—what about the cost of bad leadership decisions made by unprepared leaders who were promoted before they were ready?

We’re treating leadership positions like we have an infinite supply of qualified candidates. But 62% of US companies report a critical gap in leadership talent possessing expertise in next-generation digital technologies according to Novoexec’s Executive Hiring Trends.

Are we promoting people out of roles faster than we can develop their replacements? And if so, what’s the endgame—eventually running out of engineers altogether while our org charts are full of VP and Director titles?

I’d love to hear how others are thinking about this. What’s working? What’s failed spectacularly? How are you balancing the need for leadership growth with the reality of a constrained talent pipeline?

[cto_michelle]

This resonates deeply. We’re experiencing the same challenge at our mid-stage SaaS company, though at a smaller scale—we’ve scaled from 50 to 120 engineers in 18 months, and I’ve watched our leadership bench get thinner even as we’ve added more leadership positions.

The Forced Choice Framework

I’ve been using what I call the “Forced Choice Framework” to think through these decisions. Every leadership promotion creates three simultaneous challenges:

1. The Gap Below: Who fills the promoted person’s previous role?
2. The Learning Curve: How long until they’re effective in the new role?
3. The Opportunity Cost: What could we have done with that salary delta if we’d hired externally?

When you promote someone from Senior Engineer → Engineering Manager, you’re not just creating one opening—you’re creating a cascading shortage down the career ladder. And if that person isn’t ready, you’ve now got both an underperforming manager AND a missing senior engineer.

What’s Actually Working

Three things have helped us navigate this, though none are silver bullets:

1. Leadership Apprenticeships (6-9 months before promotion)

Before promoting anyone to EM or Director, they spend 6-9 months as a “shadow leader”—running projects, attending leadership meetings, mentoring junior engineers, but without the title or full compensation bump. It’s not perfect (candidates who need money now will leave), but it dramatically reduces the “promoted before ready” problem.

Retention impact: We’ve kept 7 out of 8 shadow leaders through the full program. The 8th left for a Director title elsewhere but came back 14 months later with better experience.

2. Dual Track Is Non-Negotiable

We’ve created explicit IC leadership tracks up to Distinguished Engineer (roughly equivalent to Senior Director in comp and influence). This year, 40% of our “leadership growth” happened on the IC track, which preserved our management pipeline without forcing people into people management.

The breakthrough was making Staff+ engineers actual leaders—they own technical strategy, mentor teams, drive architectural decisions. Not just “really good coders.”

3. Buy vs Build Decision Matrix

We’ve formalized when to hire externally vs promote internally:

• External: When we need a competency we don’t have (e.g., hired a Director of SRE when we had zero SRE practice)
• Internal: When institutional knowledge matters more than pure skill (e.g., promoted our Director of Platform Engineering who’d been here 4 years)
• Hybrid: When we need both—we’ll hire a VP externally but intentionally hire them to mentor and elevate an internal Director who’s not quite ready yet

The Uncomfortable Metric

To your question about measuring the wrong things—I’ve started tracking “Leadership Pipeline Depth”:

For every leadership role, how many people are:

• Ready now (could start tomorrow)
• Ready in 6 months (with focused development)
• Ready in 12-18 months (potential but needs significant growth)

Right now our numbers are terrifying: Director of Engineering has 1 ready now, 1 ready in 6 months, 0 ready in 12-18 months. That’s a pipeline depth of 2 when we should have 4-5.

This forces honest conversations: Are we developing people fast enough? Are we hiring for pipeline depth, not just immediate need? Are we about to make a promotion we’ll regret?

The Real Cost

You mentioned the $78B in lost revenue from unfilled positions. I’d argue the bigger cost is organizational debt—the accumulated impact of decisions made by leaders who aren’t ready.

I promoted a Director to VP last year who I knew wasn’t quite ready, but I felt pressured by attrition. Six months in, they made a technical architecture decision that’s now costing us 8 engineering months to unwind. The direct cost of that bad decision? Roughly $240K in fully-loaded engineer time.

Was it their fault? Not really—they were promoted before they had the pattern recognition to see the long-term implications. That’s on me as their leader for putting them in that position.

The Brutal Answer to Your Question

Are we promoting people out of roles faster than we can develop their replacements?

Yes. Absolutely. And the reason is that we’re optimizing for individual career velocity (keep ambitious people happy) at the expense of organizational capacity (maintain sufficient depth at every level).

The companies that will win in 2026-2027 are the ones willing to say “no” to promotions that would create unsustainable gaps—even if it means losing that person to a competitor in the short term. Better to lose one person than promote them into a role that damages your organization for years.

[vp_eng_keisha]

This thread hits hard, especially because I’m living this exact tension at our EdTech startup. We’ve grown from 25 to 80+ engineers in two years, and the leadership pipeline crisis you’re describing? It’s not just an operational problem—it’s an equity problem that disproportionately impacts underrepresented groups.

The Hidden Diversity Cost

When we promote people before they’re ready, or when we can’t fill leadership roles internally, here’s what happens:

1. We default to “proven leaders” (read: people who look like previous leaders, usually white men from top-tier companies)
2. We eliminate the bench where diverse talent would develop the track record needed for future promotions
3. We create a cycle where underrepresented groups never get the “stretch opportunity” to build that leadership resume

At my last company (Slack), I watched this play out: They promoted 3 white male Directors to VP in 18 months. All qualified, all deserving. But it meant the 6 women and POC Directors who were “almost ready” never got that shot—and most left within 2 years because they saw the pattern.

When leadership pipelines are thin, we revert to risk-averse hiring—and that always disadvantages people who don’t fit the traditional leadership mold.

What I’m Seeing With Our Own Pipeline

We did an audit last month that was sobering:

Management Track:

• Engineering Manager: 60% underrepresented groups
• Director: 40% underrepresented groups
• VP (me): 1 person, Black woman

IC Track:

• Senior Engineer: 55% underrepresented groups
• Staff Engineer: 45% underrepresented groups
• Principal Engineer: 33% underrepresented groups

The leakage happens at every transition. And when we’re forced to hire externally because internal candidates “aren’t ready,” we’re hiring predominantly white male leaders from established tech companies—which just perpetuates the problem.

The Apprenticeship Model (With an Equity Lens)

Michelle mentioned leadership apprenticeships—I love this approach, but we’ve added an intentional equity component:

“Director in Training” Program (9-12 months)

We identify high-potential Engineering Managers who are 1-2 years away from Director-ready (not tomorrow, not 5 years out—the middle range). Then we explicitly invest in their development:

• Shadow current Directors for 3 months
• Own a significant cross-team initiative for 6 months
• Present to executive team quarterly
• Get executive coaching ($5K/person budget)
• Compensated at 75% of Director base during the program

The equity piece: We overweight applications from underrepresented groups because we know they’ve historically had fewer “stretch opportunities.” In the first cohort:

• 3 out of 4 participants were women or POC
• All 3 became Directors within 15 months
• The 4th (white male) chose to stay on the IC track as Staff Engineer

This approach costs money upfront ($15K per person in coaching + shadow time), but it builds a diverse bench that we desperately need.

The “Ready When” Framework

To Luis’s question about balancing promotion velocity with readiness—we’ve adopted what we call the “Ready When” framework:

Instead of “Are they ready for Director?” we ask:

1. Ready for what specific Director scenario? (team of 5 vs team of 30, greenfield vs legacy, strategic vs execution-focused)
2. What support do they need to succeed? (mentor, peer cohort, reduced scope initially)
3. What’s the cost of waiting? (retention risk, team frustration, competitive offers)
4. Who else is in the pipeline if they leave? (depth matters)

This lets us make differentiated promotion decisions instead of applying a single “readiness bar” to everyone.

Example: We promoted an Engineering Manager to Director 6 months earlier than planned because:

• She was getting external Director offers (cost of waiting: lose her entirely)
• We scoped the Director role to her strengths (team of 8, customer-facing product)
• We gave her an executive coach and a peer mentor (VP from another company)
• Pipeline depth: 0 other candidates in 12 months

Result: She’s crushing it, 94% team engagement, promoted 2 of her engineers to senior roles in 10 months, and we retained an incredible leader who would have left.

The Organizational Design Question

I want to push back gently on the framing of “promoting people out of roles faster than we can develop their replacements”—because I think that frames it as a development problem when it’s actually an organizational design problem.

If your only path to growth and compensation is vertical (IC → Senior → Lead → Manager → Director → VP), then yes, you’ll always have this crisis. But if you create multiple paths to impact and compensation:

1. IC Leadership Track (Staff, Principal, Distinguished with equivalent comp to Directors/VPs)
2. Specialist Roles (Security Architect, ML Platform Engineer with premium comp for deep expertise)
3. Horizontal Moves (Senior Engineer in Backend → Senior Engineer in ML, learning new domain)
4. Project Leadership (Lead critical initiatives without formal title/org changes)

Then promotion velocity becomes less critical because people have other ways to grow.

At our company, 40% of our compensation increases last year went to IC track or specialist roles—not management promotions. That reduced pressure on the management pipeline.

The Uncomfortable Question About Representation

Luis, you asked: “Are we promoting people out of roles faster than we can develop their replacements?”

I’d add: Are we promoting the same demographic of people out of roles while never developing diverse replacements?

Because if the leadership pipeline crisis means we keep hiring “proven leaders” from the outside—and those leaders are predominantly from one demographic—then we’re not just facing a capacity crisis, we’re systematically excluding entire groups from leadership.

The 45% of senior leaders eligible for retirement? Predominantly white men. The 18% increase in executive demand? Being filled by predominantly white men from top-tier companies. And the 25-40 year olds who should be developing into those roles? The most diverse cohort in tech history, and we’re not giving them the runway to develop.

What’s Actually Working

Three tactical things that have helped us:

1. Mandatory succession planning for every Director+ role with named candidates, development plans, and timelines
2. Retention conversations 2 levels down (I talk to EMs about Staff Engineers they’re worried about losing)
3. External advisory board of diverse tech leaders who review our promotion decisions quarterly and push back when we’re making risk-averse choices

And one cultural shift: We’ve started celebrating “development velocity” as much as “shipping velocity”—recognizing leaders whose teams produce the next generation of leaders, not just the next product feature.

It’s not perfect, and we’re still figuring it out. But I’m convinced the companies that solve for both pipeline depth AND pipeline diversity will have a massive competitive advantage in 2027-2028.

[product_david]

Coming from the product side, this leadership pipeline discussion is fascinating because we’re having the exact same crisis in product leadership—and I think the root cause is the same across functions: we’ve optimized organizations for scale without building the systems that enable scale.

The Product Parallel

In product orgs:

• Product Manager → Senior PM: 2-3 years experience, owns 1-2 features
• Senior PM → Group PM or PM Lead: 4-6 years, owns product area
• Group PM → Director of Product: 7-10 years, owns product pillar
• Director → VP Product: 10-15 years, owns product strategy

But here’s the problem: When companies scale rapidly (Series B to Series C in 18 months, like we did), you need 3 Group PMs and 2 Directors seemingly overnight. And if your bench isn’t ready, you’re either:

1. Promoting PMs who’ve never managed anyone into leadership roles
2. Hiring external leaders who don’t understand your product or customers
3. Having Directors and VPs do IC work because you don’t have enough senior PMs

Sound familiar? It’s the same dynamic Luis is describing on the engineering side.

The Strategic Misalignment

Here’s what bothers me about this discussion—and I say this with respect because I think both Michelle and Keisha are spot-on in their tactical approaches—we’re treating a strategic problem with tactical solutions.

The strategic problem: Companies are scaling organizational complexity faster than they’re developing leadership capacity.

The tactical solutions: Apprenticeships, dual tracks, succession planning, development programs.

Don’t get me wrong—these tactics work. But they’re like taking Advil for a broken bone. They address symptoms without fixing the underlying issue.

The Business Model Question

Let me reframe this: What if the leadership pipeline crisis isn’t a failure of development—it’s a feature of the business model?

Companies that scale rapidly (2-3x team growth annually) create leadership gaps by design:

• Investors expect aggressive growth to justify valuations
• Aggressive growth requires organizational expansion
• Organizational expansion creates leadership demand
• Leadership development takes 2-5 years
• Math doesn’t work

You can’t grow headcount 2x per year and expect internal leadership development to keep pace. It’s arithmetically impossible.

So companies have three options:

Option 1: Slow down growth (reduce hiring targets, accept longer time-to-market)
Option 2: Hire external leaders (accept cultural dilution and institutional knowledge gaps)
Option 3: Promote before ready (accept underperformance and organizational debt)

Most companies choose Option 3 because it feels like they’re solving the problem internally. But as Michelle pointed out, the cost of bad decisions made by unready leaders can be massive.

What I’m Seeing From the Product Seat

The engineering leadership gap creates direct product consequences:

1. Slower decision-making: When EMs aren’t ready for Director roles, they escalate decisions that should be made at their level → Directors spend time on tactical decisions instead of strategy → product roadmaps slow down

2. Architectural debt: Unprepared technical leaders make short-term architecture choices → 12-18 months later, we’re replatforming because we hit scalability walls → product development pauses for quarters

3. Poor eng-product partnership: When engineering leaders lack strategic thinking experience, product-engineering alignment suffers → we ship features that work but don’t solve customer problems → product-market fit erosion

At my company, we have four open Director of Engineering roles that have been open for 5+ months. In the meantime:

• Our VP Engineering is doing Director-level work (backlog grooming, sprint planning)
• Our Directors are doing EM-level work (1-on-1s, performance reviews)
• Our EMs are doing IC work (code reviews, bug fixes)

Everyone is operating one level below their title. And from the product side, this means I can’t get strategic input on technical feasibility for our 12-month roadmap because everyone is fighting today’s fires.

The ROI Conversation Nobody Wants to Have

Luis mentioned $78B in lost revenue from unfilled leadership positions. Let me add a product lens to that:

Cost of unfilled leadership roles:

• Slow hiring cycles (68-day average) → $X lost opportunity cost
• Leadership gaps → $Y organizational inefficiency

Cost of poorly filled leadership roles:

• Bad architectural decisions → $240K in Michelle’s example
• Product-market fit erosion from poor execution → potentially millions in lost revenue
• Organizational churn from underperforming leaders → 18% turnover cost according to retention research

The question: Would we be better off intentionally leaving roles unfilled for 12-18 months to give internal candidates time to develop, rather than promoting too early or hiring external leaders who don’t fit?

That’s radical, I know. But if the choice is between:

• A VP Engineering who’s not ready making $240K mistakes
• No VP Engineering for 12 months while we develop the Director who’s 80% ready

…maybe the second option is actually less expensive?

The Framework Question: Development Velocity vs Career Velocity

Keisha mentioned her company celebrates “development velocity” as much as shipping velocity. I think that’s exactly right, but I’d push it further:

We need to measure leadership development as a business KPI, not an HR metric.

What if we tracked:

• Leadership Pipeline Coverage Ratio: For every critical role, how many ready/almost-ready internal candidates exist?
• Leadership Development Cycle Time: How long does it take to develop someone from EM → Director? (Is it getting faster or slower?)
• Promotion Success Rate: What % of promoted leaders are still in their roles 18 months later and rated high-performing?

And what if we compensated executives based on these metrics? Not just shipping velocity or revenue growth, but whether they’re building the bench that enables sustainable growth?

The Uncomfortable Truth

I agree with Michelle’s conclusion: Companies that say “no” to promotions that create unsustainable gaps will win in 2027-2028.

But I’d go further: Companies that say “no” to unsustainable growth targets will win even more.

If your board is pushing 2x annual headcount growth but your leadership pipeline can only support 1.3x growth sustainably, the right answer isn’t to promote unready leaders—it’s to push back on the growth target.

That’s a hard conversation. Investors don’t want to hear “we need to grow slower to develop leadership capacity.” But the alternative—scaling organizational complexity faster than leadership capacity—leads to exactly the crisis Luis is describing.

What’s Actually Working (From the Product Side)

Three things that have helped us navigate this:

1. Explicit Leadership Capacity Planning

We model leadership needs 18 months out based on headcount projections. Then we work backward: If we need 2 new Directors in Q3 2026, who are the 4-5 EMs who could be ready by then? What development do they need? Are we willing to invest in that development?

If the answer is “we don’t have 4-5 viable candidates,” then we adjust our hiring targets—we can’t grow faster than our leadership capacity allows.

2. “Rent-a-Leader” External Advisors

Instead of hiring external VPs/Directors who may or may not work out, we’ve brought in 3 external advisors (1 VP Eng, 1 VP Product, 1 VP Sales) who:

• Attend our leadership meetings 1x/month
• Coach our Directors and EMs
• Provide strategic input on big decisions
• Don’t make day-to-day decisions or manage teams

This gives us access to experienced leadership perspectives without the commitment/risk of a full-time hire. And it gives our internal leaders exposure to executive-level thinking without promoting them before they’re ready.

3. Product-Engineering-HR Alignment

I meet with our VP Engineering and Head of People weekly to align on:

• Which leadership gaps impact product velocity most?
• Where should we invest in development vs hire externally?
• What growth targets are realistic given our leadership capacity?

This forces honest conversations about trade-offs before they become crises.

The Question I’m Wrestling With

Luis asked five questions, and I want to add a sixth:

6. Are we scaling companies at a pace that’s fundamentally incompatible with developing leaders from within?

Because if the answer is yes—if the business model requires 2-3x annual growth but leadership development takes 3-5 years—then we’re not facing a failure to develop leaders, we’re facing a structural impossibility.

And if that’s true, then the solution isn’t better development programs. The solution is different growth expectations—which means having very different conversations with boards and investors about what sustainable scaling actually looks like.