I just spent three months trying to hire a VP of Engineering. We interviewed 47 candidates. Made offers to 3. All three declined—two for other opportunities, one decided to stay at their current company after a counter-offer. We’re back to square one, and our engineering org of 80 is rudderless while I’m stretched too thin.
This isn’t just my problem. It’s everyone’s problem in 2026.
The Numbers Don’t Lie
According to JRG Partners’ research, we’re looking at an 18% increase in demand for engineering executive roles by 2026. That’s a massive jump in a market where qualified candidates were already scarce.
The global cost? An estimated $78 billion in lost revenue annually from unfilled critical engineering leadership positions. And engineering executive turnover in high-growth sectors is averaging 15%—notably higher than general executive turnover.
We’re in a full-blown leadership crisis, and most companies are pretending it’s a hiring problem. It’s not. It’s a development problem.
The Root Causes
1. The Great Retirement Wave
Baby Boomer engineers and executives are retiring en masse, taking decades of institutional knowledge and proven leadership acumen with them. At Microsoft, I watched this unfold in the 2010s. We knew it was coming, but most companies didn’t prepare succession pipelines.
2. The IC Exodus
Engineers are leaving technical roles for management faster than ever—engineering PMs now earn $114K+ on average, and about half of surveyed engineers are concerned about AI impacting job availability. The financial incentive is real. But here’s the problem: we’re losing our best technical contributors to management roles they’re often unprepared for.
3. The “Best IC = Best Leader” Fallacy
This is where most companies shoot themselves in the foot. You promote your most talented senior engineer to Engineering Manager because they’re brilliant at solving technical problems. But technical excellence doesn’t automatically translate to leadership capability.
Leading requires:
- Strategic thinking, not just tactical execution
- People development, not just code reviews
- Organizational design, not just system architecture
- Cross-functional collaboration, not just team coordination
- Business acumen, not just technical depth
These are different skills. And most companies expect newly promoted managers to magically develop them overnight while still carrying IC responsibilities.
Why Traditional Pipelines Are Failing
I’ve seen succession planning up close at Microsoft, Twilio, and several startups. Here’s what doesn’t work:
The “Replacement Chart” Approach: You identify high performers and assume they’ll be ready when the time comes. But without intentional development, they’re not. You end up promoting people who aren’t ready or hiring externally in a panic.
The “Sink or Swim” Method: Promote someone to EM and hope they figure it out. Some do. Many don’t. The cost in burned-out leaders and damaged teams is enormous.
The “Wait for Perfect Timing” Strategy: “We’ll invest in leadership development after we hit our growth targets / close the funding round / ship this feature.” But there’s never a perfect time, and by the time you need leaders, it’s too late.
What Actually Works
Companies with dedicated internal leadership development programs see 25% higher retention for engineering leaders. That’s huge.
Here’s what I’ve learned works from 25 years in this industry:
1. Parallel IC and Management Tracks
Not everyone wants to manage, and that’s okay. Create clear progression paths for both. Staff Engineer → Principal → Distinguished Engineer should be as prestigious and well-compensated as EM → Director → VP.
2. Behavior-Based Development (Not Time-Based)
Don’t promote based on tenure. Look for leadership behaviors: Do they mentor? Can they influence without authority? Do they think strategically? Can they navigate ambiguity? These are leadable skills, but you have to deliberately cultivate them.
3. Leadership “Scaffolding” for First-Time Managers
Reduce IC workload during the transition. Provide executive coaching. Create peer learning groups. Pair them with experienced mentors. Don’t throw them in the deep end and call it “development.”
4. Cross-Functional Exposure Early
Rotate high-potential engineers through product, customer success, sales engineering. Leadership requires understanding the full business, not just the engineering function.
5. Sponsorship, Not Just Mentorship
This is especially critical for underrepresented engineers. Mentors give advice. Sponsors advocate for you in rooms you’re not in, open doors, take career risks on your behalf. Every high-potential engineer needs both.
The Uncomfortable Truth
We’re not actually short on talented engineers who could be great leaders. We’re short on companies willing to invest in developing them before it’s urgent.
Leadership development is expensive. It’s slow. It requires pulling people off critical projects. It’s hard to measure ROI. Executives pay lip service to it but rarely fund it adequately.
And so we’re stuck in this cycle: scrambling to hire externally, paying premium compensation, losing them to retention issues, repeat.
My Question to This Community
How are you approaching leadership development at your companies?
Are you building pipelines or hoping to hire your way out of this crisis? What’s working? What failed spectacularly?
And for those of you who made the IC → EM → Director → VP climb: What would you have wanted your company to do differently to prepare you?
I’m especially curious about experiences at companies <200 people. At Microsoft we had resources. At startups, it’s a different game.
Let’s talk about this honestly. Because right now, we’re collectively failing at this, and the cost is getting too high to ignore.