ROI: The $ Value of Growing Your Engineers (Before You Lose Them)

Engineer development is often the first thing to get deprioritized when budgets tighten. It's viewed as nice-to-have, hard to measure, or something HR should handle quietly in the background. But here’s the truth: not investing in your engineers’ growth is costing you more than you think. Much more. This article makes the case for development as a strategic investment, as opposed to a perk, with tangible ROI, backed by real-world insight and industry data.

TL;DR

• Replacing engineers is expensive: up to 200% of their salary in some cases.

• Development is a cost-effective retention and productivity strategy.

• The ROI is measurable: reduced turnover, stronger performance, and faster delivery.

• Leaders must factor in lost knowledge, hiring drag, and morale drop-off when comparing investments.

• If you think development is expensive -> try replacing your top performers.

Why Development Often Gets Left Behind

Career development is something everyone agrees is important until it’s time to budget for it. Then it quietly disappears behind higher-priority initiatives focused on optimizing revenue-generating activities, maintaining critical infrastructure, providing essential levels of customer support, and retaining salaries for core revenue-generating and critical roles.

When a new employee asks about their career levels and prospects, the answer is:

“The company does have a career ladder... but it’s not very granular. It mostly determines pay bands.”

This describes what engineers actually experience: no clear path within their current level, no visible next step unless a higher-level role opens up, and little to no room for creative progression. The result? Highly capable engineers left waiting in limbo. For months, sometimes years.

We forget that stagnation has a cost. And in engineering teams, it’s rarely visible until it’s already doing damage.

The Real Cost of Losing Engineers

Replacing a mid- to senior-level engineer has implications that go beyond just filling a role on the organizational chart. It involves a real cost in terms of lost time, a dip in team momentum, and the departure of valuable institutional knowledge. Consider the time investment required for recruiting, the impact on team velocity during onboarding, and the simple fact that accumulated expertise leaves with the individual. And the data backs it up:

According to SquadMakers, replacing a developer can cost 75% to 200% of their annual salary. According to an estimation by CodeSubmit, hiring a full-time software developer can cost around $35,685, factoring in recruitment, onboarding, and lost productivity. But the real cost will vary by company.

Once hired, a new engineer typically takes 3–6 months to ramp up, and even longer to reach the full confidence and trust that a departing engineer had. And that’s not counting the time existing team members spend mentoring, covering, and regaining lost momentum.

The kicker? These costs rarely show up on a single line item. They're distributed across departments, time zones, and project delays, making them easy to ignore and hard to challenge.

Why Development Is a Smarter Investment

At one point in a conversation with a fellow engineering leader, the following question emerged:

“Why am I putting so much effort into those development exercises?” It was a rhetorical question, followed immediately by the answer: “Because I intuitively feel it’s a good investment of my time.”

And it is. But intuition isn’t always enough to justify budget. Let’s break it down.

Imagine investing €8,000–€12,000 annually in targeted development for a mid-level engineer; these can be courses, coaching, cross-team opportunities, and time for focused growth projects. Compare that to:

• $30-60,000+ in hidden costs to replace them

• 3+ months of reduced velocity

• Lost tribal knowledge, system history, and customer nuance

Now multiply that by three or four engineers in your department per year. What’s cheaper?

Here’s what you gain when you do invest:

• Increased retention: Engineers stay longer when they see a path forward.

• Improved productivity: Engineers perform better when they feel confident, challenged, and recognized.

• Stronger team morale: When one person grows, it often lifts others with them.

• Resilience during reorgs or product shifts: When people are used to growing, change doesn’t destabilize them - it activates them.

It’s easy to think of development as a long-term play with intangible returns—but the data tells a different story.

A study published on ResearchGate reviewed the effects of employee training on productivity and found that targeted development programs can increase individual productivity by up to 20%. That’s not a vague morale boost—that’s real output. Teams that consistently invest in skill development see gains in efficiency, quality, and delivery speed.

Just as importantly, those gains compound over time. Employees who feel supported in their growth tend to stay longer, contribute more confidently, and pass on their knowledge to others, strengthening the team from within.

So, What’s the ROI?

You don’t need to calculate every variable to know this:

• If your engineers stay longer, you win.

• If they perform better, you win.

• If they’re excited about their work, they bring others with them.

• If they leave, you lose far more than just a headcount.

And yes, the business case exists. Employee-driven company practices have been shown in studies to increase customer satisfaction by as much as 30 percent. Research has also suggested that the use of recognition and rewards results in increased employee satisfaction, retention, and productivity. Positive employee experience metrics have also been correlated with a 50% increase in revenue growth.

If you want to improve retention, performance, and hiring efficiency, start by treating growth like a strategic priority, not an afterthought.

If you’re a VP, a finance leader, an HR partner, or a manager with budget responsibilities, now is the time to shift your view. Development isn’t soft. It’s measurable. It’s strategic. And it’s cheaper than churn.