11/20/2013 | By Adam Hyder
We use ratios every day. Sometimes, we use them to describe the relationship between two numbers; other times, we use them to make a comparison between two things. In the world of finance, ratios are used to look at the health of a company. For example, Price-Earnings Ratio (P/E Ratio) is used by investors to value a stock. A high P/E ratio means that the investors are anticipating a higher growth in the future. On the other hand, companies that are losing money do not have a P/E ratio. Not having a P/E ratio, however, does not mean that an investment is bad. For example, many SaaS companies have no P/E. Yet they have astronomically high market caps and, often, very bright outlooks.
Bottom line: Ratios are only meant to provide initial perspective on a relative comparison. But once you start with the ratio, you then have to look at other factors before making decisions.
In my many years spent building a software career in Silicon Valley, I have often been asked about the Developer-to-Quality Assurance (QA) Engineer ratio, or Developer-to-Product Manager ratio, or the Developer-to-Sales ratio. That’s understandable—because unlike P/E ratios, these comparisons are not publically available. In the past, I’ve simply answered these questions based on the numbers from my current or past companies. Now, though, I don’t have to look at Jobvite alone to answer that question. Instead, I can look at a large sample of aggregated Jobvite customer data and glean some solid facts.
Knowing this, I decided to take Jobvite’s Big Data infrastructure for a spin. After all, we provide recruiting solutions for the fastest growing companies in Silicon Valley.
Here’s what I found:
- Companies hire 1 Product Manager for every 4 Engineers
- Companies hire 11 Sales people for every 10 Engineers
As with Price-Earnings comparisons, these ratios are just a starting point. These are averages based on results from thousands of our customers—and clearly, there are many other organization-specific factors that will skew these results. For example, a self-service e-commerce business will understandably have a higher number of engineers compared to sales positions.
One thing I was not able to discern, however, was the Developer-to-QA engineer ratio. One possible justification could be that in today’s test-driven, agile development world, companies simply do not have a distinction between a developer and a QA engineer, and consequently, developers also perform the duties of a QA engineer. I will continue to look for patterns here.
Again, these ratios and observations are based on averages taken from thousands of companies—and, like any other ratios, they are just a reference data point.
Do you have any thoughts on hiring ratios in your industry or organization?
