The 2025 Engineering Leadership Reality Check: Why 38% Have Less Motivated Teams (And What Actually Works)
Lloyd Moore
New data from LeadDev shows 38% of engineering leaders report less motivated teams than a year ago. Only 21% describe their teams as healthy. 12% say they’re emotionally drained daily.
If you’re a founder or engineering leader reading those numbers and thinking “my team seems fine,” you might be six months behind reality.
I’m seeing this across my network right now. Good engineers going quiet in standups. High performers suddenly interviewing elsewhere. Teams that used to ship fast now dragging on simple tasks.
The problem isn’t one thing. It’s several things compounding.
What’s actually happening in 2025
The motivation crisis isn’t mysterious. Here’s what’s driving it:
AI anxiety is real. Engineers are being told AI will transform their work while simultaneously watching AI generate code that needs constant fixing. The message is: your job is changing fundamentally, but we don’t know how yet. That’s exhausting.
76% of engineering teams are using AI tools now. But 60% say AI hasn’t actually improved their productivity. Some say it’s made quality worse because juniors are copy-pasting code they don’t understand.
Engineers feel caught between “learn AI or become obsolete” and “AI isn’t actually helping yet.” That tension wears people down.
Return-to-office mandates broke trust. Companies that promised remote work forever are now demanding people come back. Whether you agree with RTO or not, the broken promises damaged trust.
Trust matters for retention. When people don’t trust leadership, they start looking elsewhere.
Economic uncertainty means more work, same headcount. Many companies froze hiring or did layoffs. The remaining engineers are doing more with less. That works short-term. Long-term, it burns people out.
The 2025 pattern: we’re asking engineers to absorb AI uncertainty, return to offices after being told they wouldn’t have to, and do more work with fewer people. That’s a lot.
Leadership responsibilities expanded without support. Engineering leaders are now expected to manage performance, handle HR issues, think strategically about AI, navigate hybrid work, and still deliver. But most haven’t been trained for this expanded role.
Only 21% describe themselves as healthy. That’s not surprising when the job tripled in scope.
What doesn’t work
Before I tell you what works, let’s clear away what doesn’t.
Generic perks don’t fix motivation. Ping pong tables, free snacks, company swag - these don’t address the actual problems. Engineers aren’t leaving because the office coffee isn’t good enough.
Surface-level culture initiatives are obvious. “We value work-life balance” means nothing if people are working 60-hour weeks. “We encourage open communication” means nothing if feedback gets ignored.
Engineers can spot performative culture instantly. It makes the problem worse, not better.
Motivation speeches don’t work. Telling demotivated people to be more motivated is useless. They know you want them motivated. They can’t just decide to feel differently.
Throwing money at retention without fixing root causes fails. Counteroffers might keep someone for six months. But if the underlying problems remain, they’ll leave anyway.
The common thread: treating symptoms instead of causes doesn’t work.
What actually works
I maintained 96% retention at Blockdaemon while scaling from 10 to 187 engineers. Not because we had better perks. Because we addressed root causes systematically.
Here’s what actually mattered:
Give people autonomy over their work
Engineers stay engaged when they have control over how they work. Not what they work on - that’s set by business needs - but how they approach problems.
We structured teams so they could complete work independently. Minimal cross-team dependencies. Minimal approval processes for technical decisions. Trust that they’d make good choices.
Micromanagement kills motivation faster than anything else. Autonomy preserves it.
Make career growth visible and real
People leave when they can’t see their next step. We made career progression explicit. What does the next level look like? What skills do you need? What projects will get you there?
But critically: we followed through. People who hit the criteria got promoted. Internal promotion rate was 70%. People could see that growth was real, not theoretical.
Protect people from constant context switching
Nothing destroys productivity like being pulled into five different urgent priorities. We built systems to protect focused work time.
Teams had clear priorities. Interruptions were minimised. People could go deep on problems instead of being constantly fragmented.
The 4-week rotation system for onboarding meant existing teams stayed productive while new people joined. That continuity mattered.
Communicate the mission relentlessly
People don’t leave companies with clear missions. They leave when they don’t understand why their work matters.
At any point in someone’s time at Blockdaemon - week one or year three - they could tell you what we were trying to achieve and why it mattered. That wasn’t accident. I over-communicated constantly until it became part of how people thought.
Purpose sustains motivation when the work gets hard.
Address performance issues directly
Nothing demotivates high performers faster than watching low performers stay. We used SPACE framework for evaluations - Satisfaction, Performance, Activity, Communication, Efficiency. It wasn’t perfect but it was systematic.
More importantly: we acted on results. People who weren’t performing got support to improve or were let go. High performers knew their effort mattered.
Fair evaluation systems maintain motivation. Unfair systems destroy it.
Pay competitively everywhere
We paid globally competitive rates regardless of location. This wasn’t altruism. It was pragmatism.
If you want to retain good people, you can’t underpay them because they live somewhere cheaper. They’ll find companies that pay globally competitive rates. Which means you lose them anyway.
Competitive compensation doesn’t guarantee retention. But below-market compensation guarantees attrition.
The 2025-specific challenges
Some problems are new this year. Here’s how to think about them:
On AI anxiety: Be honest about uncertainty. Don’t pretend you know exactly how AI will change engineering work. But give people space to experiment and learn. Make it clear that learning AI tools is encouraged, not required overnight.
The teams handling AI best are treating it as augmentation, not replacement. Code review standards stay high. Testing requirements stay strict. AI helps, but humans still own quality.
On return-to-office: If you’re mandating RTO, be clear about why and what flexibility remains. If you’re staying remote, be explicit about it. The uncertainty is worse than either decision.
Broken promises damage trust more than unpopular policies. Say what you mean. Do what you say.
On doing more with less: Be realistic about capacity. If you froze hiring, you can’t also accelerate the roadmap without burning people out. Something has to give.
The teams managing this well are protecting their people by saying no to marginal projects. Ruthless prioritisation preserves team health.
On expanded leadership responsibilities: Engineering leaders need support. Training, coaching, peer groups, time for their own development. You can’t ask people to do three jobs and expect them to figure it out alone.
What this means for you
If you’re leading an engineering team in 2025, here’s what to focus on:
Check in properly. Not “how are you doing?” in standup. Actually talk to people. Are they overwhelmed? Burned out? Losing motivation? You can’t fix problems you don’t know about.
Look for early warning signs. High performers going quiet. Increased sick days. People taking longer to ship things. These signal problems before people resign.
Give people control where you can. You can’t control the business pressure or market conditions. But you can give people autonomy over how they work, what they focus on, and how they solve problems.
Make growth real. If people can’t see their next step, they’ll leave to find it elsewhere. Make career progression explicit and follow through on it.
Protect focus time. Constant interruptions and context switching kill both productivity and motivation. Build systems that let people do deep work.
Be honest about uncertainty. Don’t pretend you have all the answers about AI, remote work, or the market. Acknowledge the uncertainty while being clear about what you can control.
The engineering leadership challenge in 2025 isn’t one dramatic crisis. It’s the accumulation of smaller stresses that compound into quiet quitting, attrition, and team dysfunction.
The data says 38% of teams are less motivated. Only 21% of leaders feel healthy. That’s not going to fix itself.
But it is fixable. Not with perks or motivational speeches. With systematic approaches to autonomy, growth, focus, purpose, and fair treatment.
The teams that come through 2025 strong won’t be the ones with the best ping pong tables. They’ll be the ones that addressed root causes while everyone else treated symptoms.