Overhead Coefficient: The Hidden Tax Per Developer
A 50-person engineering org we instrumented in February 2026 had a monthly overhead coefficient of K = 0.37. That means every $1 of direct development work was shadowed by 37 cents of indirect cost: meetings, code review, ramp-up, and a slice of CTO/EM/DevOps salary spread across the team. The CFO had been modelling overhead at a flat 30% loaded multiplier for three years. The actual number was 23% higher, and almost nobody in the company knew.
The bigger problem was not the gap. The bigger problem was that the 30% number was a single bucket, so even after you discovered the gap, there was nothing actionable inside it. Boston Consulting Group's 2024 report on G&A allocation in software firms made the same observation at industry scale: companies that report overhead as one line item find it nearly impossible to trim, while companies that decompose it into three components reduce it by 8–15% within two quarters.