You're asked to cut your team's budget by 20%. How do you approach this?
Why This Is Asked
Interviewers want to see how you make difficult trade-offs under constraints. They're assessing your ability to analyze options objectively, involve the team appropriately, protect what matters most, and communicate decisions clearly—without demoralizing the team or sacrificing long-term health.
Key Points to Cover
- Understanding the "why": clarifying the business context and timeline
- Analyzing options: tools, contractors, travel, training, headcount, scope reduction
- Prioritization: protecting mission-critical work and team morale
- Communication: transparently explaining decisions and involving the team where appropriate
STAR Method Answer Template
Describe the context - what was happening, what team/company, what was at stake
What was your specific responsibility or challenge?
What specific steps did you take? Be detailed about YOUR actions
What was the outcome? Use metrics where possible. What did you learn?
đź’ˇ Tips
- Show you consider multiple levers—not just headcount—and weigh trade-offs
- Demonstrate empathy: acknowledge the impact on the team while staying focused on solutions
- If you've never faced this, outline a principled approach and tie it to similar prioritization decisions
✍️ Example Response
STAR formatSituation: During a company-wide cost reduction initiative, I was asked to cut my team's budget by 20%. The team had 10 engineers, and we had contracts with contractors, tools, and training. I had two weeks to propose a plan to my VP.
Task: I had to analyze options, protect what mattered most, and communicate decisions in a way that didn't demoralize the team.
Action: I first clarified the "why" with finance—was this a one-time cut or an ongoing constraint? It was ongoing. I then mapped every budget line: headcount, contractors, tools (AWS, Datadog, etc.), training, travel, and discretionary. I ranked by impact on delivery and morale. I ruled out across-the-board cuts—they feel arbitrary. I proposed: (1) reduce contractor spend by not renewing two part-time roles and redistributing work; (2) consolidate tools (we had overlapping monitoring solutions); (3) defer non-essential training for one quarter; (4) reduce travel to one conference per team per year. I avoided headcount cuts—losing people would have hurt delivery and morale most. I presented the plan to my VP, got approval, and then shared it with the team in a candid 1:1 and team meeting. I acknowledged the impact and invited feedback.
Result: We hit the 20% target. We had to defer some nice-to-haves, but we protected core capacity and team morale. One contractor role was converted to full-time later when budget improved. I learned that budget cuts require a clear framework—impact vs. savings—and that transparency with the team builds trust even when the news is hard.
🏢 Companies Known to Ask This
| Company | Variation / Focus |
|---|---|
| Amazon | Frugality, Ownership — "You need to cut your team's budget by 20%. How do you approach it?" |
| Meta | Making hard calls |
| Microsoft | Execution |
| Netflix | Freedom & Responsibility, judgment |
| Uber | Entrepreneurship, results |
| Salesforce | Customer success |