A senior programmer is challenging our younger team lead's decisions. Should I let hierarchy or experience speak?

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You should side with whoever has the best idea, obviously.

The whole point of a senior engineer is that they have the expertise to disagree with design choices.

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challenging is always good as it stays respectful. Either the team finds a better decision or the non-lead learns something.

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If the comments are valid, enforcing hierarchy will lead to you losing the senior. From personal experience and experience of my colleagues that may be one of the most frustrating situations.
Can you make him an advisor to the lead and facilitate a reasonable discussion without egos getting involved?

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Why not both?

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Talk it out and set a compromise? It’s usually not just black and white.

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I agree with the previous comments stating that challenging ideas is totally fine… With the caveat that it has to be respectful. I was in a similar situation to your manager several years ago… I had a lead who was challenging me, but he did it in a really snarky, comments under his breath, eye rolling, way. And that was awful. I also think it’s important that you be very clear that the manager will make the final decision. If you get into a situation where members of the team are going around the manager to say, the Director, that’s going to really mess up the team in the long run. And also communicate to the manager that you expect them to be open to ideas that contradict their own. I learned a long time ago that just because I’m the manager doesn’t mean that my ideas are the best :)

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Yeah, it's important to allow new perspectives to have a voice. Otherwise, everything will always sound the same because it's coming from one group of "experienced" folks.

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While the Senior Programmer may have valid suggestions or points, I think it’s important to maintain some kind of a hierarchy to avoid anyone feeling undermined. Wondering if there’s a way for them to collaborate without letting the Team Lead feel defeated..

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Senior developer should have and feel a freedom to articulate and promote the ideas. Team lead should have a right for a final say though. And this final say should be respected, even if disagreed with.
But if team lead was wrong, they should be left to deal with consequences. This is the moment where the senior often leaves the team because “he said so”. This is the dynamic that should keep the team lead in check and prevent him or her from being stubborn, especially if they are not sure.

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Experience.

The senior developer should know better and try to resolve the disagreement behind the scenes with the younger lead. If they can't agree the developer should defer to the lead. If it is something super important escalate to next level of management who ideally should make a call. Most likely by getting a peer our outsider to help evaluate.

Can’t agree that senior developer should know better. That’s the reason why he prefers to stay as a senior developer while having more experience. Because he doesn’t want to deal with people and soft skills much, he is better off with applying hard skills. Handling this should be on lead’s plate, even if he is younger.

When I give advice to junior folks, I always say the next level of success is surprising less related to technical skill, but ensuring what skill you have has the largest business impact. This always requires learning how to work with people understanding their concerns and agenda and adjusting to it. Doing the right thing is sometimes giving people the space to fail.

If there is a technical issue the senior engineer should explain a simple low risk experiment or next step to steer everyone toward the right direction. If such a thing has been done and lead is still being stupid, senior engineering can start putting in process or technical guardrails to allow for a soft fail.

Senior engineers should avoid public drama. Facts should drive decisions or their should be guardrails to allow for failure.

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