The Instagram and WhatsApp example keeps coming up like clockwork in various contexts. A recent discussion that I recall: https://news.ycombinator.com/item?id=22471355
> If your incentive system rewards hiring over results, expect headcount to grow...
Goodhart's Law in action? "When a measure becomes a target, it ceases to be a good measure."
But the question is, can they do it without the bloat? My understanding is yes - and I can probably even tell you how.
I dont mean to be snarky, but isn't the "how" sort of obvious (though hard to achieve)? You'd have to align reward with value generated per unit of risk and nothing else. The more value you generate (on a risk adjusted basis), the greater your reward and promotion. When companies grow larger, it becomes difficult for them to measure value generated, or too tedious, or politics overpowers governance.
I'd be curious to hear your proposal on a fix.
I have no idea how to change the politics of hiring more, I can only hope if I was to ever start a company that I can try to make my own firm so.
This doesnt mean big company Directors and Executive Directors are not deserving of their promotions, it just means that they usually have an added hoop to jump thru -- increasing headcount.
I've been in senior ranks of big companies, and spoke to plenty of counterparts at other companies, and it is almost always the story.
Secondly, headcount is a darling of many HR systems. You might cite exceptions with Google or Stripe but your typical corporate environment will not put much effort into fairly evaluating career advancement (e.g., measuring impacts, outcomes, risk) for anyone.
If you are sales or profit focused, lucky you. But outside of that, most HR systems will use simple metrics like "how many people report to you" or "how much budget do you control" to evaluate your promotions and pay. Some will even have literal formulas (e.g., you need 6 reports to go to Director; you need 6 Director reports to go to Executive Director; etc.)
It is done because it is easy and convenient for HR. Unfortunately, obviously, people then try to game the system and over-hire.
You might have to produce an "impacts report" at EOY but that is often HR-theater. Get down to "why" and you will find it came down to how many direct reports you had. Or how much budget you burned.
If your incentive system rewards hiring over results, expect headcount to grow I urge those in governance positions to ensure their organizations have a real impacts assessment system to evaluate employee progress. There is no better way to kill motivation among workers than tell them that impact has no effect.