Take two teams, one with 6 people that produce a lot of value, and one with 50 people that produce... Let's say the same amount of value.
When the manager of the team with 6 people, in the same org, starts getting paid three times more than the manager of the team of 50, you'll stop seeing managers fight for headcount.
All of the economic incentives in the workplace lead to bloat, because people aren't paid for value added - they are paid market rate. The market rate for a manager of 50 people is higher than the market rate of a manager of 6 people.
It's like the gripe that engineers have in firms that don't have an engineering career track for vertical advancement. Good engineers are pushed into becoming managers, because that's the only way they can get rewarded. Likewise, managers are pushed into becoming managers of larger teams, because that's the only way they can get rewarded.