Another reason is that companies try to maximize profit, not profit per employee.
If a company can 1.5x their profit by doubling their headcount, they would do it even if it seems less efficient because that's what the investors want.
If a company can 1.5x their profit by doubling their headcount, they would do it even if it seems less efficient because that's what the investors want.
Having more FTE makes your company more trustworthy so in B2B market having more FTEs makes it easier to sign on more customers from F500. If you have 10 employees good luck having F500 company taking you as a serious business.
Having more headcount is also making company more trustworthy for banks to get loans.
So making it easier to get customers and making it easier to get loans for future growth is also coincidentally more worth for investors - but profit per FTE is still important and if you can make loads of money with 10 employees and the same amount of money with 100 - I would invest in the first one.