The answer to every problem at my place is: more headcount, productivity drops further and further, more headcount, more headcount.
I suspect the economy would look very different if total headcount in a manager's org was the denominator in a manager's performance review, such that if you employ 10x as many people, you better have generated 10x as much profit. But this would also have lots of unintended consequences: management would be incentivized to employ as few people as possible, which means lots of people would be out of work and would be competing with your firm.
they probably do, it's just a matter of incentives, i.e. "It is difficult to get a man to understand something, when his salary depends upon his not understanding it"
maybe companies try to fix this with PIP quotas or something, but then this gets taken and perverted by the managers to where it has the opposite purpose and the highest rating goes to whoever helps build the empire the fastest