alt Hacker NewsThe problem I have: The CEO (and the investors, or the whole industry) is obsessed with ARR per employee. That's the key metric (in their mind).
It doesn't matter how much the employee costs. Let's assume you can hire two Juniors or one Senior for the same salary. If you have to optimize for ARR per employee - you can only hire one person. And if you have the choice between hiring a Junior or hiring a Senior... you're going to hire the Senior.
Goodhart's law fully applies here.
When you say the "whole industry", which industry are you referring to? The entire technology sector? Venture-backed companies specifically? Growth-stage VC-backed specifically?
This claim is counterintuitive to me in many business contexts - ex. for an established privately-held company issuing dividends to the owners, what incentive do owners have to emphasize ARR per employee rather than net income?