alt Hacker NewsThis is the lump of labour fallacy, right? Companies don't actually have to have fixed labour budgets; indeed ideally firms should be always willing to hire/retain a worker at a salary less than that workers marginal revenue product, as this is profit maximising.
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vovavili • today at 9:02 AM
Companies have bureaucracies and bureaucracies are very much budget-constrained.
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Apart from the general difficulty of organising like this and actually evaluating the marginal revenue from an additional employee (it's hard enough to attribute to your existing employees!), this marginal revenue is likely to have diminishing returns as the company grows and from a risk management point of view you will want to have some margin so that you don't flip into losing money as soon as business slows a little.