Almost every time somebody mentions growth in business context, they mean increasing the number of employees. Why?

It seems to be a pretty arbitrary dimension, especially taking into account that headcount isn’t the primary purpose of business. Making money is (at least in for-profits)!

There are big downsides of growing headcount:

  • You have to pay more in salaries
  • You get less efficient
  • You need more coordination
  • The company gets (more) hierarchical, with people at the bottom getting further from the vision, and managers on the top further from the actual work getting done.
  • You have more work in progress (which is bad) and it’s harder to change direction

There are other ways to improve the business that are less prominent:

  • Improve efficiency
  • Increase focus: drop your worst customers and products.
  • Make people that already work for the company more happy, efficient and loyal.