[ravenstine]

Your observation is a good example of the perverse incentive. Fortunately, everyone can win in this particular scenario. If the company can pay its employees on time and doesn't care that much about minimizing costs, and managers can spread the wealth by providing jobs, then it's hardly the worst thing in the world.

Employees can also be seen as insurance against bottlenecks created by other employees. The more employees you have on hand, the less likely that a particular employee going AWOL will cause a noticeable interruption. I've seen companies make the mistake of only hiring a minimal number of engineers, for instance, and end up in a sticky situation when one of them leaves.