From the company perspective, this is still an alright state of affairs, because even when investors get skittish and less overtly speculative, the company can still improve profit numbers by cutting excess staff. Meanwhile in times of plenty, the hiring of that glut of employees drives the company value higher due to the speculation that they're going to be able to do all the things.
It's dumb, but investing is often a web of self-fulfilling prophecies. If investors think a company will increase in share price, they buy, driving up the share price, allowing the company to sell shares at a higher price, giving them more money to grow.
Another issue might be that without good management, the marginal utility of each new hire goes down fast. As a company trying to launch new features, fixing management is hard to measure and fix, but hiring is simple to measure and seemingly solves the problem.
i wonder if companies have seen increased valuations from saying they are hiring for tons of positions without actually following through on the actual hiring
That means it is better to make $101 with 20,000 employees than only $100 with 2 employees.
That's not how it work: a rational actor would take the $20 million and invest it in 40 different films costing $.5 million each if he could make an expected profit of $.5 million on each of the 40 cheap films.
In other words, a rational economic actor will keep adding employees (or any other expense) as long as adding employees increases profits, but will not keeping adding assets as long as doing so increases profits because assets have opportunity costs.
To account for the opportunity costs, investors commonly speak of return on investment (profit divided by amount invested) rather than profit, because that is really what they're trying to maximize. Recasting what I just wrote in the new, crisper language, the rational actor will add any employee, any other cost and any investment to a firm as long as doing so increases return on investment.
It's also better from a managing perspective because if you have 10% of bloat and then have a bad quarter, you then have a lever you can pull to show you are getting stuff done. Its how managers smooth their performance, you overhire in good quarters to lower the profitability comps, and then fire to buffer up bad quarters.
There’s also an element of large companies working on many different things, and the more you silo projects the more people you need because many projects end up duplicating work.
You also don’t necessarily see the output of teams at large companies, potentially for years, so you see large numbers of people working but there’s no external/publicly visible product.
But then you also have “we’re successful right now so let’s pretend that the current growth rate will continue forever and hire accordingly” which is mismanagement that eventually needs to be corrected.
There is also saturation points for advertising where customers don't respond.