I witnessed what you are describing first-hand. Some years ago, in a job far away, the overall account manager for my region managed everything through a single budget spreadsheet. Decisions were made entirely based on cost without any actual thought to the outcome of the decision. While in the middle of cutting cost, the company failed to deliver some important contracts that led to the company being penalized (to the tune of tens of millions of dollars). The irony, if they'd just spent a fraction of the penalty amount hiring people, they would have been able to deliver on the contracts and avoided the penalty.