One anecdote I have was the organization denied my request to by a Microsoft program (cost was $150 and no one questioned my need for it, but felt that it could be postponed for a few months). My need to use that program did not go away and I spent a lot more effort and it cost the company a lot lot more than $150 as I had to use workarounds. My leadership understood that it took a longer for me to do certain tasks, but could not fight the bean counter for a few months. When you have such situations, requester's now have to spend inordinate time justifying the request. This reduces morale and increases wasted time.
Again, to be fair, I have see this in other organizations. In my experience, after a few months, such programs are unceremoniously laid to rest, however the bad feeling and ill effects persist for a long period of time. While cost control is important, nit picking is not cost control. Another example (based on true experiences) an employee who is traveling to a different city may be told to stay in a Motel 6, which 10 miles away from the organization the traveler needs to visit with, as it cheaper than the Hilton which is walking distance from the destination. If you now add up the costs of daily travel etc., the Hilton option may be cheaper, but that level of detail is usually ignored. If the traveler is asked to justify it, he/she has now to spend time looking at the options, calculating travels costs and time, and this is not productive time for the employee. Again people may think this is a trivial example, but believe me, things like this will happen.
The unfortunate part is that such messages resonate with Wall street. They think that companies are becoming efficient by doing this. The more successful companies focus on strategic cost reduction (removing waste) not on creating an environment of fear.
