I think you misunderstood me. My point was if your company/project was already running incredibly inefficiently, cutting more people would not make the remaining people more efficient somehow out of fear, because what caused the inefficiency is still there, you just have more things for each of them to do now.

The way to increase efficiency is to figure out what part of the whole process is causing waste and aim to minimize that, but that is HARD because it requires understanding your process, which is why they just do the lazy thing and fire a bunch of people to appease the almighty shareholders, so that they can say they did something.