How does division of labor increase productivity

For example, if a factory produces only cars per year, each car will be quite expensive to make on average. However, if a factory produces 50, cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower. The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services.

The division and specialization of labor has been a force against the problem of scarcity. Specialization only makes sense, though, if workers can use the pay they receive for doing their jobs to purchase the other goods and services that they need.

In short, specialization requires trade. You do not have to know anything about electronics or sound systems to play music—you just buy an iPod or MP3 player, download the music and listen. You do not have to know anything about artificial fibers or the construction of sewing machines if you need a jacket—you just buy the jacket and wear it. You do not need to know anything about internal combustion engines to operate a car—you just get in and drive.

Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want. This is how our modern society has evolved into a strong economy. Economics is not primarily a collection of facts to be memorized, though there are plenty of important concepts to be learned.

A proportion may go to profits, whilst some may go to higher pay for employees. Employees may often consider this as an option to reduce the negative impacts.

For instance, some workers may become demotivated and bored by some repetitive aspects of the job. Higher salaries can help to reduce the effect, although may not eliminate it completely. This is what Henry Ford did when he created the Ford assembly line in the early 20th Century. Although workers were set specific and repetitive jobs, they were paid higher than the industry average.

What happened was, the turnover rate declined, and workers became happier. When workers are set specific tasks, that is their pure focus. So it becomes easier to see pitfalls in the existing process.

Doing the same task each day makes it easier to analyse areas for improvement. It takes up more of the brains processing power, so it is at the forefront of a workers mind. The division of labor largely brings a number of significant advantages. However, there are several disadvantages that need to be considered. Although the advantages are still overwhelming, it is still important to identify the disadvantages and how to mitigate them.

Specialising on a specific task can increase productivity, but it can introduce a level of monotony and boredom. Doing the same thing repeatedly without any challenge is not conductive to the human condition. We naturally crave advancement and meaning. Certain jobs are more monotonous than others. Think of standing in the middle of a factory, repetitively putting goods in a box.

Some may enjoy such tasks, whilst others become disengaged. However, on the whole, productivity may decline and turnover rates increase. Yet compared to the pre-division of labor, the productivity rates are still at advanced levels. One of the ways by which employers counter-act boredom is either through performance based bonuses, higher pay, or performance checks.

The success of which depends on how and where they are implemented. For instance, the creation of a simple pencil is split down into several parts.

Someone must mine the granite, another to cut the wood, another to produce the rubber, and another to put it all together. Nobody in the process truly understands how the pencil is made, but all are involved in its creation. At the same time, the final production is reliant on the timely delivery of materials. Should one part of the process be delayed, either by a strike or natural disaster, the whole chain can fall apart. In later tutorials, we will develop this idea by discussing comparative advantage.

People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are in turn shaped by interests and talents. Only those with medical degrees qualify to become doctors, for instance. For some goods, specialization will be affected by geography—it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota.

If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more productive than if they produce a combination of things, some of which they are good at and some of which they are not.

Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better.

A similar pattern often operates within businesses. This provides a competitive advantage in the market place. An assembly line for a manufacturing company provides a useful example of specialization leading to economies of scale. Suppose a bicycle manufacturer has 10 workers each assembling 10 bicycles simultaneously.

The time for one individual to assemble a bike could be considerable. In addition, the know-how of having to put multiple pieces together requires the need for more skills. If the bicycle maker switches to an assembly line in its factory, each of the 10 workers focuses on a specialized aspect of the assembly process. For example, one worker would add the breaks, the next worker would add the pedals, and so forth.

Each worker would become proficient in their specific task and allow the bike to be assembled faster as it moves down the assembly line. This increases efficiency and allows for additional bicycles to be produced. Because production increases, the fixed costs of production such as the building and tools used to assemble the bicycles are spread over an increasing number of products, thus achieving economies of scale.

Though specialized labor is one method that leads to economies of scale, economies of scale can be achieved through a variety of means. Some areas include technology that improves efficiency, the power of buying bulk that leads to better costs, and for larger companies, better terms on financing and better transportation networks.

Economic theory and the actual implementation of those theories have proven that as a company's workforce specializes in specific skills, it leads to efficiency, which leads to more goods produced. As more goods are produced, the cost of producing them is spread out, leading to economies of scale, which is an important competitive advantage for any company. Tools for Fundamental Analysis. Your Privacy Rights.

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