Even a relatively simple business like a restaurant divides up the task of serving meals into a range of jobs like top chef, sous chefs, less-skilled kitchen help, servers to wait on the tables, a greeter at the door, janitors to clean up, and a business manager to handle paychecks and bills—not to mention the economic connections a restaurant has with suppliers of food, furniture, kitchen equipment, and the building where it is located.
A complex business, like a large manufacturing factory such as the shoe factory shown in Figure 3, or a hospital, can have hundreds of job classifications. When the tasks involved with producing a good or service are divided and subdivided, workers and businesses can produce a greater quantity of output.
In his observations of pin factories, Smith observed that one worker alone might make twenty pins in a day, but that a small business of ten workers some of whom would need to do two or three of the eighteen tasks involved with pin-making , could make 48, pins in a day.
How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons. First, specialization in a particular small job allows workers to focus on the parts of the production process where they have an 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. The division of labor allows the system to be more productive. Workers are getting more proficient and doing tasks faster. Finally, companies can increase output at a significant scale. We have to make choices in using our limited resources to meet unlimited consumer needs.
Therefore, we must use these resources in the most efficient way possible. Production is said to be efficient if we can produce more output with the same input.
In other words, we have to be more productive. One way to increase productivity is by specialization, dividing the workforce according to skills and tasks. Specialization requires companies to divide business operations into specific tasks. In the car manufacturing business, for example, it involves dividing the production system into multiple stations along an assembly line.
At each station, workers have specific tasks. Moreover, they do the same work regularly. Meanwhile, in the service business, specialization requires companies to divide business operations into several functional areas, such as marketing, finance, human resources, and operations service provision. Each requires workers with skills and performing different functional tasks. As each worker performs a specific task, they will become more and more skilled at it over time.
And specialization ultimately leads to higher output per worker. Technical advances in production have resulted in goods and services on a large scale. Theoretically, in an era of globalization, countries specialize in the work they can do at the lowest opportunity cost.
Learning Objectives Examine how the division of labor can lead to alienation and less satisfaction in the workforce. Key Points A more complex division of labor is closely associated with the growth of economic output and trade, the rise of capitalism, and the complexity of industrialization processes. Increasing the specialization of work might lead to workers with low overall skills and a lack of enthusiasm for their work. Karl Marx described the process of alienation as follows.
In his view, workers would become more and more specialized, and work would become more and more repetitive, until eventually the workers would be completely alienated from the process of production. Labor hierarchy is a very common feature of the modern workplace structure. Key Terms Division of labor : A division of labour is the dividing and specializing of cooperative labour into specifically circumscribed tasks and roles. Division of Labor In a division of labor, the production process is broken down into a sequence of stages, and workers are assigned to particular stages.
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