By division, labor gets specialized in making only a part of the process and not the whole process therefore, loses the skill to make the whole product. Refers to one of the major adverse effects of division of labor. This may discourage individuals to think freely and generate ideas. A monotonous work makes the individual think in the same direction. Refers to the fact that job affects the mental and physical growth of an individual. This further affects the productivity of labor. Implies that performing the same task again and again makes the work less interesting, which results in decrease in the motivation level of workers. Some of its disadvantages are as follows:
However, division of labor is not free from disadvantages.
This motivates producers to increase the level of production. Implies that division of labor helps in increasing the quality and quantity of product. Implies that repetitive working on the same process makes workers expert of that process, which leads to reduction in errors. Otherwise, it is hard to make a single pin by one worker performing all the 18 processes. This is possible if those 18 processes delegated among a number of workers. In a day, ten workers can make 48,000 pins. There are 18 processes require to manufacture a single pin. While explaining the importance of division of labor with respect to productivity, Adam Smith has used an example of manufacturing of a pin. If the process is divided among a number of workers, they would be able to perform it efficiency and in less duration of time. Consequently, the productivity of the organization would be affected. Some processes of an organization are so long, thus, cannot be completed by a single worker or he/she would require more time to complete those processes. Refers to one of the main advantage of division of labor. It is also referred as functional division of labor. Refers to the division of labor on the basis of their skills and occupations, such as carpenters and blacksmith. There are different types of division of labor, which are explained as follows: Therefore, if these tasks are divided among a number of workers, then it would be easier to produce large number of pins in a day.Īccording to Stingier, “the division of labor is not a quaint practice of eighteenth century pin factories it is a fundamental principle of economic organization.” Therefore, division of labor is useful to an organization in many ways.
If these 18 processes are performed by a single worker, it would not be possible to complete the whole function or it may take much time to produce a single pin. The pin making function of an organization involves 18 processes. In such a case, capital and labor act as substitute of each other.įor explaining the importance of division of labor, he cited an example of pin making in an organization. However, if the organization has shortage of capital, then it would use more labor instead of investing on advance technology and machines. On the other hand, if an organization has enough capital to purchase advance technology, then it would prefer to reduce the number of labor. In such a case, land and capital are complementary to each other. Similarly, when skilled labor is available to produce goods and services, then only the organization would invest capital for production purpose. The factors of production can be used as complementary as well as substitute of each other.įor example, if an organization has adequate capital only then it would hire labor for producing goods and services.
This implies that the factors of production should be used in combination, so that the production target can be achieved.
The production process of an organization can be efficient, if there is an optimal use of factors. According to Eraser, “Factor of production as a group or class of original productive resources.” Therefore, all the four factors of production are equally important for the production activity of an organization. Land involves natural resources labor is associated with human resources, capital includes manmade resources, and enterprise combines all the three factor, to carry out the production process.