After two quarters of increasing levels of production, the CEO of Canadian Fabrication & Design was upset to learn that, during this time of expansion, productivity of the newly hired sheet metal workers declined with each new worker hired. Believing that the new workers were either lazy or ineffectively supervised (or possibly both), the CEO instructed the shop foreman to "crack down" on the new workers to bring their productivity levels up. Explain carefully in terms of production theory why it might be that no amount of "cracking down" can increase worker productivity at CF&D. Provide an alternative to cracking down as a means of increasing the productivity of the sheet metal workers.
To understand why "cracking down" may not be an effective means of increasing worker productivity at CF&D, we need to delve into production theory. One of the key concepts relevant to this situation is the law of diminishing marginal returns.
The law of diminishing marginal returns states that as more units of a variable input, such as labor, are added to a fixed input, such as capital or machinery, the marginal output (additional output) generated by each additional unit of the variable input will eventually decrease.
In the case of CF&D, the CEO hired new sheet metal workers during a period of expansion. Initially, with the first few workers hired, there may have been a significant increase in productivity. However, as more workers were added, the law of diminishing marginal returns likely came into play. This means that each additional worker added resulted in a smaller increase in overall productivity.
There are a few reasons why this could happen. Firstly, adding more workers may lead to coordination and communication challenges. As the number of workers increases, it becomes harder to effectively manage and supervise them, potentially leading to decreased productivity. Additionally, training and onboarding new workers also takes time, diverting resources away from production in the short term.
Now, let's discuss an alternative approach to increasing productivity. Instead of "cracking down" on the new workers, CF&D could consider focusing on improving training and onboarding processes. By providing comprehensive training programs and proper supervision, new workers can quickly acquire the necessary skills and knowledge to perform their tasks efficiently. This can lead to enhanced productivity levels without resorting to stricter measures.
Additionally, it may be beneficial to analyze the overall production process, identify any bottlenecks or inefficiencies, and make appropriate adjustments. This could involve optimizing workflow, reallocating resources, or investing in new technologies that can streamline production.
In summary, the law of diminishing marginal returns suggests that as more workers are hired, the increase in productivity may gradually diminish. Instead of "cracking down," CF&D should focus on improving training, supervision, and overall production processes to maximize worker productivity.
The declining productivity of newly hired sheet metal workers at Canadian Fabrication & Design (CF&D) despite increasing levels of production can be explained using the production theory perspective. According to the production theory, there are two main factors that contribute to productivity: physical capital (e.g., machinery, equipment) and human capital (e.g., skills, knowledge, training).
In the case of CF&D, the declining productivity of newly hired sheet metal workers suggests that the issue may not be related to worker behavior or supervision. Instead, it is likely due to the limitations of physical and human capital.
1. Physical capital: Increasing levels of production require additional physical capital, such as machinery and equipment, to support the production process effectively. If CF&D did not invest adequately in updating or expanding their physical capital to match the increased production demands, it can lead to a decrease in worker productivity. Insufficient or outdated machinery can slow down production and hinder workers' ability to perform at their best.
2. Human capital: When new workers are hired, they may lack the necessary skills, knowledge, and experience to immediately perform at the same level as more experienced workers. It takes time for new employees to acclimate to the job, learn the necessary skills, and become proficient. Thus, a decline in productivity with each new worker hired could simply be attributed to a learning curve or lack of sufficient training and development opportunities.
Instead of "cracking down" on the workers, an alternative approach to increasing their productivity could include:
1. Training and development: Providing comprehensive training programs for new hires can help them acquire the necessary skills quickly and efficiently. CF&D could invest in training initiatives to ensure that the new workers receive the necessary education and on-the-job training to perform at optimal levels.
2. Mentorship and support: Pairing new hires with experienced workers who can serve as mentors or providing them with ongoing support from supervisors can enhance their learning and integration into the company. Mentors can share best practices, offer guidance, and provide feedback to help new workers improve their performance.
3. Upgrading physical capital: Assessing the equipment and machinery used in the production process is essential to ensure that it meets the increased production demands. Upgrading or acquiring new machinery, if needed, can facilitate increased productivity.
By focusing on improving the human capital through training, mentorship, and investing in physical capital, CF&D can address the underlying reasons behind decreasing productivity and create an environment conducive to better performance.