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.
a. Explain carefully in terms of production theory why it might be that no amount of
“cracking down” can increase worker productivity at CF&D
b. Provide an alternative to cracking down as a means of increasing the production of the sheet metal workers.
a. One possible explanation for the declining productivity of newly hired sheet metal workers at CF&D despite the CEO's instruction to "crack down" is the concept of diminishing marginal returns or the law of diminishing returns. According to this theory, as more units of a variable input (in this case, newly hired workers) are added to a fixed input (such as the production facilities and equipment in the company), the marginal productivity of each additional unit of the variable input will eventually diminish.
In other words, initially, hiring new workers may lead to an increase in productivity due to the division of labor, specialization, and the opportunity to exploit economies of scale. However, as more workers are hired, there may be a decrease in overall productivity because the fixed resources and facilities cannot accommodate the increasing workforce efficiently. There might be inadequate space, tools, training, or supervision to effectively utilize the growing number of workers.
Simply "cracking down" on the workers, which may involve stricter supervision, enforcement of stricter rules, or increased discipline, might not solve the underlying issue of limited resources. The problem lies in the mismatch between the expanding workforce and the fixed production capacity. Therefore, no amount of "cracking down" can compensate for the inherent limitations in the production process.
b. An alternative approach to increasing the production of sheet metal workers at CF&D could involve addressing the underlying resource limitations and improving the overall production process. Here are a few potential alternatives:
1. Invest in additional resources: The company can invest in expanding its production facilities, upgrading equipment, and providing adequate tools and resources for the workers. This can help increase the capacity to accommodate more workers and enhance productivity.
2. Enhance training and skill development: Providing comprehensive training programs to newly hired workers can help improve their skills and enable them to perform tasks more efficiently. This can be achieved through regular training sessions, mentoring programs, or collaboration with industry experts.
3. Streamline processes and workflow: Analyze the existing production processes and identify areas where bottlenecks or inefficiencies occur. By optimizing the workflow, eliminating unnecessary steps, and improving coordination between different departments, the overall productivity can be enhanced.
4. Implement performance incentives and motivation: Create a system that rewards and recognizes employees based on their productivity and contributions. Performance-based incentives, such as bonuses or promotions, can motivate workers to improve their productivity. Additionally, fostering a positive work environment and providing opportunities for career growth can increase employee satisfaction and engagement, which can positively impact productivity.
5. Conduct regular performance evaluations and feedback sessions: Establish a framework for ongoing performance evaluations and feedback sessions for employees. This helps identify areas of improvement, provide constructive feedback, and address any training or support needs for the workers.
By focusing on improving resources, optimizing processes, enhancing skills, and fostering a supportive work environment, CF&D can aim to increase the productivity of its sheet metal workers more effectively than simply "cracking down" on them.