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 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 "crack down" can increase worker productivity at CF%D.
b. Provide an alternative to cracking down as a means of increasing the productivity of the sheet metal workers.
a) apply the law of diminishing returns.
a) Apply an increasing returns-to-scale reasoning argument.
a. Worker productivity can be explained by the concept of diminishing returns in production theory. Diminishing returns occur when the marginal productivity of additional workers decreases as more workers are added to a fixed amount of resources, such as machines or equipment.
In the case of Canadian Fabrication & Design (CF&D), the declining productivity of the newly hired sheet metal workers suggests that they may be experiencing diminishing returns. This means that as more workers were hired, the overall productivity of each individual worker decreased.
There are a few reasons why this might happen in CF&D. Firstly, there could be constraints on the availability of resources. For example, if there is a limited amount of sheet metal or machines, adding more workers without increasing these resources could lead to a decrease in productivity. The existing resources are being spread thin among the increasing number of workers, which can result in longer wait times and less efficient use of the available resources.
Secondly, there might also be issues related to worker coordination and communication. As more workers are added, there is a higher likelihood of miscommunication or inefficiencies in coordinating tasks. Each worker may spend more time waiting for instructions, leading to reduced productivity.
Lastly, the new workers may still be in the learning phase and require additional training and supervision to become fully productive. Ineffective supervision or inadequate training could hamper their ability to contribute efficiently to the production process.
Simply cracking down on the workers is unlikely to solve these underlying issues. It may create a hostile work environment and discourage teamwork and cooperation, which are essential for addressing the constraints and coordination problems that contribute to diminishing returns. Therefore, a different approach must be considered.
b. An alternative approach to increasing the productivity of the sheet metal workers at CF&D could involve focusing on the following strategies:
1. Enhance training and onboarding processes: Invest in comprehensive training programs to ensure that new workers are equipped with the necessary skills and knowledge to perform their tasks efficiently. This can help reduce the learning curve and improve their productivity.
2. Improve resource allocation: Analyze the production process and identify any bottlenecks or constraints in the availability of resources. Addressing these issues by increasing the availability of machines, tools, or materials can alleviate the negative impact of diminishing returns and improve worker productivity.
3. Foster teamwork and communication: Emphasize effective communication and coordination among workers. Encourage collaboration and provide opportunities for workers to share their knowledge and best practices. This can improve overall efficiency and avoid unnecessary delays.
4. Implement performance incentives: Consider implementing performance-based incentives to motivate workers and reward high productivity. This can help create a positive work environment and encourage individual and team efforts towards increased productivity.
5. Continuous improvement and feedback loops: Establish a process for gathering feedback from workers and supervisors. This feedback can help identify areas for improvement and make necessary adjustments to optimize productivity.
By focusing on these alternative strategies, CF&D can address the root causes of declining worker productivity and create a more conducive environment for increasing efficiency and output.