Division of labour and its implication on organizations and global economies

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According to Adam Smith, the improvement in the productivity, skill and dexterity can be brought about when an organisation practices division of labour. The principle of division of labour helps an organisation to split its labour employed according to different processes (Smith, 2005). This helps the workers to specialise on the process with which they are associated increasing their productivity thus improving the overall performance of the organisation. In order to explain the employment of division of labour, Adam Smith has used the mechanics of a pin-making factory. Smith (2005) argued that instead of assigning all the tasks to one labour, each labour will be assigned to a specific portion of the task. In case of pin-making, one worker would draw the wire, second worker will straighten it. The third labour will cut the wire into equal pieces and the fourth will point it. The final work will make the head of the pin.

The capitalist mode of production is based on the technical division of labour whereas Marx had explained the concept of social division of labour. Herskovits and Marks had described that DoL is different in case of social distribution of crafts, tasks and specialities. The society is divided into different roles according to gender, each is accounted to specific section of the production carried out in the society. In the contemporary organisations the technical division of labour is practiced which is derived from social division of labour (Braverman, 1998). According to the works of Durkheim (2014), division of labour is not restricted to the economic sphere but the application of specialisation can be observed in the political and administrative functions within the society giving rise to occupational hierarchies.

Owners are required to lower per unit cost of production in order to increase their profit and with the application of division of labour, the owners can increase the increase the volume without incurring additional cost (Lytras, 2016). Therefore, specialisation increases the productivity of workers since they do not have to waste time in shifting from one task to another which is beneficial for the entrepreneurs (Ehnts, 2016). According to the pin-factory example illustrated by Adam Smith, division of labour helps in improving the skill of the employees with respect to specific task. Furthermore, specialisation helps the employees to attain their creative potential to innovate new tools and machinery which makes their work easier increasing the efficiency of the production system (Smith, 2005). Therefore it is a win-win situation for both employees and owners. The division of labour can also be viewed in terms of nations which has been proposed in the Heckscher-Ohlin (HO) model. In the HO model, the authors have stated that with trade liberalisation, countries will specialise on the base of their abundancy in the factors of production (Ventura-Dias, 2003). For example, the labour abundant countries will employ labour-intensive techniques whereas, the capitalist countries will invest in capital intensive production which highlights the application of the principle of specialisation and division of labour between the nations. This benefits the nations as they can produce at a lower cost benefiting each economy and the liberalised trade offers the exchange of goods which helps bot the nations to enjoy wider range products and services at a lower cost of production (Ventura-Dias, 2003).

Central Issues Related to the Division of Labour

The application of division of labour gives rise to organisational hierarchies based on the skill and performance which shapes the structure of the societies. However, this hierarchical position should not result in excessive bureaucracy which can negatively affect ability of the employees in terms of executing a particular task. The increase in competition has resulted in bureaucratisation of the workforce around the world which in turn has provided authority in the hands of charismatic leaders. This reduces the freedom of the workers countering the beneficial impact of division of labour (Fleming, 2014). The rise of large multi-national firms has increased the control exercised by the leaders in order to monitor the market competition. Increasing research in the field of job satisfaction and job specialisation has provided with information that working within an organisation characterised with explicit hierarchical structure and bureaucracy increase the stress level among the workers even working with specialisation (Mohammadi, 2011). Scholars have observed that autocratic style of management has resulted in diminishing the performance of the organisation rather than improving it. The command and control management do not pay heed to the freedom of employees increasing the dissatisfaction at workplace. This in turn increases absenteeism and turnover rates of the employees. Organisations with more hierarchical layers are sighted to be the victims of red tape, endless paperwork and lack of communication between the leaders and their subordinates (Mohammadi, 2011). Adam Smith has also expressed his fear of limitations of skill in case of specialising in a particular process. The assembly line products restricts the scope of exploring new challenges which acts as a demotivating factors making the work monotonous. Therefore, Smith suggested that there should be enough scope provided by the management so that they keep employees satisfied and productive (Adeyoyin, eta al., 2015).

Therefore, the solution is to develop scientific management within an organisation. The foundation of scientific management is based on attaining maximum prosperity for the organisations including the welfare of the entrepreneurs and employees (Taylor, 1998). According to Taylor (1988), the management of contemporary organisations should set dual targets of achieving prosperity for the employers as well as employees. The author had further emphasised that in order to ensure successful outcome for the leaders, the first step is to secure welfare of the employees. There has been criticism of this approach to management stating that employees and entrepreneurs have antagonistic objectives. For example, the employees would always desires to attain higher wages whereas, employers would want to complete the work in minimum expenditure. However, Taylor (1988) had countered that the increase in productivity because of satisfied and motivated labour force would cover the extra amount paid to the employees as a wage rise. The author explained this benefit through a very basic example. Taylor (1988) described a situation where two manufacturers were producing shoes, one paying higher salaries, and the other paying lower wages. The employees receiving satisfied salaries would be motivated to produce more shoes (two pairs of shoes) and the other employees receiving lower wages would not be inclined to produce more (One pair of shoes daily). Therefore, the owner considering the welfare of the employees earns higher than the other justifying the application of scientific management in the organisations as developed in the McDonald’s (Ritzer, 2011).

Division of Labour and Global Society

According to scholars, globalisation has created a new concept from the original concept Adam Smith’s division of labour. Scholars have coined this term to identify the difference between manufacturing processes adopted by the advanced capitalist countries from the developing countries. The new international division of labour identified the transformation in the production pattern along the geographic location. Under old international division of labour the segregation of the economies based on the division of labour where underdeveloped economies were identified as the producers of raw materials for the technologically advanced Western countries (Petras, 1981). Therefore, the underdeveloped economies act as the suppliers of primary products and natural resources like, minerals. However, over the years this scenario has changed incorporating the production carried out in the developing countries representing the transition between underdeveloped and developed nations. Therefore in new international division of labour theories proposed that geographical segregation of the labour is no longer valid as production processes has shifted to the developing and underdeveloped countries (Hutchinson, 2004). This has resulted in the global industrial shift with production processes transferring to the developing countries in Asia such as China, India, etc. and South America. The search for low wage labourers has resulted in this reorganisation of labour across the globe. Moreover, the developing countries has witnessed significant growth in the communication and transportation effectively helping in bringing a balance between the production patterns across the world.

Nolan’s work on China has helped in identifying ‘system integrator’ companies have emerged as the sole benefactor of the global shift of labour as these companies have expanded establishing their brand and acquiring improved technology (Wolf, 2013). According to Nolan’s findings industries such as, commercial aircrafts, smartphones, etc. This has resulted in confluence of different cultures and have helped in developing the necessary infrastructure in the developing countries to execute production. The increase in the foreign direct investment and consolidation of organisations in various industries is a clear example of the evidence of the new international division of labour theories. ‘System integrator’ companies have developed on the basis of capital reserves which it invests in the research and development of improving the technological expertise. However, the economies are required to exercise caution so that this shift does not create an internal imbalance, due to cultural conflicts and international vested interests (Wolf, 2013). Therefore creating a win-win situation for both developed and developing countries.

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