Specialization of labor is a classic economic theory. Plato discussed the specialization of labor in his work “Republic”. Plato wrote about this theory by saying the state could supply its needs with four or five individuals. Each individual would be responsible for creating a specific good or service for other individuals. This concept has been the focus of many economists throughout several generations. Business owners can learn a great deal when reviewing specialization and of labor.
Specialization of labor was advanced through history by two notable economists: Adam Smith and Karl Marx. Smith, often called the father of modern economics, approached specialization of labor from a capitalistic mindset. Smith believed specialization of labor allowed companies to produce more goods and increase each worker’s ability. Marx, a German philosopher known for his communist beliefs, believed specialization of labor alienated workers and caused them to experience spiritual and physical depression.
Henry Ford brought much practical advancement to the economic theory regarding specialization of labor. Ford is known as the father of modern assembly lines and mass production. He created a business environment where individuals could produce large amounts of vehicles through consistently repeated actions. In order to stave off employee disappointment or unrest, Ford paid his employees high wages for their work. Ford was able to advance his company into one of the most profitable and well-known organizations in history.
Small business owners often implement a specialization of labor in their business organization without even knowing it. Accountants, salesman, production employees and repair workers represent a basic division of labor. Each individual is hired according to his merits and what he can bring to the business owner’s company. Business owners may hire workers who can complete more than one function in their company. However, these individuals may require higher wages or produce lower quality work.
Dividing labor functions is not always the best option in small business. In fact, many business owners must complete several business functions on their own. This economic concept is known as entrepreneurship. Business owners can attempt to pass basic entrepreneurship principles to their workers by requiring them to complete functions outside their normal work capacity. This concept is often known as cross training. Business owners cross train individuals to ensure an employee is available at all times who can complete various business functions.
Today’s business environment has greatly changed the rules regarding specialization of labor. Technology allows companies to replace traditional human labor with machines, robots and computers. Business owners can use technology to complete certain business functions quicker and more accurately than using human labor. Technology also creates flexibility regarding the division or specialization of labor. Rather than learning technical skills, employees may only need to learn how to use a machine or computer for their job function.
- "Republic"; Plato; 380 B.C.
- “Principles of Management”; Tony Morden; 2004
- “Economics: Work and Prosperity”; Russell Kirk; 1999
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