Specialization, teamwork, and production efficiency

Abstract

The division of labor has been a fundamental principle in the design of production processes since Adam Smith's pin factory. More recently, teams have been employed widely to bring the benefits of cooperation and ownership to production and service processes. The fundamental questions raised here concern the relationships between these two approaches to the design of business processes. For example, under what conditions is it preferable to assign small tasks to isolated individuals, rather than assigning complex sets of tasks to large teams? We model the production process as a serial production line with variable processing times for each task. We develop models for the effect of dividing a complex production process into smaller tasks, and the effect of assigning teams of two or more workers to perform a given set of tasks. We determine the optimal size of teams and the optimal division of labor for a given set of assumptions about the underlying production environment. Our results show that, depending on the underlying parameters, a wide range of solutions to the production design problem can be found, including highly specialized processes with large teams, and unspecialized processes with small teams. These findings are in contrast to the principles enunciated in the literature on Business Process Reengineering, in which the case worker design is recommended as a universal solution. We also determine the regions in parameter space in which particular solutions can be found, and we study the sensitivity of the optimal choices to changes in the fundamental parameters.