The marginal product of labour is one of the most important and influential economic concepts in the labour productivity, We are looking at how we can improve the satisfaction of our employees and the achievement of our short, medium and long term business goals. The topic is important and that is why today we are going to investigate about causes that may affect this marginal product. Will you join us?
You probably know What is the marginal product of labour, but as this blog is read by professionals with and without experience, we believe it's worth dedicating a brief section to clarify this term and provide an example.
In very simple terms, we could say that the marginal product of labour is the extra or additional product that is created when we increase by one unit to the amount of work What we use for production.
concept that is easy to understand if we think of a exampleImagine you have a shoe factory with Three automatic machines and two employees. Each worker handling a machine is capable of manufacturing 10 shoes per day. If you increase your workforce by hiring one employee, the marginal product of labour The contribution of that new employee will be 10, as (without modifying any other productive circumstances) that person will increase your factory's daily production by 10 units.
But imagine you hire a fourth worker And why don't you increase the number of machines in your shoe factory? Do you think that fourth worker will also have a marginal product of labour of 10 additional units? The answer is “no” as that new employee He/She/It won't have their own machine to work with and you will have to organise the shifts in a different way so that your marginal product of labour continues to grow or, at least, does not fall into a downward curve.
In the example in the previous section we have already given you a hint about one of the two most frequent causes of the diminishing marginal product of labour: not taking into account the machinery what a new employee needs to do their job with maximum efficiency. If you hire an extra employee, but do not acquire an extra machine for them to make their shoes, your daily production will surely grow, but The marginal product of labour will not do it of that new employee and, perhaps, decrease the marginal product of labour of that other employee with whom they will have to share machinery if they work the same shift.
The first cause of diminishing marginal product of labour is easy to see and very useful for new entrepreneurs that the larger their workforce, the greater their output and the better their economic results will be. However, there is a second cause of the decrease in this value which is harder to see and to correct than the first, a cause that transcends numbers and formulas: workplace demotivation.
Imagine you swap your shoe factory for a shoe production line in which employees work shoulder to shoulder on a belt. As you increase the number of workers, supposedly The marginal product of labour for each of them will grow, but there will come a time when there will be so many people working together that They will be bothered one another, personal conflicts will arise, The atmosphere at work will become strained, squabbles will arise if one of them goes faster or slower than the other… All these personal problems will translate into a Your workers' feeling of unhappiness, a feeling that will demotivate your staff and negatively affect the value of the marginal product of labour that you are precisely looking to increase through mass hiring of staff.
Can this second cause be corrected? Yes: by implementing a series of measures that improve the happiness, engagement, and productivity of your valuable human team without increasing your expenses.
