Bagby Case

1. When making a choice between specialized and broad task assignments, Bagby will be faced with trade-offs. The advantages to Bagby choosing specialized task assignments are exploiting comparative advantage and lower cross-training expenses. Under exploiting comparative advantage “specialized task assignment allows the firm to match people with jobs based on skills and training and correspondingly has employees concentrate on their particular specialties” (Brickley, Smith, & Zimmerman, 2009, p. 395). Being that the employees will be highly specialized it would be expected that these employees would require less supervisor and less training to perform their tasks. Additionally, it is assumed that they would also yield a higher output. The benefits to lower cross-training expenses are realized because the employee does not need to be trained on more than one task. This reduces training expenses and reduces the need for all employees to have the same level of experience, education, or technical expertise. If part of the process requires an education, using specialized task assignments you would not have to have all employees have an education; only the employees working that task would need the education requirement. This would save the company money because they would be able to higher lower level employees to do other tasks. Under broad task assignments, it is more expensive to have all employees trained on every task, but it also allows for flexibility should the need arise to move employees to different task assignments.
Unfortunately, there are disadvantages to specialized task assignments. They include forgone complementarities across tasks, coordination costs, functional myopia, and reduced flexibility. Under forgone complementarities across tasks, “sometimes, performing one task can lower the cost of having the same person perform another task” (Brickley, Smith, & Zimmerman, 2009, p. 396). Employees often need to have knowledge of other areas in

References: Brickley, J. A., Smith, C. W., & Zimmerman, J. L. (2009). Managerial Economics and Organizational Architecture (5th ed.). New York: McGraw-Hill Irwin.