SwitchingCosts

Quora Answer : Why can't companies reduce the working hours of overworked employees and hire more people?

Jan 17, 2015

For most jobs, switching costs are too high to make this worth while.

An existing employee has a huge amount of knowledge of the job, of the context, and of the current status of all the minute sub-tasks, in his or her head.

It will be far, far more efficient for the employer to pay that person more money to work more hours, than to pay the same money to another person to work those extra hours.

The second person will have learn all the things that the first person already knows. Even when the second person is up to speed on the general job, if they divide the work between the two of them, they will spend more time on the co-ordination and handover of tasks (including context, knowledge of the status of minute sub-tasks etc.)

The finer granularity of swapping over, the higher the switching costs relative to the value of the work.

It's very unfortunate, because at the social level we would be far better off if lots of people did a little bit of work, rather than fewer people doing a lot of work and other people being unemployed. But the switching costs are a major disincentive to that.