Randolph Smithfield is a cost analyst with Franklin Insuranc

Randolph Smithfield is a cost analyst with Franklin Insurance Company.  Franklin is applying standards to its claims payment operation. Claims payment is a repetitive operation that could be evaluated with standards.  Randolph used time and motion studies to identify an ideal standard of 36 claims processed per hour.  The Claims Processing Department manager, Fred Jones, has rejected this standard and has argued that the standard should be 30 claims processed per hour.  Fred and Randolph were unable to agree, so they decided to discuss this matter openly at a joint meeting with the vice president of operations, who would arbitrate a final decision.  Prior to the meeting, Randolph wrote the following memo to the VP.

To: Linda Greene, Vice President of Operations

From: Randolph Smithfield

Re: Standards in the Claims Processing Department

As you know, Fred and I are scheduled to meet with you to discuss our disagreement with respect to the appropriate standards for the Claims Processing Department.  I have conducted time and motion studies and have determined that the ideal standard is 36 claims processed per hour.  Fred argues that 30 claims processed per hour would be more appropriate.  I believe he is trying to “pad” the budget with some slack. I’m not sure what he is trying to get away with, but I believe a tight standard will drive efficiency up in his area.  I hope you will agree when we meet with you next week.

Required: Discuss the ethical and professional issues in this situation.  Who is more correct, Randolph or Fred? If you were Linda Greene, how would you handle this conflict?

Solution

The scenario presented in this case is indicating towards an unethical practice by the Claim processing department manager, Fred Jones. Based on the facts presented, Randolph\'s calculation of 36 claims per hour is based on time and motion studies but Fred\'s claim of 30 per hour is not based any study but just a simple number suggestion. Though Fred is directly related to the department and having more experience of the process, a simple projection without backed by any solid research is bound to raise question on his ethics. It is justified by Randolph to raise question on Fred\'s morale.

On the other hand, the act of Randolph to send a memo before hand to the VP Operation stating the problem can also raise question. One can think that the act is to influence a neutral process before hand and can be questioned as being unprofessional. Though it can also be seen as a formal memo to keep the VP in posted about the upcoming meeting. Hence, it can be concluded that Randolph is more correct.

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the VP Operations should ask both the parties for a detailed report and study the basis of their projection before taking any decision. Randolph should be asked to present the entire study and research, whereas Fred should also be asked about why he thinks 3 should be the number and based on what he came to this conclusion. Ideally these 2 parties should be asked to submit their report prior to the scheduled meeting.