Question

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

As you know, Oscar 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. Oscar 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.

Discuss the professionalism of the memo to the vice president. Is this deemed appropriate, why or why not? Should this have been worked out between the two employees? Between Amy and Oscar, which side are you on? Support your thoughts and reasoning. How does ethics play a role in this situation? What about the discrepancy in the number of claims (30 versus 36)? Is there a problem there also?

Answer 1

Professionalism of Amy's memo to the Vice President:

Amy's memo to the Vice President is not appropriate. Having fixed a meeting to discuss the matter openly at a joint meeting with the VP, operation, any unilateral communication on the subject is not correct. Such communication is intended to take a favor from VP, of operation. The reasoning is given by Amy in his memo to the VP may be correct. Amy might have conducted the time and motion study correctly to assess the standard of processing 36 claims per hour.

Amy should have discussed the matter in detail with Oscar to convince him of the correctness of his study. Since there was no agreement on the standard number of claims processing per hour and both of them decided to settle the issue after an open discussion jointly with the VP, Amy should have waited for the discussion. Amy should have prepared himself with all facts and figured based on study to convince both Oscar as well as VP during the joint meeting scheduled with them. Amy's comments on Oscar's intention of "padding the budget with some slack " is as good as making an allegation. Amy's opinion that " a tight standard will drive the efficiency up in Oscar's area" may be true. It is an accepted fact that all standards should be stretchable. Targets should be stretched but not unrealistic. The standard should be realistic and achievable.  

The standard of processing 36 claims per hour may be correct. It might have been based on a proper time and motion study conducted by Amy. The standard of 30 claims, as proposed by Oscar may be also correct. Oscar might have made a scientific study to set this standard. There may not be any discrepancy in the number 30 Vs 36. However, Amy's unilateral communication to VP, when the matter is scheduled to be discussed openly in a joint meeting with VP, is not ethical. Commenting on "Oscar's standard is not correct" and raising an allegation against him and his intention is detrimental for the VP to have an independent judgment during a joint meeting.