Assignment

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?