Total dollar amount of claims processed per month is not an accurate way of measuring speed of processing, because some claims will be for high amounts and others will be for lower amounts. That is not something the manager of claims processing can control, so his performance should not be measured on it. Furthermore, evaluating his performance on that could lead to his giving priority to processing the larger claims. That would lead to larger claims being approved before smaller claims, and larger sums of cash would be paid out earlier to settle those larger claims. More cash paid out earlier would increase cash outflow, resulting in lower cash balances and higher cost of capital. Giving priority in processing would also result in poor customer service to the filers of the smaller claims.
Percentage of claims processed accurately the first time is something a manager can control through training. Measuring Burke's performance in this area would have the positive effect of encouraging him to improve the accuracy of his staff.
Processing cost per claim is something a manager can control. Measuring Burke's performance in this area would have the positive effect of encouraging him to keep costs as low as possible.
Average processing time per claim is something a manager can control through training. Measuring Burke's performance in this area would have the positive effect of encouraging him to keep processing time as low as possible.
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