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Case 6

“Looney Tunes on Parade”:

Part 3—A Time for Action

Background Information

Just over a year after Peter Gilmore hired David Randle to supervise the Pricing

Unit Department of Republic Insurance’s Strategic Management Division, he was

faced with a number of problems. The initial period of smooth sailing had deterio-

rated as revelations about David’s questionable conduct had surfaced. In response

to these revelations, Peter completed an appraisal of David’s job performance,

warning him that he needed to make improvements in this area. Peter was now

watching David closely.

Peter’s new “get-tough” supervisory style yielded a number of results. It was now

early July, 1988, and the Life Insurance Line Price Study for which David was

responsible was a few months overdue. The head of the Customer Services Division

had called Peter last week to ask him where it was. This time, Peter knew to ask

David for it.

David said it would be ready the next day and, sure enough, the following morn-

ing it was on Peter’s desk. At an early-morning coffee break, Peter asked Betty

Moore if any of the cost analysts had prepared this report. Betty replied, “No, David

did it all himself late yesterday afternoon.”

Peter started to read the report, and one thing immediately became apparent: the

numbers and calculations did not seem correct. And there was something else that

wasn’t right about the report. At first, he just couldn’t figure out what it was; then

he remembered. He went to his bookcase, pulled out the February, 1986 issue of

Life Insurance Digest, and there it was: David Randle’s report—or rather, the

Digest article that David had copied and used for his report.

Peter talked with Henry that afternoon, and both agreed that David must go. The

next morning, David was sitting in front of Henry and Peter in Peter’s office.

Henry began: “David, a week ago when we discussed this price change study, the

figures you gave me were quite different from the figures in this report. What the

hell is going on?” Henry was angry, and his tone was harsh.

David shifted in his chair. “Well, er, the figures I gave you were still tentative.

They were, ah, still estimates.” David did not look at either of them and fidgeted

slightly in his seat.

Henry continued: “The Knilson Actuarial Count equation is a basic formula for

computing the real market pricing for our life insurance policies. I want to see you

do it, here, now!”

David was now visibly shaken and said lamely: “Well, Hank, as you know, I’ll

need my work papers. Let me go back to my desk, I don’t want to take your

time…maybe there is a specific error I made that—”

50 Case Studies for Management and Supervisory Training

32

Case 6 (continued)

Henry cut him off: “No sir, here and now. We’ll supply you with the information.

Use this pen and pad of paper.” Henry pushed the items toward him.

David picked up the pen and began writing down some numbers. After a minute,

he looked up and started to explain his results.

Peter interrupted him: “David, you don’t know what you’re doing. You’ve got

two of the basic parameters confused, and you just don’t know what the hell you’re

doing…You copied this article virtually verbatim from the Life Insurance Digest,

didn’t you?” Peter pushed the article across the desk, in front of David.

David was stunned.

Peter said, “Let’s go to Personnel, David. You are no longer an employee of

Republic Insurance.”

At 10:30 a.m., David Randle walked to the street in front of the Republic Insur-

ance Company, and by 10:45 a.m., he was no longer in sight.

CASE QUESTIONS

1. Evaluate the termination procedure used.

2. Are there any legal considerations in releasing David Randle in this manner?

Are there any legal grounds for prosecuting David?

3. What should Peter do now with his staff?