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New Jersey Insurance Co.
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Group Case # 4: NEW JERSEY INSURANCE COMPANY
Executive Summary
John W. Montgomery, a member of the budget committee of the New Jersey Insurance Company, reviewed the Law division’s budget performance for the first half of 1987. The report showed an over budget and under budget performance for Individual Loans Section and Corporate Loans
Section, respectively. Different control mechanisms were recommended to each division to minimize the variances in its budget. These mechanisms were based on the nature of the expense center, whether it is an engineered expense center or a discretionary expense center.
Case Context
The law Division of New Jersey Insurance Company has five divisions, which include the
Individual Loan Section and the Corporate Loan Section. Examiners in the Individual Loan Section were carefully selected and trained to check and approve certain of the loan transactions.
Because the work they performed were repetitive, management set a work standard of 15 loan transactions per examiner per day as controlling measure. The individual Loan Section maintained a level work force as company policy and to ensure that anyone who would be trained for the job was needed permanently in the section. To achieve control over the section and still comply with the company policy, the examiners occasionally got some work from the investment division, did some aspects of foreclosures, or worked overtime.
The lawyers in the Corporate Loan Section, on the other hand, handled complex corporate loans which necessitated the opinion of outside counsels. Expenses incurred in employing outside counsels were paid by the borrowers and did not affect the budget of the corporate loan section.
As a control procedure, the section head conducted consultations with the section lawyers and reassigned work of various attorneys to equalize their work loads. Weekly staff conferences with
Mr. Carlisle were also
http://www.termpaperwarehouse.com/print/New-Jersey-...
Group Case # 4: NEW JERSEY INSURANCE COMPANY
Executive Summary
John W. Montgomery, a member of the budget committee of the New Jersey Insurance Company, reviewed the Law division’s budget performance for the first half of 1987. The report showed an over budget and under budget performance for Individual Loans Section and Corporate Loans
Section, respectively. Different control mechanisms were recommended to each division to minimize the variances in its budget. These mechanisms were based on the nature of the expense center, whether it is an engineered expense center or a discretionary expense center.
Case Context
The law Division of New Jersey Insurance Company has five divisions, which include the
Individual Loan Section and the Corporate Loan Section. Examiners in the Individual Loan Section were carefully selected and trained to check and approve certain of the loan transactions.
Because the work they performed were repetitive, management set a work standard of 15 loan transactions per examiner per day as controlling measure. The individual Loan Section maintained a level work force as company policy and to ensure that anyone who would be trained for the job was needed permanently in the section. To achieve control over the section and still comply with the company policy, the examiners occasionally got some work from the investment division, did some aspects of foreclosures, or worked overtime.
The lawyers in the Corporate Loan Section, on the other hand, handled complex corporate loans which necessitated the opinion of outside counsels. Expenses incurred in employing outside counsels were paid by the borrowers and did not affect the budget of the corporate loan section.
As a control procedure, the section head conducted consultations with the section lawyers and reassigned work of various attorneys to equalize their work loads. Weekly staff conferences with
Mr. Carlisle were also