WRITTEN ANANLYSIS AND COMMUNICATIONS- 1

Rocky Mountain Mutual: Promoting Fun or Fitness?

MEMOTo: Mr. Zachary Evans, Vice President of OperationsFrom: Joseph MirolaDate: July 19, 2015Subject: Fitness Center to further the interests of Rocky Mountain Mutual

Greetings Zach,

As discussed in our meeting last week, I understand that you have some reasons to close the fitness center. In order to satiate your apprehensions , I have listed out a few reasons that support my position of keeping the fitness centre operational.As a regular user, I was greatly benefited from using the fitness center. During the past 8 months, I have instituted a Wellness Program which used peer encouragement to promote use of the Fitness Center thereby resulting in greater camaraderie and team cohesiveness amongst the employees. A detailed analysis of the company records further evince that the fitness centre decreases employee absenteeism, reduces company medical cost and increases employee productivity and proactiveness. Employees who have taken advantage of the Fitness Centre miss half the number of work days than employees who do not use the fitness centre. Also productivity in the Claims department has risen by 18 percent and the amount of sick days have fallen off by 5%.Investing in our most important asset the employees, would not only improve the cost to benefit ratio, by lowering the companys insurance premiums towards employee benefit, but also contibute to the overall efficiency of the company. Having a healthy, happy, productive front line can positively affect our bottomline.

Thank you.

EXECUTIVE SUMMARY

Rocky Mountain Mutual, a growing insurance company built a new headquarter complex in the remote suburbs of Utah. The distinctive feature of this branch was its state of the art fitness centre.Though the fitness center was not being used by the 65% of the employees, but the employees who used to visit the center were found to have comparatively low rates of absenteeism and low medical claims, leading to a more pleasant and productive work environment. But Zachery Evans, the Vice President of Operations, wants to close the fitness centre due to increased expenses and space constraints.

TABLE OF CONTENTS Page No.SITUATION ANALYSIS1PROBLEMSTATEMENT1THE OPTIONS1CRITERIA FOR EVALUATION1EVALUATION OF OPTIONS2RECOMMENDATION2ACTION PLAN3CONTINGENCY PLAN 3EXHIBIT3

SITUATION ANALYSISRocky Mountain Mutual built a new headquarter complex in a remote suburban area in Utah. A swanky new state of the art Fitness Centre having high running cost was established for the employees. A wellness program was also instituted that used peer encouragement and support groups to foster a culture of fitness among employees. Increased productivity levels, reduced absenteeism, and reduced medical claimswere the corollary of the fitness regime.The recently promoted Vice Prsident of Operations, Zachary Evans believes that the Fitness Centre is a non commercial liability for the company. According to him, center does not add value but serves as an entertainment center for a few employees, and that the cost of running it does not justify the returns it is providing.So he proposes to shut the fitness centre and utilise the same space to accommodate the growing Corporate Information Systems department.THE PROBLEMConvincing Zach about the long term benefits of keeping the Fitness Center open

THE OPTIONS(1) Keep the fitness centre and encourage employees to participate by extending the Wellness Program to the entire organization.(2) Shut Down unnecessary parts of fitness center for space and cost optimization.

CRITERIA FOR EVALUATION(1) Maintenance cost of the Fitness Centre.(2) Space constraints.(3) Low usage ( 65% people do not use the centre)(4) Intangible and tangible benefits to the employee (5) Cost to the company

1|PageEVALUATION OF OPTIONS

OPTION (1)Maintaining the Fitness Centre may sound like a big expense, but considering the cost to benefit ratio, if regular exercise at the gym makes our most importane assets more productive and reduces the number of days theyre out for health reasons, its an investment that pays off in the long run. Other benefits could be substantiated by the facts mentioned below :

1.Reduction in cost to company: Present data indicates that about $22,250(Exhibit A)are being saved per annum by reduction in medical claims by employees. 2.Reduction in absenteeism:There is a drop in absenteeism by 5%, and productivity has improved by 18%.3.IntangibleBenefits : The Wellness Program has greatly increased intangible benefits such as team bonding and camaraderie among employees, a healthier lifestyle, building high morale and strengthening the employee/employer relations and and boosting brand name,.4. Impetus to attract young employees and retain the old employees : since our office is located in a fairly remote suburban area, our fitness center could act as an incentive to draw young and talented employees when we expand our business. Furthermore, as no other competitor has similar facility in the vicinity ,It also gives us an edge to be ahead of our competitors at all times.

Even though only 35% employees use the fitness centre, if we close the facility down, they may feel insulted and we may be contributing to employee resentment by such a measure, which can have very adverse consequences going into the future. Our current employees must have taken into consideration all such facilities offered by the company before they made the decision to join us, despite being located in a remote suburban area and duping them could result in a high turnover of employees

OPTION (2)By careful investigation company can shut those parts of fitness center that are used least , sell the surplus firness equipment, reduce the number of staff , thereby optimizing the cost of maintenance of the fitness centre.

The centre was build 3 years ago. Since the place was originally built as a fitness centre, the cost associated with rehashing it to Corporate Informations System Department could outweigh the benefit for such conversion. Instead, opening the fitness centre for the general public with a membership fee could definitely bring in money for Rocky Mountain meet the current expenses of the center.As not many of the employees are using its services presently, we have ample space to accommodate other people.

RECOMMENDATIONIt is seen that option (1) has the potential to convince the top management to keep the Fitness Centre operational for pursuit of long term benefits.

2|PageACTION PLANIn order to keep the fitness centre going, the following must be done :1. The Wellness Program need to be extended to the rest of the organization.2. Schedule an initial meeting.This is the perfect time to explain the details of the program and generate excitement around the program. Take this time to explain to your employees why their health is important to you, and how they can benefit from a healthier lifestyle increased energy (to play with kids) etc.3. Offer a reward or incentive for participants:While the most rewarding benefit of participating in the GymFed program is the transformation of the body, mind and spirit as members lose fat, gain muscle and increase their self-confidence, offering an internal reward encourages healthy competition and anticipation among employees.4. Schedule socials.Scheduling off-site socials to encourage participants to talk about the health benefits they have received by adopting the fitness regime. This would foster group interaction and cohesiveness

5. Send out weekly emails.During the program, send out weekly emails to encourage people and remind them to track their progress against their goals.

CONTINGENCY PLANIn case the top management doesnt seem convinced with the options and data provided then we can suggest an option to reduce the space of the gym area have the remaining space for the new department.

EXHIBITStatistics for Rocky Mountain Mutual CaseNumber of employees: 250

Number of users of fitness center:

One or two times a week--25% of all employees (approx. 62 people)Three or more times a week--10% of all employees (25 people) Non-users--65% (approx. 163 people)

Hospitalization Costs-2 yrs. Absentee Rates-2 yrs.

Users of the Facility $18,600 (approx. $300 per person) Days Missed (aver. per person) 6 per year

Non-Users of the Facility $81,500 + (approx. $500 per person) Days Missed (aver. per person) 12 per year

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