Section C

Written Analysis and Communication

(WAC)

Assignment-1

Case: Rocky Mountain Mutual: Promoting Fun or Fitness?

WAC-1

Rocky Mountain MutualUtah, USADate:18 June 2015To:Zachary Evans,Vice President - OperationsFrom:Joseph MirolaManager - Claims

Subject: Retention of the Fitness Center at Headquarters

Dear Sir,

First of all, Thank you very much for allowing me to put forth my view points for retaining the fitness center at Headquarters. I would like to draw your attention as per our discussion on this issue in the last week's meeting. As, asked Im putting in writing my recommendation to support retaining the fitness center. The purpose of this memo is to give you my perspective in the hope of persuading you to reconsider your decision.Company reports indicate that the Fitness Center has led to an overall decrease in employee absenteeism, reduction in employee medical costs, and an increase in productivity. Employees who have taken advantage of the Fitness Center miss half the amount of work-days than employees who do not use the fitness center. This claim can be substantiated by the following data: Employees who used the Company Fitness Center missed only average 6 days of work in a year. Employees who did not use the fitness center missed an average of 12 days of work per year.There are three category of medical costs effected by use of the Fitness Center: Frequent users (10% of all employees, 25 people): employees who use the fitness center more than 3 times per week. Have an average medical of $100 per year. Average users (25% of employees, 62 people): employees who use the Fitness center once or twice a week. Have an average medical cost of $300 per year. Non-users (65% of employees, 163 people): employees who do not use the fitness center at all. Have an average medical cost of $500 per year.So if calculated the statistics shows more than $64000 gain in terms of less expenditure on medical claim. Whereas the gain of additional man-days in terms of money makes the total gain more than $100,000.To increase use of the Fitness Center I instituted a Wellness Program 8 months ago in my department (Claims Department), which used peer encouragement and team-building concepts to promote use of the Fitness Center. Since then, productivity in the Claims Department has increased by 18 percent and the amount of sick days has decreased by 5%. I believe the Wellness Program can be instituted throughout the company and we can expect to see similar results to what we have already seen in the Claims Department. The costs of maintaining the fitness center can be taken care of with the costs and increased company profits due to higher employee productivity and decreased cost of sick days. Our Headquarter is located in a remote suburban area, where there are few things that attract young employees. So it is very difficult for us to attract the talented young college graduates. The fitness center gives us an edge in terms of recruiting young, ambitious employees to the area, since our competitors in the area do not have fitness centers. Furthermore, there are no other fitness centers that are conveniently located near our headquarters. So if we close down the Fitness Center, there will be no where that our company employees can go. Employees who were recruited to this company with the Fitness Center as part of their employee benefits package will feel betrayed, which might even lead to a high attrition. We have to attract the best employees if we want to take the firm forward and keep our previously promised things for present employees.I sincerely hope that you strongly consider keeping the Fitness Center because, in the long run, it will only increase company profits.Please find enclosed my view points in the form of a report to have more insight on this issue. The structure of this report has two parts: An executive summary, followed by a report to explain your concerns along with my view points to illuminate various factors to help you in the decision process.

Thank you

Executive SummaryThe fitness center of Rocky Mountain Mutual was a result of a strategic decision to attract young employees into the company. It was built at cost of $100,00,00 and annual maintenance cost was $100,000.After taking over of Zachary Evans as Vice President-Operations and his ideas of improving profit and reducing costs, a question has been raised whether to continue with the fitness center or not.There can be two options either to close the fitness center to remain open. The analysis shown here considers keeping it open and recommends initiating the wellness programme throughout the company to maximize its economic and employee benefit.

Word Count: 104

Table of ContentsS. No. Contents Page Number 1 Situation Analysis 2 Problem Statement 3 Options 4 Criteria for Evaluation 5 Evaluation of Options 6 Recommendation 7 Plan of Action

Situation Analysis

In this case, here is a need to persuade a person in high position to change his mind about an issue. Mr. Zachary Evans, Vice President-Operations is in position higher to that of the writer (Joseph Mirola, Manager-Claims). Mr. Evans, who in turn is preparing a report for the President, CEO, and the Board of Directors in which he will outline his ideas for improving profits and reducing costs, includes among his suggestions a proposal to close the Fitness Center. Joe mentions his strong views against closing the center, noting how much the facility means to him and his department. Joe is writing a memo to keep the Fitness Center open.It is required to define a high persuasive tone for the memo to offer a kind of request and effective appeal. Though, a major challenge is to offer the kinds of data and other information that will be effective in pursuation.

Problem StatementTo decide whether or not to close the fitness center, for saving its running maintenance cost, hire more employees and accommodate the growing Corporate Information Systems Department (CISD) in its place.

OptionsFollowing are the two options to be considered for evaluation:1. To keep the fitness center open, stressing its importance in terms of economic and employee benefit.2. Closing the fitness center to save its running maintenance cost, hire more employees and accommodate the growing Corporate Information Systems Department (CISD). Criteria of Evaluation1. To stress the importance of given data and to make inferences from details given in the case.a. Employees who use the center save the company money; b. Employees who use the center are more productive; c. The writer finds the fitness center an important benefit of working for the companyd. Number of users is significant

2. Associated intangible benefits3. An opportunity in the context of persuasion with basic disagreement with the superior to make him agreed, managing differences between organizational objectives and employees preferences and needs.Evaluation of Options1. To keep the fitness center open, stressing its importance in terms of economic and employee benefit.1.1. To justify the $100,000 per year operating costs, consider savings in hospitalization, absenteeism, and productivity. Based on the survey a conservative estimate of hospitalization savings figures out at more than $60,000. Absenteeism savings is also significant considering much more man-days available. The greatest savings by far are found in productivity increases. For example, in Joe department alone, productivity has increased by a staggering 18% over a six-month period. The given survey statistics and using productivity figures from a single department the savings becomes more than $100,000, just enough to offset operating costs. With less conservative statistics and information from all departments, savings would likely to be much more than the operating costs.1.2. Only 3 years ago approximately $1 million was spent to build the center. Those costs were allocated over time as a significant capital expenditure; if it was to shut it down now, needs to allocate $300K to each of the last 3 years as a fixed costs, which would definitely not improve profits from a balance sheet perspective. Shareholders would not be happy. 1.3. The space was built to be a fitness center, not a home for CISD. It requires expending considerable resources to remodel the space and would have to take a loss on all the equipment purchased. The health insurance costs are drastically lower for people who use the center. The average hospitalization cost for non-users (65% of employees) is $500/person or about $81,500 annually. Average cost for employees that work out 1-2 X a week (25%) is only $300, $200 less than average non-users. For the 10% of employees that use the center 3X or more a week, average cost is only $100, $400 less than the non-users.1.4. One of the concerns was on low utilization. Data collected via a survey indicated that 35% weekly utilization (or 87 employees). This data coupled with personal experience of Joe demonstrates that with little motivation, maximum employees may use the center at least once a week.1.5. The fitness center is important as the figure of only 25% of businesses providing exercise facilities nationwide is projected to increase every year. Further, on a local level, the center gives a competitive advantage by attracting healthy, young and productive workers who value the employee benefits provided by the center.1.6. The fitness center also adds opulence to the headquarters and its premises to have unique ambience and better corporate image.2. Closing the fitness center to save its running maintenance cost, hire more employees and accommodate the growing Corporate Information Systems Department (CISD) in its place.2.1. It is truly believed that closing the center would not be an effective means of improving profits and cutting costs.

RecommendationThe Recommendation would be to keep the Fitness center and increase its utilization by offering a throughout the organization Well-ness programme coupled with some incentive, which will benefit both the employee and the Company.

Plan of ActionIn order to implement the decision to keep the Fitness center, we can proceed in the following ways: First is its internal marketing. Utilization being a concern, it would be recommended to adopt a Wellness Program company-wide as a way of supporting healthy lifestyles, increasing better return on fitness center. As seen in the Claims Department, Employees throughout the company can be mobilized to adopt it. Also by offering some additional incentive, which can be further worked-out and fine-tuned, more age groups can be attracted.

To help keep high morale, the fitness center will offer relaxation to employees wanting to let off their conflict and tension in the simple, uncomplicated manner through informal parleys, physical exercise, walking/running and swimming. Being in insurance business per se, it can go for outside marketing also which may give it competitive edge over competitors: lower health care costs, higher productivity, better morale, and an extra benefit with which it can attract and retain young employees. Also it will earn a good repo among customers to attract them more.

Word Count: 1014

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