-
8/4/2019 Report - For Analysis
1/4
EXECUTIVE SUMMARY
Rocky Mountain Mutual is a growing Insurance company with
further expansionplans. Headquartered at a remote suburb in Utah,
The management had
constructed a Fitness center in the office complex mainly to
make up for the lack of
sport-club facilities in the area. However, presently, there are
some concerns about
the utility of the center. The report below provides an analysis
of the options
available to the RMM Management regarding the fitness center and
recommends
that the fitness center remain open.
INTRODUCTION
Headquartered at a remote suburb in Utah with no sporting-club
facilities in the
neighborhood, the Rocky Mountain Mutuals management had
constructed a Fitness
center in the office complex to make up for the lack of
sport-club facilities in the
area. With positive encouragement from the claims Manager, Mr.
Mirola, the center
has gained increasing acceptance by the employees. The results
reflected in
reduction of individual health care costs from $500 to $300 /
$100 for the avid
users. In addition the employees who exercised were found to be
comparatively
more productive than their non-exercising colleagues. However,
the high
maintenance costs of the fitness center have raised questions
about the utility of
the fitness center and the wisdom in keeping the center
open.
PROBLEM STATEMENT
Is there enough justification for RMM-Management tokeep the
fitness center open?
OPTIONS FOR THE RMM-MANAGEMENT
Close the fitness center
Keep the fitness center open as is
Page 1 of4
-
8/4/2019 Report - For Analysis
2/4
Encourage increased usage of the center by employees and pursue
other
revenue generation options to make the center financially
self-sufficient
CRITERIA FOR EVALUATION
Utilization and Usage
Costs vs. Benefits
Employee performance
Effect on potential employees
EVALUATION OF OPTIONS
One of important reasons for opening the Fitness Center was the
location of the
Rocky Mountain Mutual Company. Located in suburban of UTAH, the
Fitness Center
continues to be the only athletic facility in the
neighborhood.
Aside from keeping the employee spirit high, the fitness center
justifies its existence
by demonstrating significant improvements in employee
productivity between the
Exercising and the non-exercising segments.
Also, the healthcare costs and absenteeism of
employees(exercising thrice a week)
have shown a measurable decrease of 20% and 50% respectively.
Further
computation clearly demonstrates a cost savings of nearly
$21,000 in centers
maintenance expenses due to the reduction in health-care
bills.
However,this facility and the associated benefits are currently
being used only by
35% of 250 employees.
Page 2 of4
-
8/4/2019 Report - For Analysis
3/4
If the continued existence of the center needs to be justified,
the center must be
self-sufficient financially. In order to achieve this, one of
the following options can
be pursued.
Incentivizing employees to utilize the fitness center
Extending the availability of the fitness center to the family
members
of employees
Introducing coaching programs for children such as swimming,
aerobics etc.
Extending the fitness center facility to the general community
during
the non-peak hours.
If the usage of Fitness Center can be increased by pursuing one
of the options
mentioned above, there is a very good chance of additional
savings of $32,600 to
$77,600 in health-care costs alone.
Also, being the only sports-club in the area could be a
point-of-advantage in
recruiting new employees for the Utah facility.
RECOMMENDATION AND ACTION PLAN
The Fitness Center must remain open as it offers a long term
advantage both in
terms of present employees and potential future employees.
Further promotion of the fitness center to both the employees
and the community
at large will provide additional revenues from the fitness
center and help in
engaging the employees.
Page 3 of4
-
8/4/2019 Report - For Analysis
4/4
Page 4 of4
