Written Analysis Communication Report on Rocky Mountain Mutual: Promoting Fun or Fitness Narsee Monjee Institute of Management Studies, Mumbai

This report is prepared by Vineet Mishra C037 of Division C for Prof. Vidya Premkumar

3/20/2015

Letter of Transmittal

Vineet Mishra

Administrative Assistant

Rocky Mountain Mutual

Utah

20th March 2015

Joseph Mirola

Claims Manager

Rocky Mountain Mutual

Utah

Subject: Report on decision on fitness centre

Dear Sir,

As assigned by you, I have completed the study on the dilemma of keeping the fitness

centre open at Rocky Mountain Mutual. I am submitting the report where I have analysed

the case, developed options and evaluated it against four criteria. The final analysis leads to

the recommendation of keeping the fitness centre running but with modifications to the

space usage and bringing in programs to motivate the employees to use the facility on

regular basis.

Hope you find the report useful in making your decision.

Table of Contents

Situational analysis .............................................................................................................. 4

Problem Statement ............................................................................................................. 4

Options ................................................................................................................................ 4

Criteria for evaluation ......................................................................................................... 4

Evaluation of options .......................................................................................................... 5

Recommendation ................................................................................................................ 6

Plan of action....................................................................................................................... 6

Executive Summary

This case focuses on the dilemma of the Rocky Mountain Mutual, an insurance company. The company had opened a new branch office in Utah and built an expensive fitness centre exclusively for its employees. The fitness centre cost about a million dollars and had facilities like a swimming pool, track for walking and running. The company records state that only 35% percentage of the employees use the fitness centre. However, there is a reduction in the medical expense of the employees using the facilities, increased productivity levels and reduced absenteeism. Joseph Mirola, Claims Manager believes in the fitness centre and also has initiated the Wellness Program. However, Zachary Evans, the new Vice President feels that it is an expensive investment and must be scrapped off. The options in this situation include keeping the fitness centre, closing down the fitness centre and converting the unused space into Corporate Information System (CIS) department, keeping the fitness centre, identify expensive unused equipments and reduce the overall cost of maintaining the fitness centre

Situation Analysis

Rocky Mountain Mutual Insurance Company built a new headquarters complex in a remote suburban area in Utah. While building the new complex, the company invested close to a million dollars in building a fitness centre featuring an indoor walking/running track, a small lap swimming pool and an exercise room with free weights and exercise machines. To supervise the activities and small staff was hired. A major reason for building the Fitness Centre was that no sports facilities were conveniently available near the firms headquarters and the management considered exercise to be an important benefit to offer to its employees. The company also touted the Fitness Centre to be a major draw for young employees.

Joe Mirola, the Claims Manager for Rocky Mountain Mutual, began to use the Fitness Centre as soon as it opened and now averages five days a week. Since he began using the centre regularly, Joe has enthusiastically described an increase in his energy and productivity. He encouraged other employees in his Department to take advantage of the facility. He instituted a Wellness Program for his department using peer encouragement and team building activities to promote the Centre.

Zachary Evans, Vice President of Operations, is of the opinion that the Fitness Centre should be closed down to reduce costs. In a meeting with Zachary Evans, Joe Mirola mentions his strong views against closing the centre. The meeting concludes with Zachary Evans telling Joe Mirola to persuade him on paper.

Problem Statement

Should the company continue providing the facilities of the fitness centre or close down the fitness centre?

Options

1. Keep the fitness centre open. 2. Shut down the fitness centre and develop Corporate Information System (CIS)

department 3. Revamp the fitness centre by disposing the not frequently used equipments thereby

reducing the maintenance costs

Criteria for evaluation

1. Cost-benefit analysis 2. Productivity, absenteeism, medical expenses of employees 3. Opportunity cost analysis

4. Attractive for young potential employees First option is the most important one because it is costing the company $100,000 annually and the company needs to figure out if it is creating enough benefit for the employees and the company Evaluation of options Option 1 - Keep the fitness centre open. Option 1 when evaluated against Criteria 1 implies that the financial resources that is being put in for fitness centre is not actually bringing in the benefits. Option 1 when evaluated against Criteria 2 suggests that productivity increases, absenteeism decreases and medical expenses decreases. Option 1 when evaluated against Criteria 3 suggests that opportunity cost is high as it is not considering benefits of reducing costs by going to other options Option 1 when evaluated against Criteria 4 suggests that it is attractive for young adults and attracts them for recruitment process with its uniqueness Option 2 - Shut down the fitness centre and develop Corporate Information System (CIS) department Option 2 when evaluated against Criteria 1 suggests that with the fitness centre shut down, the company saves approx $100,000

Option 2 when evaluated against Criteria 2 suggests that there wont be a major impact on the productivity, absenteeism and medical expenses as 35% of the employees only use the system

Option 2 when evaluated against Criteria 3 suggests that opportunity cost is high as it is not looking at other options that improve productivity and reduce absenteeism and medical expenses

Option 2 when evaluated against Criteria 4 suggests that the attractive proposition of having a fitness centre is not available with the company anymore and it doesnt act as a major driver for the potential employees. Option 3 - Revamp the fitness centre by disposing the not frequently used equipments thereby reducing the maintenance costs Option 3 when evaluated against Criteria 1 suggests that it reduces annual costs to the company Option 3 when evaluated against Criteria 2 suggests that productivity increases and absenteeism and medical expenses decreases

Option 3 when evaluated against Criteria 3 suggests that opportunity costs is less as it is a win win and collaborative situation Option 3 when evaluated against Criteria 4 suggests that attractiveness for young adults and future employees is high Recommendation Rocky Mountain Mutual should keep the fitness centre open but reduce the area by eliminating some of the unnecessary equipments and facilities. Plan of action Fitness centre are should be revamped. First, identification of the expensive and unnecessary equipment should be done and then the unused space can be used for the required official purposes. Wellness programs encouraging the employees to join the fitness club should be initiated and monthly trackers to improve the attendance of the employees for the fitness centres should be present to monitor the growth of employee usage. Also, performance and health reports for employees using the health centre should be shared to everyone to motivate them to keep healthy.