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Persuasive Memo on Fitness Center at Rocky Mountain Mutual

TO: Zachary Evans, Vice President of Operations

FROM: Joseph Mirola, Claims Manager
DATE: October 26, 2014
SUBJECT: Proposal to retain the fitness center
I would like to thank you for giving me an opportunity to explain the benefits of having the fitness
center. In our last meeting, you briefed me how the company can cut down the operating cost
and improve profits by closing down the fitness center. Though, the fitness center is causing the
company a lot of money, I strongly believe that closing it is not the best option for improving
profits. Closing the fitness center would have a negative impact on the company and its image.
The benefits of the fitness center are described below.
1. Low medical costs and absenteeism.
The data collected in these 3 years of operation of the fitness center reveals the following facts:

Users of the company fitness center missed on average 6 days of work in a year.
Non-users of the company fitness center missed an average of 12 days of work per

This clearly indicates that the employees who availed the benefits of the fitness center
missed half of the work days than the employees who didnt use the fitness center.
Moreover, we also have a data collected on the money spent by employees on the medical
cost which is as follows:
10% of the employees (25 people) who used the fitness center three or more times in a
week have an average medical cost of $100 per year. These can be considered as the
frequent users or the early adapters.
25% of the employees (62 people) who used the fitness center once or twice in a week
have an average medical cost of $300 per year. These can be considered as the
average users or the late majority.
65% of the employees (163 people) who never used the fitness center have an
average medical cost of $500 per year. These can be considered as the non-users or
the laggards.
Though these statistics do not suggest that low medical cost and low absenteeism are
caused by attending fitness center, but it does confirm some of the facts we have hearing
and reading since a long time. According to the U.S. Centers for Disease Control and
Prevention (CDC), physically active individuals have significantly lower medical costs than
those who are inactive and people if become more active they would cut down medical
costs in the US by more than $70 billion. In another study conducted by CDC, regular
exercise can reduce the risk of depression and improve sleep quality. Thus the results
established by the study conducted by premier institutes confirm the fact that exercising
and being a regular user of fitness center lowers down the medical costs and thus
improves productivity.
This result is also substantiated by the wellness program started by me for the claim
department which promoted the use of the fitness center. There has been an increase of
18% in the productivity and sick days reduction by 5% in the department as compared to

the previous eight month period. The productivity gains would be substantial and would
result in enormous profit for the company. If each employee would be motivated to join
fitness center it would result in huge profits sufficient enough to cover the operating cost of
the center. Thus, the fitness center could serve as an asset which will yield profits in the
future and we should concentrate on long-term gains rather than the short-term profits.
With only 3 years in operation 35% of the employees have become regular users, if
incentives would be provided to participate in fitness programs then it would surely
increase the profits by lowering down the medical costs and absenteeism.
2. Increased morale of employees.
The wellness program has encouraged peer-interaction and an increased morale of the
employees. This would eventually help in team-building of the people and encourage them
to discuss the problems upfront rather than keeping it to themselves. Thus, we would be
able to know the problems faced by employee and their perception of the policies framed
by the top management which would lead to increased productivity.
3. Remote location
Our company is located in a remote suburban town, the fitness center would be an
attraction for young employees. This would encourage young college graduates to join our
company instead of scouting for options in urban city. Thus, we would be able to bring new
fresh talent in the organization and would have an upper hand in recruiting young and
ambitious employees. This can also lead to high turnover rate. It can also lead to negative
backlash and protests and thus could impact our image in the community. The fitness
center is a source of pride for our company since no other company in the vicinity offer the
same facility. Thus, we should close it down as it would lower down our reputation in the
4. Oozes off frustration
Since, in future more employees would be encouraged to work in computers and in tough
situations. The targets would also be difficult to achieve which could frustrate employees.
Many of them would leave company in such a case. The fitness center would of great help
in such scenarios as it would keep them fit and would also provide mental peace to them.
This would give us an edge over other companies since they would not be able to harness
the true potential of their employees.
The space was built to be a fitness center, if you would accommodate the Corporate
Information Systems Department (CISD), the company would have to expend a lot of
money. Moreover, the assets of the fitness center would be of no use and would lead to a
huge loss. Instead of that we could renovate other departments or expand to build a CISD.
The profits earned by lowering of medical costs and increase in productivity would recover
the extra cost that would be incurred in expansion or renovation. Thus, we would be able
to be competitive as well as fitness-oriented organization. This would make us different
from other organizations and would give us an upper edge. Employees are the building
blocks of an organization, they should be given utmost importance. By, incorporating the
same in our culture, we would win the hearts of the employees.
I hope you would analyze all the benefits of the fitness center and give a chance to the firm
to continue with it to reap the benefits in the future. Thank you once again for taking my