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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.