Executive Summary

The opening of fitness center at the ROCKY Mountain Mutual was decided by the
management to promote fitness benefit to employees. Almost a million dollar was spent
and currently around $100,000 is incurred every year to maintain it. In views to maximize
profit and reduce costs, it is being called upon to decide whether the operations of fitness
center should be kept open or should it be shut down.
Three options have been provided and the options are evaluated on the basis of certain
criteria to review their validity. Option 1 has been recommended with an aim to
maximize profit as well as keeping the fitness center open for the benefit of the employee
wellbeing.

Situation Analysis
Management encourages Fitness in ROCKY Mountain Mutual Firm
On the fact that a state-of-art Fitness center is available at Rocky Mountain Mutual, it can
be inferred that management encourages fitness and considers it an important employee
benefit.

High operating cost of the fitness center

Company incurs a very high operating cost in maintaining the fitness center. Such costs
are overhead to the firm as it lowers the overall profit margin.

Lack of motivation to use fitness center by the employees

Employees at Rocky Mountain Mutual firm lacks motivation to visit the fitness center.
Only

35% of the employees use the fitness center on a regular basis. This shows that
employees need to be motivated and educated on how important fitness is for an
individual. Well-designed fitness programs can help to motive employees to visit the
fitness center.

Fitness increases employee productivity

Fitness center can be regarded as an asset to the company as fitness increases
productivity.
Employees those who visit fitness center regularly has been observed to have less
medical cost and
lower absenteeism. Increase in employee productivity in turn will increase company
turnover.