TABLE OF CONTENTS

1. Situational Analysis 3
2. Objectives 3
3. Problem Statement 4
4. Constraints and Criteria 4
5. Generation of all the options 4
6. Analysis of the options 5
7. Best Option and Action Plan 6
8. Risk and Contingency Plan 7
9. Annexure 8

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SITUATIONAL ANALYSIS
Joseph Mirola, the manager of the Claims Department, believes in the advantages of the
fitness center, while the new VP, Zachary Evans, suggests that it is merely a reward for a few
people. The exercise center costs $100,000 each year, and only a third of the personnel use it.
According to the vice president, the number of users must match the expense of maintaining
the canters. The medical cost for those who don't take advantage of the fitness center is
$81,500, while for those who do is $21,100. Moreover, the absenteeism rate of those who
don't use it is twice as much as those who do exercise. With the help of team building and
support from peers, the Claims Department's productivity has increased by 18%, and
absenteeism decreased by 5%. The Corporate Information Systems Department is growing
and requires more space for its team members. The company is debating over the balance
between employee benefits and reducing expenses. The insurance firm seeks to sustain itself
by increasing profits and cutting down costs. To ensure employee retention, they must offer a
variety of benefits to promote physical and mental health.

OBJECTIVES
Short term Objectives:
1. Boost employee morale and promote a fitness culture:
The company wants to create a work environment that is both positive and healthy. This can
be achieved by providing employees with the necessary tools and resources to stay active and
engaged. This could include offering gym memberships, providing healthy snacks at the
office, or organizing group activities such as group runs or sports tournaments. This will also
help to create a culture of wellness and camaraderie, which will help to boost morale and
create a positive work atmosphere.
2. Efforts to minimize employee absenteeism and associated medical expenses:
The organization wants to reduce the amount of time that employees are absent from work
due to illness or injury. This could be done by providing employees with access to preventive
health measures, such as annual health check-ups and regular exercise. Additionally,
providing employees with resources to better manage their health, such as a workplace
wellness program, can help to reduce the amount of time and money spent on medical
expenses associated with employee absenteeism.

Short-term Objectives:
1. Attract future employees and reduce attrition:

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The organization wants to create an attractive work environment that will draw in new
employees and retain current employees. This could be done by offering competitive salaries,
and comprehensive benefits packages.

PROBLEM STATEMENT
The problem the company Rocky Mountain Mutual is facing is whether to continue operating
the fitness center at the headquarter or stop operating it so that it can be used in the future to
expand when they hire new employees. The fitness center is currently used by only 35
percent of the employees and out of the regulars only 10 percent of them are using it
frequently, three or four times per week. Joe, the manager of the claims department argues
that the fitness center is not for the fun but for the health benefits of their employees. Zachary
Evans the new VP of the company suggests not to continue operating the fitness center as it is
expensive to run which is around $100,000 per year and this space can be used in the future
when they expand.

CONSTRAINTS AND CRITERIA

The constraints which the company has is:

1. Space Constraint: As they are planning to expand in the future there would be an
issue of space to accommodate the newly hired employees.
The criteria that the company must take into consideration while taking decisions:
1. Financial Impact: The cost of maintenance and employee recruitment for the fitness
center should not impact the overall operating costs and profit of the company.
2. Employee wellness: Given that the facilities offer a wide range of emotional and
well-being services, they must take the well-being of the staff into account.
3. Employee Productivity: Employees who don't exercise regularly may get sick,
which would raise their medical expenses and cause them to miss work. Lack of work
results in lower output.
4. New Talent Recruitment: The availability of facilities like gyms, and fitness center
in office spaces generally attract new applicants as they consider these facilities while
joining.

GENERATION OF ALL THE OPTIONS

1. Keep the fitness center open and continue the wellness program:

This means that the Rocky Mountain company should maintain the fitness center and keep
the existing wellness program running. The fitness center should continue to be a resource for
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the community and provide a place for people to exercise and get healthy. The wellness
program should be maintained so that people can access health and fitness advice, resources,
and support.

2. Close the fitness center and discontinue the wellness program:

This means that the Rocky Mountain company should close the fitness center and discontinue
the wellness program. This option would be best if the fitness center is not being used
optimally or not providing a sufficient return on investment. Additionally, the wellness
program should be discontinued as it may not be providing enough value to justify its cost.
3. Keep the fitness center open and close some parts of the center that are not being
used optimally:

This means that the Rocky Mountain company should keep the fitness center open but close
any areas of the center that are not being used as much as other parts of the center. This
would allow the fitness center to remain open and provide a resource for the community,
while also cutting costs by discontinuing the use of parts of the center that are not being used
optimally.

ANALYSIS OF THE OPTIONS

Option 1:
This calculation as shown in Exhibit 1 of the annexure pertains to the cost savings from
closing a fitness center for a company with 250 employees. The company has records of the
medical bill costs per person and the number of employees using the center either once or
twice a week, thrice a week or never using the center.
Based on the given information, the total claim (medical bill cost) for the employees using
the center once or twice a week is 62 x $300 = $18,600. The total claim for the employees
using the center thrice a week is 25 x $100 = $2,500. The total claim for the employees who
never used the center is 163 x $500 = $81,500.
Therefore, the total claim if the fitness center runs at a normal level is $18,600 + $2,500 +
$81,500 = $102,600.
However, if the fitness center is closed, the total claim becomes $125,000. The cost savings
can be calculated as $125,000 - $102,600 = $22,400.
This calculation assumes that the employees who use the fitness center will incur higher
medical costs if the center is closed. The savings represent the difference between the
expected medical costs if the center is open and the actual costs if the center is closed.

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Advantages would be:

 Offers a unique advantage in the hiring process, which sets it apart from competitors.
 Has led to a noticeable improvement in the work output of employees by 18%.
 Has resulted in a decrease of $22,400 in expenses related to claims for the
organization.
 Has caused a decrease of 5% in employee absences.
 Terminating the program after 3 years would result in the loss of the investment
made.

Option 2:
Rocky Mountain Company is currently facing a tough decision - to close the fitness center
and discontinue its wellness program. This is due to the fact that the company would be able
to save $1,00,000 per year. However, this decision also brings about a number of other
implications. For one, the space freed up from the fitness center could be used to create more
space for other departments like Corporate Information Systems. This would mean increased
efficiency as more resources could be dedicated to developing the company. On the other
hand, this decision also has the potential to cause a loss of competitive advantage for
recruiting new talents. A wellness program is often seen as an important aspect of any
company and its absence might make it difficult to attract new, talented employees. Finally,
the decision could also lead to a rise in absenteeism and lower productivity of employees.
This is because, without a wellness program, employees might be more prone to taking time
off for health reasons, leading to decreased productivity. Overall, the decision to close the
fitness center and discontinue the wellness program is a difficult one. While there are
potential cost savings, there are also risks that need to be weighed carefully before a decision
is made.
Option 3:
Option 3 for the Rocky Mountain Company seems to be the best option for them to pursue.
By keeping the fitness center open but closing some parts of the center that are not being used
optimally, the company will be able to benefit in a number of ways. By continuing to offer
this perk to their employees, they will still be able to hold a competitive edge while
recruiting, which will help them to attract the best talent available. Additionally, the effects of
employee productivity will still remain high, as employees will still have access to the fitness
center and be able to maintain a healthy lifestyle. The company will also benefit by saving
money in the long run. By closing some parts of the center that are not being used optimally,
the company will be able to reduce its overall costs. Furthermore, this measure could also
lead to lower absenteeism since employees will be more likely to come to work if they have
access to the fitness center. Finally, if the fitness center would be still at a loss, the company
could close the center in phases. This way, the company will be able to gradually reduce its
losses and eventually save some money.

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THE BEST OPTION AND ACTION PLAN:

After analyzing all the available options and considering both constraints and criteria, the best
option for Rocky Mountain Mutual is option 3 which is to continue operating the fitness
center and close the parts of the fitness center which are not being used to their full potential.
Action plan:

1. Conduct various sessions by experts on the importance and benefits of the fitness
center for the employees and promote it using posters, and email. Also distribute
handouts, sign-in sheets, and refreshments to encourage the participation of
employees.
2. Collect data on how many employees are interested in using the facility of the fitness
center.
3. Based upon the collected data, evaluate which part of the fitness center is used more
and close the spaces which are not much used by the employees.
4. Evaluate the usage of the fitness center at the end of every month and then make
changes accordingly.

RISKS AND CONTINGENCY PLAN

There is a possibility that the business will experience losses after continuing to run the
fitness center.
The contingency plan if the company makes losses is:
1. They can offer a subscription-based model for the non-members so that the employees
from the nearby offices can also use the fitness center which will be an alternative
source of income to make up for losses which optimize the cost.
2. Clear communication with employees about the changes to the fitness center will be
crucial. The company should ensure that employees understand why certain areas of
the center are being closed and what alternatives are available for them to use. This
will help to minimize any negative impact on employee morale and help to maintain
employee support for the center.
3. The company should consider alternative wellness programs to replace the areas of
the center that are being closed. This could include offering gym memberships,
providing healthy snacks at the office, or organizing group activities such as group
runs or sports tournaments. This will help to ensure that employees still have access to
resources that promote physical and mental health.

This will help to ensure that the company remains on track to meet its financial goals.

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ANNEXURE
Exhibit 1

Medical bill cost per person

Description Employees in $

Number of employees 250

Number of employees using the center once or

twice a week 62 300

Number of employees using the center thrice a

week 25 100

Number of employees who never used center 163 500

Total claim if fitness center runs at a normal level 102600

Total claim if fitness center is closed 125000

Cost savings 22400

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