ROCKY MOUNTAIN MUTUAL

Promoting FUN or FITNESS

Group1
 CASE FACTS
Rocky mountain is an insurance company
In semi urban area
Joseph Mirola - claims manager
Fitness centre has been opened
250 employees-10% regular user (M.C.- $100)
25% non regular (M.C.- $300)
65% non user (M.C.- $500)
High cost of Fitness centre
Zack has proposed to close the fitness centre to
reduce the costs
Major Benefits of Fitness Centre

Good health of Employees

Low Absenteeism
Reduction in Medical cost
Increase in Productivity (18% overall)
Costs Incurred by Fitness Centre
Setup Costs of the centre
$10,00,000
Total Maintenance costs- $100,000 per year

Setup costs is a sunk cost so only $100,000

is to be recovered
Benefits
Assuming our no. of employees in future are 400
Suppose 30% of the employees are regular (M.C.$100)
Suppose 30% are non-regular user (M.C.$400)
Total Costs saved 120x ($500-$100)= $48000
120x ($500-$300)= $24000
= $72000
Increased productivity leads to Increased energy
This leads to low attrition rate
This further reduces the recruitment costs
Low Absenteeism leads to better performance
Other benefits
Since 10% users going to fitness centre increased the
overall productivity by 18%
30-40% employees would increase the productivity by
minimum 50% (taking a conservative view)
Revenue can be generated by using the fitness centre
on weekends
All these benefits are much more than the expenses
incurred
Sir I request you to please look into these details as
implementing policies to promote the centre has resulted
in a better output