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