EXECUTIVE SUMMARY

Rocky Mountain Mutual is a growing Insurance company with further expansion plans. Headquartered at a remote suburb in Utah, The management had constructed a Fitness center in the office complex mainly to make up for the lack of sport-club facilities in the area. However, presently, there are some concerns about the utility of the center. The report below provides an analysis of the options available to the RMM Management regarding the fitness center and recommends that the fitness center remain open.

INTRODUCTION
Headquartered at a remote suburb in Utah with no sporting-club facilities in the neighborhood, the Rocky Mountain Mutuals management had constructed a Fitness center in the office complex to make up for the lack of sport-club facilities in the area. With positive encouragement from the claims Manager, Mr. Mirola, the center has gained increasing acceptance by the employees. The results reflected in reduction of individual health care costs from $500 to $300 / $100 for the avid users. In addition the employees who exercised were found to be comparatively more productive than their non-exercising colleagues. However, the high maintenance costs of the fitness center have raised questions about the utility of the fitness center and the wisdom in keeping the center open.

PROBLEM STATEMENT
Is there enough justification for RMM-Management tokeep the fitness center open?

OPTIONS FOR THE RMM-MANAGEMENT

Close the fitness center Keep the fitness center open as is

Page 1 of 4

 Encourage increased usage of the center by employees and pursue other revenue generation options to make the center financially self-sufficient

CRITERIA FOR EVALUATION

Utilization and Usage Costs vs. Benefits Employee performance Effect on potential employees

EVALUATION OF OPTIONS

One of important reasons for opening the Fitness Center was the location of the Rocky Mountain Mutual Company. Located in suburban of UTAH, the Fitness Center continues to be the only athletic facility in the neighborhood.

Aside from keeping the employee spirit high, the fitness center justifies its existence by demonstrating significant improvements in employee productivity between the Exercising and the non-exercising segments.

Also, the healthcare costs and absenteeism of employees(exercising thrice a week) have shown a measurable decrease of 20% and 50% respectively. Further computation clearly demonstrates a cost savings of nearly $21,000 in centers maintenance expenses due to the reduction in health-care bills.

However,this facility and the associated benefits are currently being used only by 35% of 250 employees. Page 2 of 4

If the continued existence of the center needs to be justified, the center must be self-sufficient financially. In order to achieve this, one of the following options can be pursued. Incentivizing employees to utilize the fitness center Extending the availability of the fitness center to the family members of employees Introducing coaching programs for children such as swimming, aerobics etc. Extending the fitness center facility to the general community during the non-peak hours.

If the usage of Fitness Center can be increased by pursuing one of the options mentioned above, there is a very good chance of additional savings of $32,600 to $77,600 in health-care costs alone.

Also, being the only sports-club in the area could be a point-of-advantage in recruiting new employees for the Utah facility.

RECOMMENDATION AND ACTION PLAN

The Fitness Center must remain open as it offers a long term advantage both in terms of present employees and potential future employees.

Further promotion of the fitness center to both the employees and the community at large will provide additional revenues from the fitness center and help in engaging the employees. Page 3 of 4

Page 4 of 4