Case Analysis Rocky mountain

Evaluation

Rocky mountain mutual, the insurance company that has been on the rise
recently, laid foundations of a new head quarters three years ago in a distant area
of utah. The mentioned headquarters are luxuriously designed and furnished and
what sets it apart from the rest of the head offices is the presence of a lavish
Fitness Center which proves to be a source of both fun and fitness for the
members of the workforce there. The fitness center provides various kinds of
activities and exercises.

Joseph Mirola, the Claims department manager uses the fitness center regularly
and highlights the importance of exercising. Since the wellness programe began
eight months ago, there has been an 18% increase in the productivity of the
claims department and number of absentees has gone down by 5%. The morale
of the workers has also enhanced ever since. Joe mirola wants to spread the
facility in other parts of the company as well believing it would be for the greater
good of the conmpany.

However, after observing the statistics reflecting the number of people using the
facility, Zachary Evans, the newly appointed vice president of Operations is
proposing to close down the fitness center. The main reason for the proposed
plan is that Evans believes the Center’s costs are more than its worth. He is of the
view that profits should be increased while cutting down costs and according to
his point of view, it is not favourable for the company to run such an expensive
center seeing that not even half of the employees make use of it.

Joe Mirola is strongly in disagreement with Zach Evans views and has provided
him with reasonable arguments that would hopefully convice him to retain the
facility. Mirola has explained to Evans the benefits achieved from exercising
regularly and remaining fit. He has emphasized the need for the fitness center
telling how the better health of workers leads to increased worker productivity
and efficiency.

After having a one-on-one meeting with Joe Mirola, Zach Evans has asked him to
present his suggestions and arguments in the form of a memo. He has assured
Mirola that he will definitely take the recommendations into consideration before
preparing a final report that he has to present to the President, CEO and board of
directors.
FACTS:
The fitness center which has been developed, costs the company around
$100,000 a year. Among the 250 employees there are only 35% who use this
service because only the Claims Department employees are availing this service
presently. The Claims department Manager, Joseph Mirola used the service
himself and according to him he experienced great improvement in the
productivity and energy. Therefore, interested in the medical costs of the
employees, Joe asked the administrative assistant to review the company records
to see if the center has had any impact on the medical costs and the absenteeism
rate of the employees.i

According to the report, it showed that 25% of the employees who used the
center once or twice a week, showed medical costs of around $300 per person.
The other 10% who used the service three times a week or more showed up a
medical cost for $100 per person. And the 65% of the lot who did not use the
service at all had a medical cost of $500 per head which is almost 5 times as much
as the cost of those who used the service regularly.

Looking at the absenteeism rate, it was noticed that those who used the service
regularly missed half as many work days as non users. Where users missed an
average of six days a year, non users missed 12 days per year.

Joe, later also started the wellness program to encourage other employees from
the department to use the facility, through peer encouragement and team –
building concepts. After 8 months since the program was started, productivity in
the Claims department noticed to increase as much as 18% where as the
absenteeism rate went down by 5%. Joe decides to encourage other department
managers to ask their employees to use the facility as well through the wellness
program.
Moreover , according to Zach, ‘only about a quarter of the nation’s businesses
have exercise facilities, and none of our big competitors for talent has a health
club in the area’. This is a competitive edge for the business as Joe says that this
facility going to prove as a great recruiting device for the company as the
employees will be attracted more towards our company.

The Vice President of Operations, Zachary Evans however proposed to eliminate

ALTERNATIVES:-
 Using Fitness & Healthcare centre employees felt very active for their job so it
increased the performance level and as a result a large amount of profit came to
the company, that profit could be used as a re-investment to the company.
 From the previous records it has been observed that after the usage of Fitness &
Healthcare centre the amount of money that company was giving to the
employees for medical costs was decreased a lot which could be given to the
employees as a bonus included in the salaries of those particular employees who
attended the sessions of Fitness & Healthcare centre, this will also attract other
employees to attend these sessions also.
 The profit that employees would earn by extra performance that was attained
after attending these sessions could be used for the promotion of this Fitness &
Healthcare center as this only working for the CLAIMS dept. but if we made this
centre working for all departments it would give a lot to company.

Pros
• When the money would be reinvested, there would be increase in productivity.
It would result in increased profits and more amount of dividend for the share holders.

• This can motivate the workers to concentrate better on their work and provide
maximum efficiency. Absentees ratio would decrease which would assist in regulating
the smooth running of the system in the company.

• We would give some amount of profit to employees because the people respond
to incentives. This would encourage employees to work with full devotion and would
ensure that employers feel connected with the company

Cons

• According to point of view of Vice President, it will be wastage of time having

• As the amount of money spent by company for the medical costs is a must and
rather it’s given to employees as a bonus or in form of medicals, it’s given by the
company from the funds that are earned by the employees themselves.

• Giving promotion to the Fitness & Health centre would be sort of more attention
for employees rather than their work. They’ll come to know that administration
doesn’t stop them from fitness sessions so instead of work their major source of
attention will be fitness sessions.
THE BEST ALTERNATIVE
Keeping in view all the stakeholders and their interests, the best alternative which least
affects any of them in an adverse manner was the one where the company re-invests
the revenue earned through the increased productivity of the workers. This not only
leaves the company with increased retained revenue, to distribute dividends amongst
the share holders, satisfying the shareholders of the company. It will also satisfy
Zachary’s aim to minimize costs and maximize company’s profits. Through this
alternative the employees benefit too, they get time to take a break and spend quality
time at the fitness center, leading to a healthy environment where the employees get
chance to interact and socialize informally, and also leading to a healthy life which will
reduce the medical costs of the workers too if they regularly use this facility, thus
cutting on the medical expenses of the employees from $500 per head to $100, saving
a lot on the expenses. This in turn increases productivity and lowering the absenteeism,
thus leading to efficiency and increased revenues and lowered labor costs.

How this alternative will be achieved is through encouraging as many employees form
all the departments to use this facility through Joe’s wellness program. This might take
time, but the results of this approach will be worth the wait.
STAKE HOLDERS INTEREST:-
If the above given points are observed, every stake holder would be more interested if
the company goes in profit and also gets an extra income for re-investment as re-
investing would be more like able to the Vice President, Administrator and even
employees.

VICE PRESIDENT:-

If the company is in a huge profit then seeing the performance Vice President would
like to make plans for monetary rewards for employees and along rewards he will also
allow the promotion of Fitness & Healthcare centre.

SHARE HOLDERS:-

Share Holders are the ones who have invested a lot in the company and they just need
results i.e.; the company should be in a profit which can satisfy them to invest again
and again for the same company.

MANAGERS:-

Where the President, Vice President and share holders are satisfied from the
performance, mangers are also satisfied with the performance and re-investments as it
will be beneficial for them too as they are also employees to the company and they
will also get bonus and rewards for such administration.

EMPLOYEES:-

Employees are already satisfied from this project as they are getting free of cost fitness
sessions and they are feeling healthier and active and they‘ll like to do more work with
more liking for their work. A sort of boredom would be finished from their work
.definitely this would be more and more benefitial for the whole company.

RE-EVALUATION:
The Vice President of Operations, Zach Evans proposed to eliminate the fitness center.
However, Joesph Mirola has tried to persuade him to reconsider his decision by
presenting a list of sound arguments in favour of the facility. According to the report, it
shows that 25% of the employees who used the center once or twice a week, showed
medical costs of around $300 per person. The other 10% who used the service three
times a week or more showed up a medical cost for $100 per person. And the 65% of
the lot who did not use the service at all had a medical cost of $500 per head which is
almost 5 times as much as the cost of those who used the service regularly. This factor
goes in favour of the Fitness Center. This factor also complements the fact that as
workers are healthier, the results they yield will be more fruitful. Various alternatives
have been presented as a solution to the dilemma of eliminating or retaining the
center. They highlight the pros as well as the cons of keeping the center. Keeping in
view all the stakeholders and their interests, the best alternative which least affects
any of them in an adverse manner was the one where the company re-invests the
revenue earned through the increased productivity of the workers. The document also
explains how all the stake holders are being affected by the presence of this fitness
center.