Private Fitness

Statement of the problem:

What should Rosemary do with her internal control system, or the lack thereof that opened the way for her trusted friend to steal cash and divert revenue?

Identification of Critical Issues:

Rosemary Worth is the sole proprietor of Private Fitness gym. Rosemary and five others, including Kate, work as instructors in the gym. Kate runs most of the major tasks such as marketing, facility up-keep, scheduling of appointments and record keeping. Rosemary and Kate are close friends. However Rosemary is faced with a dilemma when she finds out that her trusted employee and friend Kate was found to have stolen cash from the register and diverted gym revenues to herself.

Discussion and Analysis:

Rosemary has to decide whether to keep or to let go of Kate after discovering that Kate has been stealing and keeping revenues to herself. Kate has contributed a lot to the gym considering her marketing skills and being able to multi-task different major functions aside from being an instructor. However Rosemary is unable to have a sense of trust knowing that Kate has already been known to have done this sort of activity before. There is a need to weigh the costs and the benefits as to what Kate brings to the gym. There has to be policies in place so this situation does not repeat in the future.

It can be pointed out from the facts that the gym does not have clear guidelines on the usage of the facilities and rooms as well as a timekeeping system for the instructors and the customers. The gym also does not have guidelines in record keeping and payroll. Operating costs are not regulated and compensation is mixed depending on the responsibilities. This may work with the current setup of how the gym is being managed but it relies solely on trust and faith. This is subject to abuse. The abuse may even continue if not caught due to the lack of record keeping.

Alternative Courses of Action:

After carefully deliberating the facts here are the possible courses of Action Rosemary can take for Private Fitness:

1. Rosemary to not fire Kate but Kate will only handle "Instructor" duties and marketing. A new staff will be hired to shoulder the other remaining responsibilities which were taken from Kate, which are: facility up-keep, scheduling of appointments, and manning the front desk. Rosemary will be the one to handle the record keeping.

Kate is good with marketing and reeling in customers, therefore, she would still be an asset to the business. Rosemary's friendship with Kate would still have a chance of being kept and Kate can have a chance to redeem herself. Hiring a new employee is an added cost to the business. However keeping Kate will increase Rosemary’s burden as she has to be a little more involved at the gym lessening her time to attend to family responsibilities.

2. Rosemary to fire Kate and hire a new staff to handle Kate's responsibilities, except for the "Instructor" duties. The new employee would only handle facility up-keep, scheduling of appointments, and manning the front desk. Rosemary will be the one to handle the record keeping.

Not too much added cost with regards to hiring the new employee since it will be offset by Kate's