CASE STUDY 3:

HERSHEY GONE HEALTHY

Group No. 2

Members:
Galvan, Daniel Joshua G.
Inso, Karla Denice A.
Itchon, Gabrielle Therese A.
Jimenez, Paola Mae F.
Lapitan, Ma. Karen Aira S.
Lim, Ana Teresa E.
Lim, Diana M.

I.

Point of View

Rick Dreyfuss, the companys director of executive compensation and employee

benefits at Hershey Foods Corporation is responsible for the problems that arise between
the management and the employees. Therefore, we will take his point of view.
II.

Problem Statement

How can Hershey Foods Corporation reduce corporate health care cost without
dictating the employees personal lifestyles?
III.

Analysis of Relevant Case Facts

A. Macro Environment
1. The 1990s have witnessed the skyrocketing of health care costs, which for
several years grew at an annual rate greater than 15 percent.
2. Companies have shouldered a great deal of this burden through benefits
packages offered to employees.
B. Task/Industry Environment
C. Internal Environment
1. The answer to the increasing healthcare costs for Hershey Foods
Corporation lay in a wellness incentive program.
2. An outside consulting firm attributed 25 to 35% of Hersheys healthcare
costs to employee lifestyles.
3. In 1991, Hershey made the decision to focus on employee health and set
about creating incentives to encourage employee wellness.
4. Hersheys philosophy is to increase employee health and morale through
strong people orientation and care for every employee.
5. Under the experimental program, employees who do not smoke will earn
$48 while those who smoked will be charged $444 for the year.
6. Hershey relied on honor system as a value depicting reliance to
employees in determining if they smoked or regularly exercised.
7. Other categories included blood pressure, weight and cholesterol level
which were measured confidentially by the companys medical department. .
8. Earl Light, business manager for Local 464 of the Bakery, Confectionery
and Tobacco Workers Union, represented 2800 of Hershey factory employees
and went against the incentive program.

IV. Formulation and Evaluation of Alternative Solutions to the Identified

Problem
A. Alternative Action 1: Mr. Dreyfuss will speak with Mr. Light and
resolve the conflict between the parties by convincing and explaining to him that
the program will cause Mr. Lights party no harm if they comply.
Advantages:

 It may change Mr. Lights perspective that the

program is not really pushing to the limit of intervening with employees
lifestyle.
Mr. Light and the union may comply to the program
if they are convinced by Mr. Dreyfuss.
Disadvantages:
Mr. Light may not agree with Mr. Dreyfuss.
Employees under the union may not find this
conversation agreeable and in result may find another job outside the
company.
B. Alternative Action 2: The company would conduct seminars
focused on the benefits of the wellness incentive program and having a healthy
lifestyle.
Advantages:
The seminars would boost the awareness of the
companys employees regarding health issues, and hopefully convince
them of its benefits.
This would inform them favorably about the
wellness incentive program, dispelling any qualms about the matter.
Disadvantage:
This would not solve the conflict with Mr. Light.
C. Alternative Action 3: The company should amend the wellness
incentive program by removing the penalty on the employees who do not meet the
company standards on having a healthy lifestyle.
Advantage:
The problem of some employees regarding the
intrusion of the company in their personal lifestyles would dissipate.
Disadvantages:
This may cause an increase in the number of
employees who smoke.
The company would keep on giving benefits to the
employees that follows the companys proposed lifestyle, resulting to
increase on costs.

Decision Criteria
Alternative

Cost (45%)

Agreeableness
with
employees
(25%)

Favorableness
with the wellness
program (30%)

Total
(100%)

45%

10%

30%

85%

35%

15%

30%

80%

45%

25%

20%

90%

To evaluate the alternatives, we based our decision through setting our own criteria which
includes the cost, agreeableness with employees, and favorableness with the wellness program.
ALTERNATIVE 1:
This alternative received the lowest remark on agreeableness with the employees because
it does not deal with the employees directly, since this alternative focuses more on the reaction or
statement of Mr. Light regarding the implementation of the wellness program. It received high
remarks on costs because only an appointment with Mr. Light is needed ,therefore, no resources
were used. It also received a high remark regarding its favorableness with the wellness program
because the company still prefer to continue the program and would just like to persuade Mr.
Light on the benefits of such program, so that once Mr. Light had seen the bright side of the
program, the other union will soon see the positive effect of the program on the companys
employees.
ALTERNATIVE 2:
This alternative obtained the lowest remark on cost because the company would insert
effort, which means releasing money, on explaining on its employees their reason and purpose
why such wellness program had been designed. Therefore, it increases the awareness of the
employees, It received 15% agreeableness with employees because theres a possibility that the
employees would agree or disagree on the purpose and reasons the company had identified to
come up with such wellness program. This received full remarks on favorableness with the
wellness program because no alteration on the rules were made.
ALTERNATIVE 3:
This alternative attained a high remark on agreeableness with employees because this
favors them greatly since the employees would not worry about getting penalized with their

unhealthy lifestyle and it would somehow make them pursue a healthy lifestyle due to the reward
they can get when they follow the program. It received the lowest remark on the favorableness
with the wellness program because the company needs to revise it. While, it received full remark
on costs because the company just removed the penalty rule but still sticking on the previous
programs giving of benefits on employees that will follow the healthy living that the company
lives upon.

V.

Decision/Recommendation

After an analysis of the case, it is best to implement the third alternative action, which is
to amend the wellness incentive program by not penalizing employees who do not have a healthy
lifestyle, while still giving incentives to those who comply with the companys standards.
Through this, the employees will not be forced to comply and will consider this incentive
program only as a way to motivate employees while the company is able to reduce the corporate
health care costs.
VI.

Implementation Plan
What

Who

When

How

Let the company know about Mr. Dreyfuss

the initiative to amending the
wellness incentive program

1 day

Issue a statement to their constituents

regarding major changes to be
implemented in their wellness
incentive program

Prepare
the
necessary Human
amendments to the wellness Resources
program,
including Department
consultations with involved
departments:
(i.e
Legal
Dept.)

3-5 days

Strike out whatever needs to be taken

away from the existing program and
replace with amendments, after
approval from entities of interest
(upper brass of Hershey Foods Corp.
and Legal Dept.)

Introduce
the
amended Mr. Dreyfuss
wellness incentive program

1 day

Let the constituents of the company

know that there is an amended
wellness incentive program

VII.

Contingency Plan

If the implementation plan fails to resolve the problem stated, Mr.Dreyfuss will resort to doing

the first alternative action which is that Mr. Dreyfuss will speak with Mr. Light and resolve the
conflict between the parties by convincing and explaining to him that the program will cause Mr.

Lights party no harm if they comply. This would most likely resolve specifically the problem
with Mr. Light. Since he is the only who came out against the program, it would be best to talk to
him about it. Convincing him that the program does not intend to dictate their lifestyle. Instead,
the program only aims to have the employees be financially accountable and responsible for
their health care system. This would solve the problem stated as there would not be any more
conflict between the employees and the program, so the program can continue to reduce
healthcare costs and, at the same time, not dictate the employees lifestyle.