84. The vice president of Nostrum argues that implementing an increase in health and 3 M% K' n- t7 i2 w
retirement benefits for employees is not a good idea at this time. His main line of
: ~6 @2 o) @. I& V9 m& J" E7 T( Hreasoning s that an increase in benefits is both financially unjustified and unnecessary— h; P7 }/ r9 V, d
financially unjustified because last year's profits were lower than the preceding year's, 9 N: y# p5 [' `$ x* t
and unnecessary because Nostrum's chief competitor offers lower benefits to its 9 e% A/ O4 [& W4 F& d' s d4 z% R
employees and because a recent Nostrum employee survey indicates that two-thirds of 4 @; @& i4 x# D
the respondents viewed the current benefits package favorably While the argument has . @( e0 R) g3 v- j/ J
some merit, it is not completely convincing.
% z7 ]! s7 Y2 ] Admittedly the vice president's reasoning linking employee benefits with
& {0 T# g' A# Pcompany profits seems reasonable on its face. Companies that are not profitable are ill-+ f! t9 c# Y' r& l- j
advised to take on additional costs such as increased employee benefits. However, the ; K( A$ w7 _* V& {
fact that Nostrum's profits last year were lower than the preceding year does not imply
, j/ K2 s5 r2 B# f5 D6 d* a4 fthat Nostrum is experiencing financial difficulties that preclude it from increasing * p" ^8 m! P6 @; V
employee benefits at this time. Perhaps the previous year's profits were extremely large; 2 m( O$ n& [4 o
whereas last year's profits, albeit lower, were sufficient to fund an increase in the ! v% k+ }9 }- U
benefits package without threatening the company's bottom line.8 s1 J3 y% O% ^, d& d3 D
Also, the fact that Nostrum's chief competitor provides lower benefits to its
& [- }; m0 p1 nemployees is not a good reason for Nostrum to deny an increase to its employees. ( Z/ i; H4 F& M5 B. X. g) {1 _
Employee loyalty is an important asset to any company, and providing good pay and
+ m1 W& C) O T9 G1 M$ \good benefits are among the best ways to acquire it. Nostrum would be well advised to
' r0 f2 b, K# Uassure that its employees have little reason to seek employment elsewhere, and ; \. N* h' O) `. K0 v8 _ M1 D% S
especially from its chief competitor.4 N( e+ V: G$ V9 b$ T* U
Finally, one can infer from the survey's results that a full one-third of the ) z, `8 o9 y- H
respondents may have viewed the current benefits package unfavorably. If so, such
; a% A$ B- v( K8 w1 v# v0 X/ Awidespread satisfaction would weaken the vice president's argument. Lacking more % }( D1 k/ X$ J. T
specific information about how these other employees responded, it is impossible to
" I6 `! t/ j% g+ Fassess the reliability of the survey's results or to make an informed recommendation.5 L* s f2 {" l& L4 i$ S4 R* Q
In conclusion the vice president's argument against implementing a benefits 1 ]1 ] `5 ` s5 j8 p# y, O
increase is unconvincing. To strengthen the argument, he must provide evidence that the / r1 a9 { b. c1 i
increase in benefits would have a negative impact on the company's overall profitability. $ `/ n6 D* f9 G& E; ?; b
Additionally, he must provide more information about the manner in which the survey 7 u; L G$ Q) x& i: r& B* j( Q# g# Z% o
was conducted before we can determine the degree of employee satisfaction of the
. t, p( F0 p! b' Acurrent benefits |