84.        The vice president of Nostrum argues that implementing an increase in health and
retirement benefits for employees is not a good idea at this time. His main line of
reasoning s that an increase in benefits is both financially unjustified and unnecessary—
financially unjustified because last year's profits were lower than the preceding year's,
and unnecessary because Nostrum's chief competitor offers lower benefits to its
employees and because a recent Nostrum employee survey indicates that two-thirds of
the respondents viewed the current benefits package favorably While the argument has
some merit, it is not completely convincing.
      Admittedly the vice president's reasoning linking employee benefits with
company profits seems reasonable on its face. Companies that are not profitable are ill-
advised to take on additional costs such as increased employee benefits. However, the
fact that Nostrum's profits last year were lower than the preceding year does not imply
that Nostrum is experiencing financial difficulties that preclude it from increasing
employee benefits at this time. Perhaps the previous year's profits were extremely large;
whereas last year's profits, albeit lower, were sufficient to fund an increase in the
benefits package without threatening the company's bottom line.
      Also, the fact that Nostrum's chief competitor provides lower benefits to its
employees is not a good reason for Nostrum to deny an increase to its employees.
Employee loyalty is an important asset to any company, and providing good pay and
good benefits are among the best ways to acquire it. Nostrum would be well advised to
assure that its employees have little reason to seek employment elsewhere, and
especially from its chief competitor.
      Finally, one can infer from the survey's results that a full one-third of the
respondents may have viewed the current benefits package unfavorably. If so, such
widespread satisfaction would weaken the vice president's argument. Lacking more
specific information about how these other employees responded, it is impossible to
assess the reliability of the survey's results or to make an informed recommendation.
      In conclusion the vice president's argument against implementing a benefits
increase is unconvincing. To strengthen the argument, he must provide evidence that the
increase in benefits would have a negative impact on the company's overall profitability.
Additionally, he must provide more information about the manner in which the survey
was conducted before we can determine the degree of employee satisfaction of the
current benefits