Admittedly the vice presidents 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 Nostrums 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 years profits were extremely large; whereas last years profits, albeit lower, were sufficient to fund an increase in the benefits package without threatening the companys bottom line.
Also, the fact that Nostrums 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 surveys 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 presidents argument. Lacking more specific information about how these other employees responded, it is impossible to assess the reliability of the surveys results or to make an informed recommendation.
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