The author of Perks Companys business plan recommends that funds currently spent on the employee benefits package be redirected to either upgrade plant machinery or build an additional plant. The author reasons that offering employees a generous package of benefits and incentives year after year is no longer cost-effective given current high unemployment rates, and that Perks can attract and keep good employees without such benefits and incentives. While this argument has some merit, its line of reasoning requires close examination.
To begin with, the author relies on the reasoning that it is unnecessary to pay relatively high wages during periods of high unemployment because the market will supply many good employees at lower rates of pay. While this reasoning may be sound in a general sense, the particular industry that Perks is involved in may not be representative of unemployment levels generally. It is possible that relatively few unemployed people have the type of qualifications that match job openings at Perks, if this is the case, the claim that it is easier now to attract good employees at lower wages is ill-founded.
Secondly, the argument relies on the assumption that the cost-effectiveness of a wage policy is determined solely by whatever wages a market can currently bear. This assumption overlooks the peripheral costs of reducing or eliminating benefits. For example, employee morale is likely to decline if Perks eliminates benefits; as a result, some employees could become less productive, and others might quit. Even if Perks can readily replace those employees, training costs and lower productivity associated with high turnover may outweigh any advantages of redirecting funds to plant construction. Moreover, because the recommended reduction in benefits is intended to fund the retrofitting of an entire plant or the building of a new one, the reduction would presumably be a sizable one; consequently, the turnover costs associated with the reduction might be very high indeed.
In conclusion, this argument is not convincing, since it unfairly assumes that a broad employment statistic applies to one specific industry, and since it ignores the disadvantages of implementing the plan. Accordingly, I would suspend judgment about the recommendation until the author shows that unemployment in Parks industry is high and until the author produces a thorough cost-benefit analysis of the proposed plan.
34.
In this argument the author concludes that the Easy Credit Company would gain several advantages over its competitors by donating a portion of its profits to a well-known environmental organization in exchange for the use of the organizations logo on their credit card. The author reaches this conclusion on the basis of a recent poll that shows widespread public concern about environmental issues. Among the advantages of this policy, the author foresees an increase in credit card use by existing customers, the ability to charge higher interest rates, and the ability to attract new customers. While the authors argument has some merit, it suffers from two critical problems.
To begin with, the author assumes that the environmental organization whose logo is sought is concerned with the same environmental issues about which the poll shows widespread concern. However, the author provides no evidence that this is the case. It is possible that very few credit-card users are concerned about the issues that are the organizations areas of concern; if so, then it is unlikely that the organizations logo would attract much business for the Easy Credit Company.
Next, the author assumes that the publics concern about environmental issues will result in its taking steps to do something about the problem―in this case, to use the Easy Credit Company credit card. This assumption is unsupported and runs contrary to experience. Also, it is more reasonable to assume that people who are concerned about a particular cause will choose a more direct means of expressing their concern.
In conclusion, the authors argument is unconvincing as it stands. To strengthen the argument, the author must show a positive link between the environmental issues about which the public has expressed concern and the issues with which this particular environmental organization is concerned. In addition, the author must provide evidence to support the assumption that concern about a problem will cause people to do something about the problem.