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 unnecessaryfinancially unjustified because last years profits were lower than the preceding years, and unnecessary because Nostrums 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 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.
