The following is part of a business plan being discussed at a board meeting of the Perks Company It is no longer cost effective for the Perks Company to continue offering its employees a generous package of benefits and incentives year after year In perio

This argument states that Perks Company does not need to offer benefits and incentives to its employees. This conclusion is based on the premise that unemployment rates are high and that money should be used to replace the existing plant machinery with more technologically sophisticated equipment. The argument fails to mention several key factors, on the basis of which it can be evaluated that the business plan as it stands now is currently weak.

First, the argument readily assumes that the employees won’t leave the company after their benefits are taken away. To elaborate, if employees leave then this will be an added cost to the company since human resources are expensive. For example, in the case of automobile companies which are entirely dependent on the human resources for their end product are not in a state to take such a decision even when the unemployment rate in the nation is high because it will eventually have a negative impact on the company’s overall revenue. To consider this a cost-benefit analysis should be made, because it may not be possible for a businessman to sustain his company without the support of his employees. Investing in new machinery would there be not of great benefit without an adequate workforce.

Secondly, the argument claims that the nation-wide unemployment rate will affect the sector in which Perks Company operates in. This is again a very weak and unsupported claim as the argument does not give any data about the company finances and employee rates.
For instance, it is possible that the department in which the Perks Company operates is not affected by the nation-wide unemployment. Instead, the company has seen an increase in the number of orders, and as a result the company still remains profitable.

Lastly, the argument assumes that the money spent on replacing the existing machinery with technologically sophisticated equipment might be a more viable option than providing benefits and incentives to good employees. This is not a great decision because, on the one hand, the charges for the new machinery and equipment might be really high, whereas, on the other hand, there will be an added cost for maintenance and labor charges of the purchased items. For instance, Toyota reduced the daily wages of their current employees in order to spend that amount on new equipment, which was initially not required by the company. As a result, the added charges with the equipment turned out to be highly expensive, and later on, due to a cut in the daily wages employees left the company which resulted in huge losses for Toyota.

In conclusion, the argument is flawed for the above-mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the author clearly mentioned all the relevant facts. Before any decision is made, all these things must be considered, not simply the cutting of benefits and incentives.