essay - GMAT: Argument 33

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 periods when national unemployment rates are low, Perks may need to offer such a package in order to attract and keep good employees, but since national unemployment rates are now high, Perks does not need to offer the same benefits and incentives. The money thus saved could be better used to replace the existing plant machinery with more technologically sophisticated equipment, or even to build an additional
plant.

Discuss how well reasoned . . . etc.

Answer:
The author asserts that the company, Perks Company, should stop providing its employee beneficial program on the ground that the national unemployment rate is high and thereby the company doesn't need to provide the program to attract new employees anymore. He also advocates that the company could use the money thus saved in other investments such as procuring new equipment or building new plants. The argument, however, has serious flaws, so that it fails to be convincing.

First, although the author cites data of national average unemployment rate, this survey can be considered to be a survey targeting all industries, not a specific industry. That is, the survey must have been conducted for businesses ranging from manufactures, and wholesalers, to retailers. And also it can be inferred that all industries ranging from department operators to oil industry were the targets. In evaluating his plan, this type of data can mislead the judgment. In this case, what is needed is data showing unemployment rate for the particular industry that Perks Company belongs to. Therefore, since the argument stands on the wrong assumption that the survey shows the unemployment rate that can be the basis for the judgment, it fails to be convincing.

Second, the argument is weak because of the fact that the risk has not been assessed in the argument. I mean, inferentially, the policy of stopping the beneficial program would cause a certain bad effect on the company. It might happen that the current employees would start thinking of changing the job. It might also happen that even those who are seeking a new job in the environment that unemployment rate is high would embrace unpreferable image toward the company. Therefore, the author should assess what kind of risk could be happened by implementing his proposal. After disclosing the risk and taking the mitigation plan in place, the proposal can obtain persuasive power.

In conclusion, the argument is weak for the reasons that I mentioned above. To strengthen the argument, the author needs to provide industry-specific statistical data and include risk mitigation plan to tackle by-products generated by implementing his plan.