GMAT Essays (AWA)

The following appeared as part of a memorandum from the vice president of Nostrum, a large pharmaceutical corporation:

“The proposal to increase the health and retirement benefits that our employees receive should not be implemented at this time. An increase in these benefits is not only financially unjustified, since our last year’s profits were lower than those of the preceding year, but also unnecessary, since our chief competitor, Panacea, offers its employees lower health and retirement benefits than we currently offer. We can assume that our employees are reasonably satisfied with the health and retirement benefits that they now have since a recent survey indicated that two-thirds of the respondents viewed them favorably.”

The author concludes that Nostrum Corporation does not necessarily have to increase its employees’ health and retirement benefits. The author’s line of reasoning is that this plan would not only lessen company’s advantage, but also would not develop the company in any aspects. Moreover, the author points out that Panacea, Nostrum’s main rival, has offered even lower benefits. The recent survey also shows that two-thirds of respondents who are Nostrum’s employees are satisfied with current offer. This argument, however, fails to be persuasive for the author’s questionable assumption, weak analogy and statistical error.

Most conspicuously, this argument is based on the flawed assumption that the declined profits of Nostrum last year have no connection with the poor employee benefits. The author overlooks the root cause of the problem, and immediately jumps to the conclusion that the concentration on human resources is useless. In fact, this statement is mistaken. Perhaps, the loss of company’s profits is largely due to the lack of sheer man power. Employees become tardy to work because they need higher attention from company on health and long-term care. The best way to create inspiration in all the employees is to respond to their needs. This may require Nostrum to accept such proposal rather than to abandon them.

Also, in business world, each corporation has its own style of strategy and management. Hence, it is senseless to compare the conditions of Nostrum to those of its chief business rival, Panacea. Possibly, Panacea may offer extremely high wages and annual bonus above average which could compensate the low health and retirement benefits, whereas Nostrum do not have such special points. If this is the case, then the author’s analogy is incomplete.

Finally, the argument does not address the effectiveness of the survey conducted among Nostrum employees. The survey may be biased. If the respondents do not properly represent the whole employees, then the result that two-thirds of employees agree with current benefits is not cogent. It would be very helpful to have some idea about actual number that two-thirds respondents represent; Two-thirds of 3000 would be 2000 which are large group of people. In contrast, two-thirds of 30 would plummet to 20 which is entirely not representative.

In summary, this argument is unwarranted. To strengthen the conclusion, the author would have to provide more evidences that Nostrum’s last year dropped profits was not resulted from employee benefits issue. Furthermore, the present situations in both Nostrum and Panacea are comparable. Most importantly, the author has to prove that the respondents of the recent survey truly represent the whole employees. Without such evidences mentioned above, this argument remains logically unconvincing.