Because no employee wants to be associated with bad news in the eyes

Because no employee wants to be associated with bad news in the eyes of a superior, information about serious problems at lower levels is progressively softened and distorted as it goes up each step in the management hierarchy. the chief executive is therefore, less well informed about problems at lower levels than are his or her subordinates at those levels.

The conclusion drawn above is based on the assumption that
a) problems should be solved at levels in the management hierarchy at which they occur
b) employees should be rewarded for accurately reporting problems to their superiors
c) problems-solving ability is more important at higher levels than it is at lower levels of the management hierarchy
d) chief executives obtain information about problems at lower levels from the no source other than their subordinates
e) some employees are more are concerned about truth than about the way they are perceived by their superiors


The assumption here is a logic gap assumption.
An assumption is what is absolutely necessary for the conclusion to be true. In short, an assumption is a hidden premise that bridges the gap between the premises and the conclusion.
See how the premises jump to the conclusion here.

Premise 1. No employee wants to be associated with bad news in the eyes of the superior.
Premise 2. Hence, information about serious problems at lower levels is softened and distorted as it goes up the management ladder.
Conclusion: the CEO is less well informed about the problems at lower level than the sub-ordinates at that levels.

Premises say that information is softened by sub-ordinates. Conclusion says that the CEO is less well informed that sub-ordinates. Does it not assume that CEO is not informed by any other means than his sub-ordinates?

Try negating the choice D. The conclusion falls apart.
Negating is a good test on assumption questions.

Lets have a look at other choices.
A - problem solving is not discussed in the argument. though this seems like a real world solution, it is not in the scope of the argument and by no means is the assumption made to reason.
B - same as A. it is a solution. not an assumption
C - this is a trap choice! this is NOT an assumption. this might be true but this is not an assumption. even if problem solving ability were not more important at higher levels, this argument would remain valid.
D - correct answer as discussed above.
E - this assumption actually weakening the conclusion by challenging the premises. Remember, in CR assumption questions the validity of premises and conclusion cannot be challenged unless the question asks for a flaw in reasoning in which the assumption is put in a negative light!!