sas_institute group case study
TRANSCRIPT
STATEMENT OF PROBLEM:
1. SAS Institute offers an overwhelming about of employee benefits without clear
limitations.
2. SAS Institute’s span of control is alarmingly high
CASE TITLE:
SAS Institute- A case (with teaching note) on the role of senior business leaders in driving
work/life cultural change
STATEMENT OF FACTS:
SAS Institute was founded by John Goodnight in 1976
SAS Institute is owed by 2/3 by John Goodnight and 1/3 by SR.VP John Sull
SAS Institute is a statistical analysis software company generating billions of dollars per year
SAS Institute has over 5,400 employees, domestically and internationally
SAS Institute leases their software solution to their clients as appose to selling it
SAS Institute is a flat organization with only 4 layers
SAS Institute’s CEO John Goodnight is active in the organization
SAS Institute’s CEO John Goodnight has numerous direct reports
SAS Institute’s CEO does not believe in team meetings
SAS Institute’s CEO dedicates 50% of his time to code programming
SAS Institute offers two child care centers in their Head Quarters
SAS Institute offers employees in regional offices subsidized childcare near their location
SAS Institute offers discretionary bonus for employees in December
SAS Institute offers state of the art athletic facilities
SAS Institute offers 35 hour work week and flexible work schedule
SAS Institute offers work friendly perks including breakfast, sweets, drinks, parties & more
SAS Institute offers self funded on-site healthcare center with nurse and physicians
SAS Institute offers employee assistance program
SAS Institute offers on-site recreation and fitness center
SAS Institute offers work life initiative program
SAS Institute offers career development resources
SAS Institute offers unlimited paid sick leave
SAS Institute offers two weeks paid vacation, plus additional week for 5+ year employee
SAS Institute offers paid holidays
SAS Institute offers onsite subsidized cafe
SAS Institute offers full paid health insurance, including dependents and domestic partners
SAS Institute offers profit sharing retirement plan
SAS Institute offers paid education and training expenses
SAS Institute encourages employee interdependence
SAS Institute encourages employee risk taking freedom
SAS Institute does not believe in tier management
SAS Institute does not believe in separating executive lunch and rest areas
SAS Institute does not believe in coveted executive offices
STATEMENT OF CRITERIA:
Non-contributory employee benefits for over 5,400 employees is extremely costly
SAS is providing employee benefits in a non cost effective way, providing two separate
healthcare benefits, fully paid by organization
SAS has not strategically capped benefits
Lack of evaluation of use of benefits and employee preference, which results in unnecessary
benefit expenses
Increase in legal liability with the offering of two childcare centers, medical office and
athletic center
Risk of unlimited sick time is that it leaves a responsibility uncovered
Lack of managed and budgeted time off benefit, which results abuse of benefit
An inappropriate number of direct reports decreases effectiveness, managers end up putting
off fires rather than effectively managing and leading
An inappropriate number of direct reports decreases accountability and increases stress
Childless employee backlash is an ethical dilemma as the benefits they receive are less
Work- life childcare balance sets the expectation for employee to provide more hours
without the need for excuse or considerations
35 work hour weeks are benefits offered on paper, yet most employees work over 40 hours,
which can be considered misleading and unethical
SAS offers too much employee interdependence which can lead to major mistake and major
consequences for the organization
Lack of salary description for current openings within the organization, which makes it
challenging for employees to determine if a position they are interested is makes financial
sense to them
STATEMENT OF ALTERNATIVE SOLUTION AND CONSEQUENCES:
Solution No.1 - Apply a cost containment solution where new employees will need to pass a
3 month or 6 month probation period in order to receive non obligatory employee benefits.
Positive consequences: This solution will allow SAS to only allocate benefit funds for
those individuals who pass the probation period, which shows good faith that the
employee will stay. As a result of this solution, they will save money during the
probation period.
Negative consequences: This solution might be a small draw back during
recruitment, yet I think it is a minor if at all existent. This solution is already in
practice in numerous organizations and it is acceptable and fair.
Solution No.2 – Apply a flexible benefit plan with a cap, where employees can choose which
benefit why would like to participate in and create their own custom benefit package. Each
employee is eligible to change their benefit package during an enrollment period. The
benefit enrollments will be tracked via a software solution.
Positive consequences: This solution will result in SAS no longer having to pay for
unwanted benefits, therefore saving a large amount of money. This would also allow
the organization to keep track of which benefits are successful ones. This will also
eliminate employee backlash, as employees will no longer feel that being childless or
unwed results in a decrease in valuable benefits.
Negative consequences: Employees could make inaccurate decision as to which
benefit provides the most effective support for them. Another negative consequence
is that this will require additional administrative support in order to implement the
plan.
Solution No.3 – Construct and utilize a review program for benefits where a vendor is
involved. The program will require an administrator to periodically review medical services
that are rendered and if they are rendered appropriately and at a reasonable cost.
Positive consequences: The positive consequence is that SAS will ensure that the
vendor is providing the appropriate coverage and that the organization is paying a
fair and competitive rate for the services and coverage. This could result in significant
savings.
Negative consequences: The only negative consequence is the time that will be
spent performing the reviews.
Solution No.4 – Implement a solution model for sick time off, which will replace the
unlimited sick time off that is currently in place. The solution will require capping the number
of hours allowed for sick time or allowing employees the option to sell hours back to the
organization. SAS can still offer a generous amount of hours that can be allocated to sick
time and at the same time have a level of control.
Positive consequences: This will ensure that employees do not abuse the privilege
and use their time wisely. This solution will also lower the number of hours were a
position and job requirements are unattended due to the time off. Because time off is
an expensive employee benefit, capping the number of hours saves the organization
some money.
Negative consequences: The only disadvantage is that current employees will not
like the idea of having this great benefit restricted, however it will take some time to
get adjusted. There will be no negative recruitment consequences, as SAS will offer a
great amount of benefits.
Solution No.5 – Restructure the organizational model at SAS, reducing the Span of Control.
This solution will require numerous tiers in the different departments, eliminating the
current 4 layers structure. Each department will have an executive who oversees the
department, which has the ability and authorization to make certain decisions. The line
authority structure flows will flow down the chain of command clearly. Each department
head will now report to CEO, decreasing the number of direct reports. Each department
manager will not report to the department head. Every employee in each department will
report to the appropriate named manager.
Positive consequences: The positive result is that employees in each department, as
well as department managers will have an accessible direct report who they can
reach out to for questions, guidance and approvals. This will also allow everyone to
be more effective and will reduce the overall stress. Another positive solution is that
managers and department heads can schedule regular team meetings.
Negative consequences: The negative consequence is that the CEO will not have the
control that he is used to and that he enjoys.
Solution No.6 –SAS could lower the number of benefits that they currently offer and
redesign their compensation package, offering employees and candidates a slightly higher
than industry standards salaries. SAS would keep some of the most utilize and popular
benefits and keep the benefits that also profit the organization, such as childcare services.
Positive consequences: Many of the employees that do not need to or cannot take
advantage of the current benefits could utilize the extra monitory income as they
need or please. This would also remove any ethical dilemmas between the benefits
offered in the United States as appose to those limited benefits offered at SAS
international locations.
Negative consequences: The negative consequence is that there may be benefits
that some employees might not be happy to loss.
Solution No.7 – Provide compensation information for job descriptions within the organization
Positive consequences: Jim Goodnight states that he does not want new hires
coming for money nor does he wants his current employees moving around because
of money. By not having access to any compensation information SAS employees
may have a mutual equal feeling amongst each other. Also by taking compensation
out of the hiring formula you can ensure the employees are genuinely interested in
the company because they believe in the mission and core values. I would suggest
that SAS inform employees of the compensation structure as well as how they can
progress through as well. This would allow SAS to show employees how growth can
be obtain within the organization.
Negative consequences: By providing employees with pay information for all the
positions at SAS employees may feel there self worth is much more than a colleague
in the same line of work. They would run the risk of estranging respected colleagues
if they learn you earn more for what they perceive to be the same job. Unless all
similar jobs pay the same rate, open salary concepts don’t work well. Also by keep
compensation information private could be a greater benefit to SAS employees.
According to compensation expert Dick Dauphinais of Strategic Compensation
Partners "It creates an opportunity for a manager to have a confidential discussion
with employees as to why they are being paid what they are -- and how they can
work toward making more money," he says. "Each employee can then move forward
with confidence that they have 'bonded' with their supervisor on their individual
issues -- good and bad -- without involving others in the process."
Solution No. 8 Scale back autonomy given to employees
Positive consequences: SAS cutting back on how much autonomy is given to its
employees it could also save money on some of the extra services it provides to the
employees on campus thus saving the company money. Currently employees have
the following extra services offered during working hours: nail salon, car detailing,
Massage therapy, skin care, racquet stringing, and UPS services for personal services.
If employees didn’t have so many personal services offered on site they could focus
on satisfying the customers of SAS without distractions. If SAS decided to maintain a
more structured organization the company could limit higher levels of autonomy to
senior level management. SAS could also forgo paying all non-exempt employees
salary and limit overtime hours to as necessary requiring approval from management.
Negative consequences: Increased employee autonomy can make an employee feel
empowered and implement they will in turn have a greater responsibility for their
work outcome. Greater autonomy can produce greater motivation for the job its self.
It has been found the employees that display meticulous and extroverted personality
traits have better job performance in a highly autonomous job. While the technology
industry depends significantly on intellectual influence restricting employees may
turn out to decrease production at SAS.
What characteristics make SAS unique?
SAS institute is a very flat organization with only four layers between the bottom and the CEO Jim
Goodnight. The case states that Jim Goodnight is a “silent leader” that gives his employees below a
lot of autonomy. But at the very same time he has a very strong presence within the company and
most major and minor decisions make their way to him.
Executives speak directly and honestly with employees, they answer their questions candidly and
ask for their ideas and feedback. Leaders have taken up blogging as a way of sharing ideas with a
large group of employees; over 24 executives have active internal blogs. SAS has also begun to do
live webcast with introduction of the SAS Live Program, modeled after Larry King Live. Various SAS
leaders are interview by moderators and also take on air questions; all shows are archived for later
viewing.
All SAS regular non-exempt employees (full-time and part-time) are paid on a salaried basis for the
regular work schedule; and they receive additional pay for hours worked beyond the normal work
schedule. The average work schedule at SAS is thirty-five hours a week. According to the case those
that choose to work additional hours choose to do so out of dedication and love not because there
is a lack of productivity or an unreasonable work load.
SAS offers its employees a generous benefits package but the actual compensation for SAS
employees is average or below average in some cases. There are no stock options but the
employees are allowed to participate in profit sharing. In addition each employee is eligible for a
bonus that each manager is given to divide as he or she sees fit. SAS estimates that the average
employees total benefits package is equivalent to over 40% of the employee’s salary.
The open lines of communication channels help to ensure that employees of SAS are kept current
on the fast-paced world of software development and technology innovation. It also allows the
leaders of SAS to bolster the CEOs fundamentals of SAS being a company that encourages open lines
of communication. It also reinforces an atmosphere of honest question and answer, straightforward
sharing of information and the solicitation of ideas and opinions amongst employees.
Which of the characteristics are fundamental to creating the SAS culture?
SAS believes that all employees need to be treated as if they make a difference. This has created an
atmosphere of loyalty and achievement among current employees. SAS also ensures that they hire
the right people for their organization during the recruitment process. For SAS this means that they
must look for certain people with detailed job proficiency and characteristics that correspond to the
company’s five values. Employees are expected to be approachable, to focus on customer needs,
to be swift and agile, innovative and trustworthy.
SAS also offers their employees a beautiful campus in Cary, NC, with walking paths, exercise facilities
and health care offices. The on-site facilities attest to SAS’s commitment to health and well-being of
all their employees. This commitment is not restricted to the Cary campus but is dispersed among
all its regional locations across the US with benefits options for all employees equivalent to
corporate office employees.
Jim Goodnight’s value for SAS has been centered on the employee since day one. SAS conveys a
strong point to its entire workforce that the company truly cares about every man and woman on its
payroll, as individuals. As a way to show that they truly care about their employees they provide
them with tangible things such as on site health care, on-site child care, massage therapy, nail salon,
car detailing, book exchange, company store, skin care along with several other extras.
SAS is still a privately held company that does not have to answer to a board of directors. Jim
Goodnight had considered going public in the 90s during the internet boom. SAS didn’t need to
money but they wanted the brand visibility and losing employees to stock options was being a
problem. In 2004 according the annual survey of employees, 87 percent said they did not want to
go public. SAS can focus on building new opportunities and long term success without the worry to
having to please shareholders.
Directing SAS, is this investment worth it to us, what would be the return for SAS for offering the
benefits?
SAS believes by offering a work environment that reduces day to day distractions of life employees
are able to give their best at work. When employees feel as though they are a valuable part of the
organization they become dedicated. Jovial, dedicated employees make SAS customers happy.
Happy customers become loyal customers, and this formula has been a proven success for the core
of SAS.
The investment is worth it to SAS with over 2.31 billion dollars in revenue SAS continues to be the #1
privately held Software Company.
SAS has heard grips about the cost of their employee benefits being passed on to the customer but
in a statement released by Jim Davis, Senior Vice President and Chief Marketing Officer for SAS he
stated the following:
“we’ve occasionally heard a few people grumbling that the cost of our employee benefits must be
raising the price of our software. (In fact, our benefits more than pay for themselves. Stanford
Professor Jeffrey Pfeffer studied SAS’ benefits a few years ago. Based on his calculations, our
employee focus should save us close to $100 million this year, not to mention the savings in
healthcare costs we get from our onsite healthcare center in Cary.)”
Continuing to keep employees satisfied seems to be a method that has worked for SAS since
opening its doors in 1976. With the average employee tenure of 10 years; 300 employees have
worked 25 or more. Annual turnover was 2 percent at SAS in 2009, compared with the average in
the software industry of about 22 percent.
REFERENCE
J.Davis. (2010, January 21). Fortune says SAS is the best company to work for in America. So what? [Blog].
Retrieved from http://blogs.sas.com/jimdavis/index.php?/archives/34-Fortune-says-SAS-is-the-best-
company-to-work-for-in-America.-So-what.html.
Bisoux, T. (2004 November) Corportate Counter Culture. Biz Ed volume number unknown. Retrieved from
http://www.aacsb.edu/publications/archives/novdec04/p16-21.pdf
Lyman, Amy. (2010, January 21). SAS Institute 2010 #1 Company to Work for in America. Retrieved from
http://resources.greatplacetowork.com/article/pdf/sas_2010.pdf
Simmering, J. Marcia. (2010). Autonomy. Retrieved from http://www.enotes.com/management-
encyclopedia/autonomy
Potter, M. L. Caroline. (2010). Should you keep your salary safe? Retrieved from
http://hotjobs.yahoo.com/salary-articles-should_you_keep_your_salary_a_secret-35
SAS INSTITUDE CASE STUDY ANALYSIS
SOPHIA MEZA
SCHEVASHE PEDRO
MICHELSON FLEURANT
JOANNE SANTOS
LARRYCE AMBROISE