sas - hr report - section d - group 6

HR Practices at SAS Institute Inc.

HR Practices atSAS Institute Inc.A Report on the Innovative HR Practices

SAS Institute has received considerable media attention for the “utopian” environment for which it has become known. It hasalso received many accolades along its path. This report aims to take a quick look at what makes the company culture so unique and SAS one of the best places to work for.



A Report

Submitted by

Section D, Group 6Karthik Swaminathan

Mohit ShitalPiyush Anand Srivastava

Rishabh TrivediSyed Eraj HasanVignesh A.P.

PGP1 Section D Term III


Submitted in partial fulfillment of the course Human ResourceManagement

15/03/2013

Group 6 _ Section D Page 1


TABLE OF CONTENTS

Cover Page

SAS Institute Inc. ………………………………………………………………………… 2

Business Model …………………………………………………………………………… 2

The CEO ………………………………………………………………………………….. 2

SAS and Silicon Valley Cos ……………………………………………………………… 3

What is so unique? ……………………………………………………………………….. 3

Policies that differentiate SAS …………………………………………………………... 5

Conclusion ………………………………………………………………………………… 10

Appendix


SAS Institute Inc.

Founded in 1976, SAS Institute, today, is the world’slargest privately held software company. It is an internationalleader in data warehousing and decision support software. It isheadquartered at Cary, North Carolina. The company employs around12,100 employees – US and abroad, and has seen an employee growthrate of 5.8% through the years. Sales in 2011 were $2725 million,with a growth rate of 12.1%.

It achieved 36 years of consecutive double digit growth. Ithas a presence in 120 countries with 31,000 customers. All buttwo of the US’s largest companies are its customers.

Business Model

The business model of SAS is unlike typical firms in theindustry. It bundles software and services and follows an annualsoftware subscription model. This means that SAS leases itssoftware to its customers – which is of immense importance inunderstanding the company’s relationship to its users. Inaddition to stabilizing its revenue, an annual lease necessitatesa tremendous emphasis on customer satisfaction and quality.

Furthermore, its products are customized to the needs of theuser. SAS believes that a strong focus on employee satisfactionwill lead to customer retention and loyalty which will createcustomer satisfaction. The leasing strategy makes sure that thecompany maintains its technological advances in tune withcustomer needs.

For this research and development is essential. SASInstitute reinvests more than 30 percent of revenue in R&D whichhas led to nearly 90 percent of SAS Institute customers renewingtheir annual leases. 70 percent of these customers, on average,increase their business.



The CEO

Jim Goodnight, the founder and chief executive officer, iscredited with carefully crafting a community of employees whoseem literally to live the good life at work. He is perceived tobe a down-to-earth person with strong values and an incredibletechnical flair. He likes to be thought of as “not your typicalCEO”.

SAS’s primary goal has always been to create a workplace inwhich employees are extremely productive because they are havingfun working in a stimulating, and resource-rich environment. SASvalues employee effectiveness over productivity.

Goodnight believes that the SAS Institute is what it isbecause of his views on how people should be treated and theemployees agree. His philosophy is simple. He wants people toenjoy themselves at work. Everything else has just fallen intoplace from there.

SAS and Silicon Valley Cos.

SAS Institute appears on various business magazine lists offamily-friendly companies owing to its unique work environment.The importance, according to the company, goes beyond thecorporate image with customers: it is a key factor inrecruitment and SAS Institute’s retention of employees.

SAS has created an environment that seeks to circumvent manyof the problems faced by its rival firms in California’s SiliconValley and elsewhere, where “churn and burn” is the order of theday. Hence, in an industry which averages as high as 22% onemployee turnover, SAS has an astonishingly 3.3% turnover rate,



particularly due to its work environment and family-friendlyprogrammes.

What is so unique?

There are several overarching features of the workenvironment at SAS Institute which make the company unique.Coupled with the perks (often quite unusual) that employeesenjoy, these features help define the special SAS culture. Abrief is presented below.

1. Employee Centeredness

The company’s values are employee-centered. SAS Instituteseeks to send a strong message to all employees that the companytruly cares about every man and woman on its payroll, asindividuals. Some manifest in tangible forms – like the on-sitehealthcare facility, the piano player in the company cafeteria,the financial planning courses that the company offers to all whowork at SAS Institute or the discounts on residential propertyin the headquarter town of Cary.

One example of this focus on employee-centeredness is thefact that each employee has his or her own office. No one sitsin cubicles. This is in line with what Jim Goodnight feels:that’s how he would like it were he “just” an employee.

2. Employee interdependence

SAS Institute seeks to encourage and even demand teamworkleading to employee interdependence. They have structures inplace so that seeking out help when needed is easy when requiredsince they view this as critical to the success of theorganization.



Jeff Chamber, SAS Institute Director of Human Resources,says, “You need to care about a sense of contribution, you needto value humility over individual recognition, and you must wantto work in an environment of total interdependence. If you need alot of ego or tangible compensation, this is not the place foryou.”

The SAS Institute reward system also encouragesinterdependence. For example, everyone in the sales organizationgets a bonus which depends not on the performance relative toother members of the sales force but relative to individualtargets.

3. Spirit of Risk-taking

SAS Institute encourages their employees to take risks, andalmost everyone agrees that it really is okay to fail. As oneemployee in technical support says, “We can try anything withinreason here.”

Though some employees criticize the fact that competition isdeliberately established between work groups as a way to createnew ideas, this sentiment is a minority one.

4. Challenging nature of work

An important feature of the environment is the challengingwork. The quality of work at SAS is why it is an employer ofchoice and doesn’t have trouble retaining people.

That the SAS Institute work environment is resource-rich alsocontributes to the unique culture. There is no competition amongthe employees for resources. The employees themselves appreciate



the flexibility, the freedom and the easy access to resources asa big motivating factor.

5. Physical Surroundings and Facilities

The physical surroundings and facilities make a bigdifference at SAS Institute. Lots of companies have campuses, butthe amenities at the SAS campus are legendary. There’s a gym,healthcare center, and childcare center within the companypremises. Every floor in every building has one or more “breakrooms” stocked with coffee, tea, cold drinks, cookies, crackers,and other refreshments. Each Wednesday, the break rooms arestocked with large canisters filled with M&M candies — a perklots of employees mention, half-jokingly, as their favorite thingabout working at SAS Institute.

The benefits and perks are available to all employeesregardless of their position or job description. Goodnightbelieves strongly that people are much more committed if theyare part of the company and as a result everyone on campus is aSAS Institute employee: software engineers, salespeople,childcare workers, groundskeepers, and so on. All employees evenhave the same bonus plan potential ad valorem.

In keeping with the culture of equality, there are nodesignated parking spaces and no executive dining room. EvenGoodnight and other senior executives eat lunch regularly in oneof the two company cafeterias.

The pervasive culture means that the company does not feelthe need to formally document its culture. The SAS Institutephilosophy though is clearly articulated and features on thecompany’s customer-focused material.



Policies that differentiate SAS

Goodnight’s original vision has spawned a self-perpetuatingculture. New decision makers share his vision, which has governedthe variety of philosophies, strategies, and practices adopted bythe company over thirty-six years. In particular, the followingpractices stand out.

1. “Hire hard” recruitment philosophy

Many people inside SAS Institute attribute the longevity ofthe company’s culture to the heavy emphasis placed onrecruiting. It is very tough to get hired, there’s a strongemphasis not only on technical skills but also on attitude. Oneoften hears SAS Institute people explain that “we hire hard andmanage easy,” meaning that people have a lot of autonomy intheir jobs.

2. 35-hour workweek

SAS Institute’s written policy is that the standard workweekis thirty-five hours. While most employees don’t actually workthirty-five hours on a regular basis, people talk about how thechoice is there and that such a choice makes all the difference.Those who choose to work longer hours, do so by choice and out ofa love for their work, as opposed to a lack of productivity orbecause of unreasonable workloads.

According to the 1997 Business Week data, 66 percent of SASInstitute respondents strongly disagreed with the question: “Areyou expected to work long hours no matter what it means for yourpersonal or family life.” This compares with 29 percent of allrespondents.



3. Employee and manager surveys

SAS Institute relies heavily on employee input through itsannual employee satisfaction survey. It is clearly visible whatthe company focuses on: most of the questions seek to gauge theoverall work environment at SAS Institute and only a few arework-life specific. Results of the survey are posted for severalweeks on the company’s intranet, and every year key improvementareas are identified.

The results of the management feedback survey, throughwhich all managers are rated by their direct reports, are alsoposted on the SAS Institute intranet. Top-rated managers receiveindividual recognition.

4. Compensation system

Numerous other benefits set SAS Institute apart from itscompetitors. When it comes to pay, though, SAS employees get theaverage (or in some cases below the average) for the softwareindustry. In addition, unlike at most other software companies,there are no stock options. To make up for this every SASInstitute employee participates in profit sharing and is eligiblefor a bonus. Each manager is given a pool of bonus money todivide as he or she chooses. The company has never missed payinga bonus since its founding.

Goodnight feels that SAS Institute doesn’t have to offerhigh salaries to get people either to come or stay, giveneverything else the company provides to its employees. In hisview, money should not be the key motivator. People that careprimarily about the money, can be bought at a price. Peopleshould enjoy working at SAS Institute because of the quality of



the work itself.

Money is not talked about and the company’s compensationsystem is kept secret. Salary levels are not posted within thecompany, so that even an employee looking to move within SASInstitute has no access to pay information. Just as he doesn’twant new hires coming for the money, Goodnight doesn’t wantpeople moving around the company just for pay.

5. Training and Development

It seems apparent that SAS Institute is in the business ofmaking the most of its most valuable resource - humanperformance. It is noted on the company web site that theInstitute was founded on the philosophy that, "If you treatemployees as if they make a difference to the company, they willmake a difference to the company."

Within the Human Resources Division of SAS, Institute, thereare separate departments, demonstrating the structure throughoutthe company. The HR Division houses Personnel and ManagementEducation Administration (MEA) in addition to Health Care, WorkLife (Child Care), Food Services, and Recreation and FitnessDepartments.

MEA department provides training to all SAS employees in the"soft" skills, including communication and social skills. Themission of the MEA department is "Fun in Learning forProfessional and Personal Growth." The department, through itsown mission, supports the objectives of the organization, toprovide the best quality software possible, by developing thecommunication and management skills of staff members managing thedepartments responsible for producing, developing, and supportingSAS software. However, Organizational Development within this



department of the Human Resources Division appeared to not be aprimary function compared with the training function.

The MEA department takes an informal approach to developingand designing training. The need assessment process used isunscientific. When the MEA department does identify a trainingneed via this method, there seems to be little emphasis onprocess to identify training objectives and performanceevaluations. The department focuses on such a specialized area,communication and social skills, that experience seems to takeover the process of selecting appropriate curriculum anddeveloping a training plan.

Like need assessment, evaluation receives littleconsideration from the MEA department. Again, word-of-mouth, inaddition to Level 1 "smile sheets" is the sole source of trainingfeedback. According to the senior manager, there is no need forLevel 2, 3 or 4 evaluations or formal processes as they findword-of-mouth response to be most reliable and reflective of theeffectiveness of their training programs.

Career Development

SAS Institute is extremely supportive of their employees'personal career growth and has effective career developmentpractices in place. Such implementations include posting jobopenings and promoting from within providing ongoing managementtraining, and offering educational opportunities by way of aninformal tuition reimbursement program.

Almost incredibly, SAS offers training to its employees ondeveloping job-seeking skills as well. Within a programadministered by the MEA department, called the AdministrativeStaff Educational Program, the curriculum includes a unit ofeffective job-hunting methods. A description of the programGroup 6 _ Section D Page 11


states that trainees will "learn how to move through the internaljob posting process and how to successfully interview.

6. Organisation structure

SAS Institute is a very flat organization: there are, inessence, only four layers between the bottom and Jim Goodnight.Goodnight has 27 people directly reporting to him and thereby alarge number of direct reports to handle.

As SAS Institute has grown, it has chosen to create newdivisions, instead of adding layers of management, leading to avery flat and simple organizational structure. According to FastCompany the sense of accountability at SAS is so ingrained andthe lines of reporting there are so simple that it doesn't need aformal organization chart.

Because the organizational structure is fluid, the promotionprocess is not very significant. An employee can easily go fromsoftware developer to project manager back to software developerin this system. SAS also does not have a very formal evaluationprocess. CEO Jim Goodnight says he evaluates staff on how wellthey attract and retain talent, because he feels keeping andmotivating the best talent, will cause everything else to workout.

SAS does everything in-house. At its facility in NorthCarolina, every employee, from the gardeners to the cafeteriaworkers to the child care center workers are all SAS employees.The company does not outsource anything. This is because SASbelieves it is more cost effective and the workers do betterwork.Group 6 _ Section D Page 12


7. Leadership

The SAS Institute work environment was initiated by JimGoodnight himself. He is the principal driver, though several ofhis direct reports play key roles. Executives at SAS promote theculture through example. For example, the vice president ofcommercial sales has two children in the SAS Institute daycarecenter. After heavy travel periods it’s not uncommon for her toannounce to her staff that she won’t be in for a few days so shecan spend some time with her kids. And John Sall, the company’snumber-two executive and only other owner, is very visible oncampus as a man whose work behavior promotes the company’sphilosophy.

While most of the major features of the culture wereinitiated and led from the top, pragmatic new ideas typicallybubble up through the organization. If they’re specific ideas foremployee services, there is a lot of autonomy for employees to becreative and add things to SAS Institute’s offerings. Moresubstantial policy change issues go through the human resourcesvice president and potentially get the thumbs up or down fromGoodnight.

What is surprising though is that Goodnight is viewed as a“silent leader,” one who gives the people below a lot ofautonomy. At the same time, his is a very strong presence withinthe company, and most major and many smaller decisions bubble upto him.

Goodnight is usually aware of even the smallest things goingon in the organization, and chooses at times to become involvedin issues that one would not typically imagine catching theattention of a CEO. Conversely, he appears to give his direct



reports a clear direction of where SAS Institute is going on theproduct/technology front, and then let’s them run their ownareas. Direct reports often go two or three weeks with nointeraction with Goodnight.

Meanwhile, the CEO spends almost 50 percent of his timeprogramming, so he’s very involved with the product line on adaily basis. This passion for the technological side of thebusiness is very clear to employees who actually feel it is verycool. Asked how he can afford to spend so much time onprogramming, and told that most other CEOs wouldn’t do the same,he responds: “I don’t know what they do all day. Probably pokingtheir noses in where it doesn’t belong.”

Goodnight appears to be a leader who gathers the input ofhis direct reports, but not in a typical team fashion. Forexample, once when SAS was considering a substantial investmentopportunity, Jim asked many of his direct reports for theirinput, and he listened to them well. He was not looking forconsensus, though. He took it all in and then made a decisionfairly quickly. In this case, he decided not to go with it.

Also, his direct reports rarely come together to meet as ateam. Goodnight hates meetings. He thinks most of them are awaste of time. He doesn’t like to manage much, preferring to dostart-up stuff and then move on to something else. He likes thecreative side of things. Many senior managers, however, do notconcur with him. According to them, Jim’s management style doesnot promote a meeting-oriented culture.

Goodnight’s method for growing the business is to look outover only a short two- to three-year horizon, given how rapidlytechnology changes. He assesses developing technologies, investsin some heavily, and gives people the latitude to make them work.



His approach is to place some bets on multiple technologies inthe hopes that one will prove right. Since he started thecompany, his vision has been incredibly accurate.



Conclusion

Putting all the facts and evidence in perspective, itappears that SAS Institute is doing things right. The companycontinues to grow, and employees are delighted to have theirjobs. SAS Institute has made the top of most of the listsvarious business magazines publish about the “best places towork” through the years.

SAS has been listed on Fortune’s Best Companies to Work Forlist every year in the US since its inception in the late1990s. In 1999, SAS Australia was the first non-US region to berecognized as a great place to work. SAS was identified as a bestplace to work in a 2004 USA Today article. In October 2008, SAS'sCanadian division was named one of "Canada's Top 100 Employers"by Mediacorp Canada Inc., and was featured in Maclean's. Laterthat month, SAS was also named one of Greater Toronto's TopEmployers. In 2010 and 2011 SAS was named No. 1 on Fortune's bestplaces to work list. SAS Belgium, SAS Norway and SAS Sweden havealso been named No. 1 in their countries by the Great Place toWork Institute. In 2011 the Best Place to Work Institute rankedSAS No. 2 in a list of top multinational companies to workfor and in 2012 was ranked No. 1. SAS India is ranked No.14 inthe ‘best places to work for’ list.

As we see, several elements describe the SAS Instituteculture: employee-centered values, employee interdependence, aspirit of risk-taking and freedom, challenging work, richness ofresources, and the company’s physical surroundings.

The SAS Institute case can be used to demonstrate several keytakeaways

1. Senior leaders play a critical role in effecting positive



work/life-related change.2. There is an important connection between specific work/family-

related benefits and the actual work environment within whichthese are offered.

3. In the software industry, the ability to enrich onefinancially may not be all that matters to employees, contraryto the conventional wisdom.



Appendix

Exhibit 1: SAS Institute Fact Sheet — “Employee-FriendlyHistory”

SAS Institute, Inc. has a solid record of providing an employeefriendly work environment since the company was founded in1976. The programs have grown in depth and breadth throughoutthe company’s history, and the Institute continues to exploreways in which SAS Institute can best meet the needs ofemployees.

36 consecutive years — profit sharing plan 36 consecutive years — discretionary bonus for employees in

December 36 consecutive years — 35-hour work week and flexible work

schedule. Employees who are parents particularly enjoythis benefit because it allows them to participate inspecial events at their children’s schools. Some parentschoose to arrange their work schedule to that they areable to meet their children at the school bus stop everyafternoon and be a part of after- school activities.

36 years — work-friendly perks, including Fridaybreakfast goodies; Wednesday M&Ms; fresh fruit onMondays; generous break rooms stocked with soft drinks,juices, coffee, tea, crackers and peanut butter; wintercompany-wide party; spring family picnic; familyHalloween party; and numerous family activitiesthroughout the year.

32 years — company-sponsored on-site childcare staffed byemployees. Two centers serve the needs of 328 childrenages 6 weeks to 5 years of age. When the new BrightHorizons Child Care Center opened in April 1996, thetotal number of children rose to 500. Qualified employees



at regional offices receive subsidized childcare at acomparable center near their locations.

27 years — self-funded on-site healthcare center staffedwith family nurse practitioners (two full-time physiciansjoined the staff in 1995)

28 years — on-site recreation and fitness center 28 years — wellness program 27 years — company subsidized on-site café 27 years — self-funded indemnity plan with low deductible 23 years — additional paid week off between Christmas and

New Year’s Day 22 years — Employee Assistance Program 20 years — Work-Life Initiatives Department 19 years — eldercare program, Generation to Generation



Exhibit 2: SAS Institute Fact Sheet — “Employee-Friendly BenefitsSummary” (excerpts)

The Institute provides a generous benefit package to all U.S.employees, which includes

Paid sick leave Two weeks paid vacation for all employees, with an

additional week for employees who have been with thecompany five years or more

Paid holidays (with an additional paid week off betweenChristmas and New Year’s Day)

Fully paid health insurance (also available for dependentsand domestic partners)

Profit-sharing retirement plan Paid education and training expenses

All U.S. employees also get to take advantage of these otheremployee-friendly benefits:

On-site healthcare center (no cost to employees and theircovered dependents)

On-site recreation and fitness center (no cost to employees,family, domestic partners)

Extensive wellness program On-site childcare Company subsidized café — award-winning gourmet cuisine

and a piano player to help create a relaxed atmosphere;breakfast and lunch available

Elder Care program Flexible work environment and 35-hour workweek Annual bonuses Other fun perks include free fresh fruit every Monday; M&Ms

on Wednesday, and breakfast goodies every Friday; breakrooms stocked with complimentary soft drinks, juices,crackers, coffee, and tea, as well as first aid supplies;



and employee events and celebrations, including the annualFamily Picnic, the elegant Winter Party, and end-of-the-month parties.

The Institute’s employee-friendly philosophies are not limitedto headquarters and other United States offices. Because theneeds of employees in other countries vary greatly depending onthat country’s culture, each office tailors its benefits to bestsuit the needs of those employees.

In Heidelberg, Germany, European headquarters, publictransportation is the norm for all citizens, and is asignificant expense for commuters. The Institute pays 100percent of the public transportation costs for allemployees in that office.

In the Madrid, Spain, office, SAS Institute presents abirthday gift to each employee, provides lunch ticketsredeemable at area restaurants, and funds an inter-companyfootball competition.


Exhibit 3: SAS Interview and Hiring Process

1. Posting of position

2. Applications accepted (immediately; this “open period istypically open for two weeks)

3. Position closes.

4. During and after the “open period,” Human Resourcessifts through applications and provides the hiringmanager with qualified applicants to the hiringmanager. This process lasts for roughly ten days.Qualified applicants must demonstrate certain “skills”requirements via the application.

5. Over approximately one week, the hiring manager conductsphone interviews with applicants to determine who shouldbe brought in for a face-to-face interview.

6. Human Resource schedules “First Round” interviewsimmediately upon receipt of the hiring manager’s candidatelist.

7. The hiring manager interviews candidates. Theseinterviews typically also involve members of the workteam, as well as people outside the specific reportinggroup who will work with the person in the position.Second and third interviews, along with skills assessmenttesting, are not uncommon.

8. The hiring manager selects a candidate and Human Resourcesoffers the position.

9. The candidate begins working for SAS either on the 1st or16th of the month.

The candidate is interviewed to discuss required skill sets, butalso to look for personal and cultural fit within the company.SAS looks to match “attitudes” related to teamwork and work/life


balance. Specifically, the company looks for people who valuecamaraderie, who enjoy being part of a winning team more thanbeing recognized as an individual star, and who understand theholistic personal benefits of working within a company that hasa philosophy of “work/life” balance. While SAS does not believethe company can teach attitude and life philosophy, it does teachand enhance professional skills related to these areas throughprofessional training programs.


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