SAS Institute
By: Dynafrom Wang
Background Information
Founded in 1976 by Dr.James Goodnight, and Dr. John Sall, the SAS Institute
provides business analytics software and services. What makes SAS Institute as
successful is focus on company-employee relationship. This was developed under
the philosophy that satisfied employees create satisfied customer, accomplished by
establishing a low employee turnover strategy and through expenditures to satisfy
employees. These benefits include: onsite daycare, gyms, subsidized cafeteria,
onsite physicians and nurses, dry cleaning, and etc. The costs however weigh much
less then if they were to have high turnover, which would cost the company 50-70M
annually. The strategies, and work policies are maintained and practised to attract
highly qualified, skilled professionals. This is shown in the example of employees
who took 10 percent pay cuts to join SAS for the benefits. These strategies help in
maintaining low turnover, and maintaining high company morale and teamwork. By
implementing such human resource strategies and policies, they managed to
maintain high quality employees whom are much more involved in their work, then
otherwise without the benefits. They also made it clear that work-life balance was
promoted to recognize the importance of employees` personal lives. But this was all
part of a strategy to make it impossible for employees to not do their work.
The Problem
The issue at hand is whether SAS can remain competitive with the cost of benefits,
economic downturn, and turnover. SAS employs over 11,000 people, 2.1 billion
dollars in revenue which 21% is reinvested into R&D; to which we can see SAS is
clearly in a dominant position in the market.
As we can see by this table, while SAS has maintained good market growth, new
competitors are beginning to pick up in pace. With such a high demand by
competitors for high-quality employees, how can SAS attract future employees,
without eating into the profits of the company?
Implications
Possible implications for not finding a clear solution could prove to be disastrous to
the company. With many competitors in the field of BI, there is a clear consensus
that high-quality employees must be retained, and future employees must be
attracted. With growing expenses of maintaining high quality employees, it is
required for SAS to first begin by evaluating similar competitors to determine if
increasing benefits would be required at this point.
Evaluation of Competitors
To begin, we will compare Trilogy Software, competitor in BI to SAS. It is clearly
evident to us immediately that Trilogy as well, wishes to attract the highest-quality
employees as evident in their careers page. “At Trilogy, we work hard to recruit and
retain the best minds in the world, including graduates from top Indian and Chinese
universities and alumni of Stanford, Harvard, CMU and MIT. We are looking for
people with big ideas and a dedication to transforming business.” In the new
business world, retention of talented, loyal employees is critical in the growth of the
company. How does Trilogy approach attracting a quality workforce? They do this by
emphasizing culture; individuality. Similar to SAS, Trilogy allows flexible work hours.
Where the two differ is in training. Trilogy recruits go through a highly intense
orientation in order to ensure recruits are ready for the job. As well, Trilogy employs
new strategies such as involving recruits in roulette in which each recruit has $2000
to bet in which all slots are filled, if you lose then you lose $400 on each paycheck
for 5 months, this is to teach recruits about risk taking, to take chances to win
$72000. Trilogy as well believes in rewarding key employees in the company with
bonuses (something Trilogy does not offer), as well as making all employees
accountable for their performance. Trilogy’s approach is to attract high quality
employees, whereas SAS’s approach is to maintain low turnover. However,
evaluating the financial situation of both companies, it becomes clear that SAS is
performing much better then Trilogy. Would this approach work for other
companies? No, with tight profit margins, as well as low-paid labor there is no need
for low employee turnover in many industries. Industries such as clothing, computer
electronics, and manufacturing industry have many unions governing them, and
low-income/high market saturation of eligible workers make employee incentives a
approach that is financially uneconomical.
Solution
Clearly, with good market share, profits, and low turnover, SAS’s philosophy is
clearly paying off. With that in mind however, attracting new employees will prove
to be difficult with incentives which can be easily copied by competition. I believe
the only solution SAS can really approach should the time require it, is to offer
larger monetary compensation for new employees.
Implementation of Solution
It would take time, and money to adjust the each employees pay if this solution is
implemented. The implementation of this can take place over a longer period of
time, since there is no need for higher compensation since company incentives are
already attracting new employees to SAS.
Justification
As businesses begin to grow, with emerging business opportunities in China and
India, there would be high demand for BI. There is intense competition in BI
software development which proves to explain why employee incentives are so
abundant in major companies in BI. Future growth is not always clear, and therefore
the solution should be implemented when the time needs it. Since SAS is currently
in a dominant position in the industry, there is no need to improve any aspect of the
business.
