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