Employee Commitment To Sas And Its Goals example essay topic

SAS Institute Case Analysis General Introduction Dr. James Goodnight and three other colleagues, Anthony Barr, Jane Helwig, and John Sall, founded SAS Institute in 1976. The SAS System was a project at North Carolina State University that Goodnight had been a part of since 1971. The project was financed by outside funding. When the funding ran out, Goodnight and his colleagues reached an agreement with the University to obtain the rights to the SAS System. The SAS Institute was born. Today, SAS is headquartered in Cary, North Carolina.

SAS has enjoyed positive cash flow from its inception since it began with an existing product and a customer base of about 100 outside companies. Consequently, SAS has never needed outside funding and has no debt. Presently, SAS is owned by Goodnight and Sall. Goodnight and Sall own two-thirds and one-third, respectively. Goodnight is currently the CEO of SAS.

Barr and Helwig sold their ownership interests. SAS is currently the largest privately owned software company and the ninth largest independent software firm in the world. SAS focuses its operations and practices around three different, but related elements of the business: customers, workforce, and research and development. Stakeholder Interests Management is facing the challenges of recruiting a talented workforce that would help it maintain its intellectual capital in a competitive job market. Goodnight and David Russo, VP of Human Resources, are aware of the challenge.

They must decide if SAS could and should maintain its unique approach to pay, customer involvement, and the avoidance of outsourcing. Employee groups, or teams have been a part of the success of SAS Institute. Current employees are accustomed to a work environment where employees are encouraged through various means to have "as much fun as management". Employees have been given great autonomy in performing their jobs. Employees who need a lot of direction do not succeed at SAS. SAS has put forth much effort in finding people who fit into the organization both culturally and geographically.

Employee interests are of significant importance as the work force in place consists of people who are highly motivated, enjoy their autonomy, and fit into the existing philosophy. Changes affecting employee interests need to be carefully considered. Customer interests are of primary importance to SAS. Ninety seven percent of Fortune 100 companies use SAS.

Eighty percent of Fortune 500 companies use SAS. SAS has 8,000 customers at 31,000 different sites. SAS sponsors user groups and user conferences worldwide. Customers are greatly appreciated at SAS. One could say that the customer drives Research and Development.

Through a "ballot" system, SAS listens to their customers to find out what they want. Customers are brought back to Cary, North Carolina to test new products and new versions of existing products and provide feedback during the developmental stages. With respect to any changes in the future, customer interests need to be carefully considered as customer input and has been a key part of SAS's success. Changes in this area would also change the relationship between SAS and its customer base.

Shareholders (owners) share the same interests as management. As stated in the introduction, Goodnight is a 2/3 owner as well as the CEO. Other than outsourcing, not much information is given regarding suppliers. Currently, minimal outsourcing takes place at SAS.

SAS maintains, "If you want something done right, you own it and control it". Suppliers stand to benefit financially by a change in outsourcing policy. However, a change in outsourcing policy would also require a change in SAS' view on outsourcing. There is potential for conflict here as SAS' point of view is that outsourcing results in inferior products. The Cary, North Carolina community has benefited from SAS' recruitment policies. By recruiting locally for positions in Cary, SAS has attracted people who want to live in North Carolina.

The community views SAS as a good place to work. Not much information is given regarding government and unions. Situational Factors With respect to workforce characteristics, the organization is flat and informal. As a matter of fact, upon request, an organizational chart could not be produced. There are 27 units reporting directly to Dr. Goodnight. In addition, he must approve all new positions.

A unique spirit of teamwork further characterizes the workforce. Individualism is not a trait that will lead to success at SAS. This spirit of teamwork has led to a loyal workforce as demonstrated by the fact that SAS is either the first or second job for most employees. SAS' business strategy is fueled by its customer base. SAS sells licensing agreements to customers as opposed to selling products and upgrades. SAS offers a 30-day free trial.

As a result of selling licenses, SAS realizes less revenue initially during the first year of a licensing agreement. However, SAS realizes more revenues in subsequent years as customers renew. SAS customers renew at a rate of 98%. SAS' business strategy focuses on research and development. Once again, customers are the focal point.

Customers are sent a ballot inquiring of them which features they would like to see. Responses are generally centered on changes or improvements to existing products or ideas for new products and are used to guide the R&D process. Goodnight states "there is no reason to sell customers software they don't want". Goodnight will not turn down a good idea even if it doesn't fit well with the existing product line. During the R&D process, customers are brought on-site to experiment with newly developed products or versions. This is done for purposes of obtaining feedback and suggestions.

SAS spends 30% of revenues on R&D. This is approximately twice the amount spent by competitors. However, even with much focus on R&D, SAS dug a lot of "holes". Holes are R&D projects that never materialized. SAS has had to learn when to quit digging. SAS' business strategy appears to have been successful.

No other organization offers the variety of products that SAS offers. However, SAS has heavy competition in certain market segments. One competitor is SPSS. SPSS incorporated one year before SAS. SPSS has spent 16% of revenues on R&D as compared to SAS' 30%. In 1993 SPSS went public.

For the year ended December 31, 1996 SAS had revenues of $653 M and employed 5,000 people while SPSS had revenues of $84 M and employed 535 people. Similar origins have not resulted in similar growth patterns. SAS' management philosophy is characterized by a long-term approach to decision-making. The management philosophy of taking a long-term approach to decision-making overlaps the area of task technology. For example, SAS spent $100 M over the course of three years to migrate systems from mainframes to servers and personal computers.

Many of SAS' competitors failed to remain competitive because they wouldn't / couldn 't migrate. Many believe that the inability to migrate was the result of pressures to achieve short-term financial goals. With respect to SAS' financial goals, the philosophy was simple. Management wanted aggressive sales growth. Management also wanted to take in more money than they spent.

As one can readily conclude, specific parameters were not used to define the goals nor were specific methods identified to achieve those goals. With respect to the labor market, SAS' has been successful at recruiting for positions at headquarters locally. SAS' has focused their efforts on finding people who want to live in the South by recruiting mainly at North Carolina universities. From a societal perspective, SAS has developed a friendly and informal culture that fits well in the South. SAS has a local reputation as being a good place to work. In addition, SAS, private schools are open to all students, not just those of SAS employees.

SAS informal approach with respect to the workforce has resulted in opportunities for employees to experience diversity in their jobs. One employee mentioned that he has had opportunities to research, publish, and travel. Bringing such opportunities to fruition were a matter of self-initiative. No information is given regarding unions. Human Resource Management Policy Choices The SAS approach to HR management has been very successful to date.

SAS has utilized a novel approach that has created the positive 4 C's outlined in the Beer chapters. These 4 C's are Commitment, Competency, Congruence, and Cost Effectiveness. These policies will be discussed in terms of Employee Influence, Human Resource Flow, Reward Systems, and Work Systems as stated in the Beer reading. The Beer concepts will be used to show how these policies have contributed to the 4 C's and how these, in turn, have led to positive long-term results on the individual, organizational, and societal levels. Hence, the question regarding why and how the SAS approach to HR management has been successful to date will be answered.

Beer says that employee influence involves. ".. a key question that all managers must ask: How much responsibility, authority, and power should the organization voluntarily delegate and to whom?" (Beer, et al., Chapter 1, page 6) The SAS Institute is characterized by an absence of bureaucracy and bottom-up decision-making. Employees are given general expectations by management, they are enabled with the tools they need, and then they are allowed to govern themselves. SAS policies tend to support a positive notion that people can be trusted to do a good job, and that employees don't need to "be managed to death". HR flow has to do with the movement of individuals into, through, and out of the organization. At the SAS Institute, a great deal of emphasis is placed on ensuring that HR flow meets the organization's long term strategic requirements for the right number of people with the right mix of competencies. The SAS Institute uses many different mediums to attract quality individuals to its company.

First of all, at corporate headquarters, a large number of applications are received just because of the positive reputation that the company has. SAS receives applications from its website and from recruiting efforts at local universities. However, the most hiring occurs from employee referrals and internal promotions. Care is given to see that those who are hired fit the company's friendly laid back, bottom-up culture. Flow within the organization is utilized to the company's benefit as well.

Employees are allowed to move without a decrease in benefits within the company. These decisions are made based on the worker's initiative or on the needs of the company. The company keeps a database of employee skills and experiences that it matches against opportunities within the Institute. Dr Goodnight believes that people generally make three or four career changes in their lifetime, and he does everything he can to make sure that those changes occur within the company. Outflow is minimized at SAS. SAS focuses on retention and in "keeping people happy".

One employee commented that opportunities have "been pretty much my taking the initiative... You have to be able to take that and run with it". This work environment has become a culture in and of itself. The culture is one of cooperation, teamwork, and mutual respect. The appearance of cultural fit is very important to SAS' hiring and retention policies.

As a result, turnover in the company is minimized. In Cary, turnover in the sales organization is around 3%. In the regional offices, it is about 6%. Most of this turnover is due to life changes rather than losing an employee to the competition. The reward systems at SAS focus on intrinsic motivation.

The company believes that "if you take care of your people, they will take care of the company". The flexible work environment and the atmosphere of fun, trust, and respect have truly served to motivate the employees. However, SAS provides many external benefits to employees including the following... Contributing 15% (the IRS maximum) to its employees' retirement accounts each year. No contributions are expected from the employee. Offering competitive base salaries that are adjusted regularly with merit increases once per year.

Performance bonuses of 5- 1/2% to 8% are given at the end of the year. The evaluations that these are based on are spread out during the year. Even if the company has only had an average year, Jim Goodnight has been known to give out performance bonuses where he deems them appropriate... A 35-hour workweek. Very few people are expected to work over-time or on weekends...

The environment is low-stress. Although short and long term sales goals are made, there are no external incentives attached to them. This allows the people to focus more on customer service and long-term client relationships... The work atmosphere is set on a beautiful 200-acre campus at corporate headquarters complete with picnic grounds, atrium's, and sculpture.

Other offices outside corporate headquarters include a French Chateau, a German Beer Garden and Hotel, and a giant English Manor House... Each employee is given a private office, rather than a cubicle, and the architectural design stimulates group belonging and cohesion. The latest and greatest technology is available to the employees. This also helps the firm attract and retain talent... There is a 7500 sq. foot medical facility on the corporate campus available for low or no cost for the use of employees and their families. It also provides indemnity insurance coverage...

There is a Montessori day-care on campus for the use of employees and their families. The company subsidizes tuition. Employees away from corporate headquarters also receive a day-care subsidy... Parents are encouraged to become involved in the schooling of their children. Their children can attend on-site private schools and college scholarships are offered to employees' children...

With the approval of their supervisors, flexible work schedules can be arranged... There is a free health club on campus. Outside corporate headquarter, health club memberships are subsidized... There is a cafeteria on site that offers subsidized food prices to employees. As you can see, SAS offers a comprehensive benefit plan that will attract and retain the best talent. This has paid off for the company in increased growth, sales, and low turnover and absenteeism.

Hackman and Oldham illustrated five work characteristics can be utilized in designing a job to harness intrinsic motivation of the employees. They are autonomy, feedback, task / skill variety, task significance, and task identity. This model will be used to describe SAS' work system. Autonomy is the degree to which employees are in charge of themselves and can serve to be motivating.

SAS has incorporated a large degree of autonomy into their jobs. All managers are working managers and they are encouraged to be coaches and mentors to their people rather than directors. Dr. Goodnight gives area directors full discretion in running their departments. The only thing he insists upon is the equitable treatment of the employees and the right to decide upon the number of people that are hired.

Feedback is not given in a formal performance appraisal process at SAS. SAS does not believe this to be effective. However, employees are encouraged to set short and long-term goals and team results are posted. Teamwork is encouraged, and they say, "It is hard to slide when you are part of a team". Managers also commit to talk to their people and provide feedback three times per year. Task variety is merely a matter of the employee's initiative.

Employees are given as many opportunities as they initiate. Although the company appears to provide little training, with the exception of technical training, on the job experiences helps the employees develop a variety of skills. The firm's emphasis on customer service and long-term client relationships, and the de-emphasis on sales numbers alone would appear to meet these needs. Human Resource Outcomes The 4 C's identified by Beer are commitment, competency, congruence, and cost-effectiveness. SAS has been able to achieve these. Commitment: Employees are highly committed to the organization.

Turnover is low and mainly due to life changes rather than losing an employee to the competition. Most career changes by the employees are done within the company. In addition, the company, by means of its culture of mutual respect, and by means of the benefits it provides appears to be committed to the employees. Competency: Because employees are allowed freedom to move within the company and take initiative for various tasks, they are able to develop multiple competencies. Congruence: The organization takes care of its employees, and the employees have taken care of the company. Mutual respect and equity have made SAS a great place to work.

The employees have continually helped SAS to grow. The needs of the organization and the employees have been able to meet in a congruent way. Cost effectiveness: Although many of the policies of the Institute appear to be costly, employee commitment to SAS and its goals has proven the to be an effective use of capital. In addition, policies such as health education, providing a health clinic, and providing an on-site health club have decreased absenteeism.

Long-Term Consequences Individual well-being: SAS allows people to find a balance between their personal lives and their work lives. They are able to maintain quality family relationships due to the 35-hour workweek. They have been able to stay involved with their children's education and have their children in the best day cares and schools because of the Institute. In addition, the low stress atmosphere in the work environment would result in better individual health and well-being. Organizational effectiveness: Although some of the Institutes growth and success can be attributed to it fortuitous beginnings, I believe to a large extent that its success has been due to employee policies, emphasis on adaptability, and the degree of importance it gives customer service and relationships. Societal well-being: It is no doubt that happy, healthy employees and strong families are a benefit to society.

In addition, the economic boost the Institute has given the Cary, NC area and the private schools it makes available to the public have benefited society. Looking to the Future - (Growth Related Problems Caused by the Current System) In reading and studying the SAS Institute case, it became apparent that the current organization is not set up in a manner that would accommodate growth. With the amount of growth anticipated, it appears that the most serious problems will be people related. Dr. Goodnight maintains significant managerial responsibility for operational the managerial role over all 27 Area Managers and must approve all new positions. In addition, training and opportunities for growth are mainly in the areas of technical development. SAS lacks a formal structure in developing leadership.

Further supporting the idea that leadership development has been neglected is the fact that there is no formal planning for career moves or succession within the Company. These tactics will not be effective in a workforce that is expected to grow 12-13% each year. Dr. Goodnight has a strong nee to see this condition change as he becomes increasingly incapable of maintaining a finger on the pulse of all departments and their detailed needs. SAS needs to start developing a leadership base that will carry them into the future and be capable of meeting demands in a changing market. Recommendations and Change Plan The Condition: As mentioned above, the condition needing to be changed basically falls in two related areas. 1) The organizational structure is such that Dr. Goodnight's time is spent managing personnel relationships and making very detailed hiring decisions instead of championing broad aims and policies.

2) Although technical training at SAS is great, leadership training has not allowed employees to develop in areas that would allow Dr. Goodnight to relinquish control over position approvals and managing all direct reports. Why change: SAS is not prepared to accommodate personnel related growth. The growth in the technology arena is expected to be around 12-13% over the next several years. Felt Need: Both Dr. Goodnight and David Russo feel a need to change. Recruiting a talented work force in a growing market will become increasingly difficult. Diagnosis: There are potential resistors to t he change.

There are many department managers that presently report to Dr. Goodnight who may feel that they are losing authority as their positions could potentially report to a mid-level manager instead. Internal roadblocks include the fact that being able to manage people will become an increasingly important skill. Action Plan: There will be many actions necessary to implement change. The first item of business would be to organize the 27 single departments into related but fewer strategic sub classifications. This will allow Dr. Goodnight to limit the amount of time he spends managing operational items. Dr. Goodnight and David Russo should be in charge of defining the new structure.

In addition, under the new structure, leadership training needs to be implemented as most employees have been rewarded based on their technical skills. David Russo should be in charge of identifying various methods of training that will help satisfy the transition. Key People: Key people obviously include the workforce as a whole. Basically the change being suggested is one that adds a new layer of management to the organizational structure. Explaining the need, identifying the need in positive terms and crediting their work ethic and enthusiasm for the growth will gain employee support. It should also be explained to them that the new structure would provide opportunities for growth and advancement in areas that were not present before, mainly leadership.

Resources: Resources for implementing the change will fall under two areas. Both of these areas will be new to the company. 1). The company needs to engage consulting firms that can help them implement the change. This is new territory for Dr. Goodnight and David Russo.

2) The company needs to reconsider its stand on outsourcing. At a minimum, leadership development should be outsourced, as this is also uncharted territory. Follow Through: Follow through will be the responsibility of management. The payoff for the plan will be an organization that is able to grow by utilizing more of the managerial resources of available within the company. Mid-level managers who share the same vision, as upper management will be as responsible for the growth and success of their respective departments as Dr. Goodnight was for the company as a whole. Prediction of Success: I believe the change will be successful.

The spirit of teamwork that is present should be used to create team spirit within the smaller sub-groups. Obviously, such a change would require more detail than the parameters of this paper allow..