SAS Institute: A Different Approach to Incentives and People Management Practices in the Software Industry
Varun Kumar Pedapati
Fit with the Environment
Strategic design is a fundamental task of organizational life. Jim Goodnight, the co-founder of SAS designed his organizational structure in a unique way that made his company stand apart from the rest. Since founded in 1976, they had been using the same organizational design. But with such an organizational structure, the big question lies whether SAS can retain its employees and customers forever.
One of the key systemic factors in SAS institute’s success was that they valued “Customer Satisfaction and Feedback” more. The use of “ballots” and frequently organizing user group conferences to gather customer feedback made them actually upgrade their products to meet customer needs. They actually gave customers what they need.
“Goodnight noted that the company would not turn down a product idea if it seemed to be a good one, even if it didn’t tightly fit the existing product line” (The SAS Institute, 1998: HR-6, pg. 3) One good example of this was the development of video games, which was totally different from their major product line” statistical data analysis “. SAS was also into publishing and selling manuals and books, which was quite unique for a software firm.
David Russo, Vice President of HR at SAS commented about Jim Goodnight “If it’s a choice between making X dollars per sale and having more people have the software, he would rather have the software everywhere. “(The SAS Institute, 1998: HR-6, pg. 4).He obviously made it clear that company did not care about the amount of revenue gained by selling products, but wanted recognition and customer satisfaction.
Every company runs on certain principles. SAS too had a few but certain set of unique principles. The first principle was “treating everyone fairly and equally”. Goodnight quoted “We wanted nice offices and an attractive place to work. So we tried to provide that for everyone. The company is characterized by an egalitarian approach.” This basically removes the borderline that higher officials have on their employees but can also lead to internal conflicts in the organization.
The second principle emphasized on “coaching and mentoring rather than monitoring and controlling” and the third principle ”made believe that all decisions at SAS Institute is to think long-term” (The SAS Institute, 1998: HR-6, pg. 5) This creates a stress free mindset for the developers to focus on the goal as the project is long term.
SAS was reported to have never outsourced anything. Everyone who worked in various departments like security, day care etc. were all full-time SAS Institute employees.
People Management Practices
SAS institute never offered its employees stock options. Employees were rather rewarded with a bonus based on their part on the company’s financial performance at the end of each year. Barrett Joyner, Vice President of North American Sales and Marketing, said that instead of using incentive schemes to signal what was important “Here, we just tell people what we want them to do and what we expect.” Incentives are very good motivators for people to their job more effectively. Sometimes, it is better to implement incentive schemes rather than telling their employees to go do their job plainly.
Ensuring a comfortable work setting and providing exceptional benefits like 7,500 square foot free medical facility, Montessori day care etc. had made SAS Institute a healthy and fun working environment. People actually prefer working in such conditions and with such benefits.
Betty Fried, Director of Corporate Communications, noted “We just won an award for our employees being involved in the children’s education and education in general. It was called the ‘Apple Pie’ award, so we had...