Jim Goodnight, SAS’s founder and CEO, and David Russo, the company’s human resources manager at the time, talked about the prospect that the women would go on maternity leave and not return. It was a tough time to hire computer talent in Raleigh, North Carolina, and as Goodnight recalls, "very difficult to attract females."
Goodnight told Russo, "We can't lose these people; we’re too small a company." At a time when the mere notion of a day-care center at work seemed silly, and when many huge companies would have considered the idea frivolous at best, Jim Goodnight decided that his tiny company was too small not to have a day care. If the way to keep talent was to have day care, it wasn’t even a difficult decision.
And so, in the basement of the company’s second building, David Russo set up SAS’s first day-care center, for about five kids.
This spring, SAS Institute’s Cary, North Carolina, headquarters campus will inaugurate its newest 200-kid day-care facility, bringing the company’s preschool child-care capacity to 700. It’s an interesting measure of Goodnight’s strategy, and his company’s success: 10 times as many children come to SAS each day now as there were employees of the company when day care started 19 years ago.
Day care may seem like an odd competitive gambit in an arena where SAS has grown to a billion dollars in sales, and 30 percent profit margins, while competing with Oracle and Microsoft, IBM and Computer Associates. (The company makes all kinds of data analysis software, the kind of data-mining and statistical programs used for everything from pharmaceutical research to managing phone networks and calculating the U.S. consumer price index.)
But day care is only one part of a human resources strategy that’s as straightforward as the rangy, blunt-spoken Goodnight himself. As much as anything else, SAS’s approach to its 6,000-person global staff is responsible for the privately held company’s consistent success.
Indeed, it’s hard to envision a company where the HR policies are more thoroughly woven into the competitive thinking, or a company where the payoff of those policies is so clear.
The benefits are great!
Goodnight believes in giving SAS staff everything they need to do a good job, including the peace of mind of having young children close at hand. SAS cafeterias have highchairs, and parent-employees are free to pluck their kids out of day care and bring them to lunch. Having removed every immediate impediment to creative thought, Goodnight expects performance.
SAS almost literally swaddles its staff in benefits: the company’s main campus offers not only low-cost day care ($250 a month) but also free access to a 36,000-square-foot gym, a putting green, sky-lit meditation rooms, and the services of a full-time in-house elder-care consultant. There’s a pianist in the caf at lunchtime, and all the free juice and soda employees want.
Every white-collar employee has a private office and the opportunity to create a flexible work schedule, and for everyone, the standard workweek is 35 hours. This year, the company increased paid vacation for all employees to three weeks; that doesn’t include the week off that SAS gives everyone from Christmas to New Year’s. After 10 years of service, you get a fourth (or, really, a fifth) week of paid vacation.
The benefits are viewed not as a long list of "treats" but as a measure of respect for employees’ contributions, and their lives beyond SAS. Most professional staff at SAS could hop across the interstate in Research Triangle Park--to Nortel, or Cisco, or IBM, or Ericsson--and quickly find jobs. That they don’t is a measure of the effectiveness of SAS’s approach: treating people like adults.
The result is that SAS has one of the lowest turnover rates in the software world, never more than 5 percent a year. In 1999, the company had a professional turnover of just under 4 percent, losing 131 staffers out of 3,292. The industry average is five times that, slightly over 20 percent.
Perhaps equally revealing is that turnover is also small in the service areas; SAS employs all its own landscapers, food service workers, housekeepers, and other support staff, and provides them the same benefits as professional staff. Among service staff in 1999, turnover was just over 11 percent, about a tenth the typical churn in such jobs.
"Ninety-five percent of our assets drive out the gate every afternoon at five," says Goodnight. "I want them to come back in the morning. I need them to come back in the morning."
In a competitive business where employees hopscotch from company to company in search of richer stock options, and where companies build staffs of consultants and permatemps to avoid overhead, Goodnight has created just the opposite: a culture of loyalty.
The purpose of gaining such loyalty isn’t to win awards (though SAS has been in the top 10 of Fortune’s "100 Best Companies to Work For" three years running) or to make Goodnight feel good. The culture at SAS provides the company with a powerful competitive edge.
Consider a 15-person product team at a typical software company,with a typical 20 percent turnover. In the course of a year, 3 people leave the team, and 3 others have less than a year’s experience at the company. In other words, 6 of 15 people either aren’t around at all or hardly have a clue what’s going on.
However, on a 15-person product team at SAS, no one leaves in the course of a year, and no one has less than a year’s experience.
"It turns out that doing the right thing, treating people right, is also the right thing for the company," says Goodnight.
It’s also the profitable thing. Harvard Business Review recently calculated that SAS’s low turnover saves the company $75 million a year, enough to spend $12,000 extra a year on benefits for each employee. "I promise you, the majority of benefits here don’t cost $75 million," says Goodnight.
Winners can be choosers.
The culture of loyalty pays off in an equally strategic way at the front end for SAS. These days, in a tight tech job market, for every job opening, the company gets 200 r sum s, according to Goodnight.
"To attract people," says SAS’s newly appointed HR manager, Jeffrey Chambers, "we have to have a strong employment brand, we have to be the employer of choice, and we have to be known as a culture that engenders trust. And to keep people, we need to do all those things, and provide intellectually challenging work for employees."
The HR staff is the primary recruiter for SAS, and Goodnight’s view of their role has evolved over the last several years. He now sees human resources as a critical intelligence-gathering group, because the competition for talent is as important as the competition to sell products.And the competition for people is a wider front: SAS wants the same kind of people as Glaxo-Wellcome or PricewaterhouseCoopers.
"I view HR as one of the main areas that does analysis of our competitors," says Goodnight. "One of their responsibilities is to make sure we don’t get complacent about hiring."
SAS uses its own data analysis software to look for patterns that need attention inside the company. "We noticed that we were getting some turnover specifically in the group of employees who had been here five to eight years," says Goodnight. It’s a particularly vulnerable group. Five years is a time when employees tend to get restless, and five years of tenure is also a time when talented people are often contributing richly to the company.
"We did some competitive salary analysis and discovered we were a little below the average for just this group. So we corrected their pay. IT is moving so fast, we have to make sure we keep up."
One measure of the impact that SAS’s HR department has of the company as a whole is the career of the new HR director. Chambers, who turns 38 on March 22, is a lawyer, and he moved from the SAS general counsel’s office to HR two years ago. He was appointed director of HR in December. "At SAS, HR has the potential for greater influence on the corporation than being an attorney here," says Chambers. "HR has to be the catalyst that fuels our growth."
Workforce, March 2000, Vol. 79, No. 3, pp. 38-42.