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SAS <i>Optimas Award</i> Winner for General Excellence, 2000

October 8, 2010

In the dark days of 2009 when business meetings focused on chilling financial forecasts and inevitable layoffs, SAS Institute Inc. co-founder and CEO Jim Goodnight did something almost unheard of. Despite the economic uncertainty, he declared: There will be no layoffs. Goodnight didn’t want any of his 11,000 employees to live in fear. “It was a very gutsy move,” says Jenn Mann, vice president of human resources at the business analytics company, which is the largest privately held software company in the world.

For anyone who knows anything about the Cary, North Carolina-based company, the announcement was pure Goodnight. The towering 6-foot-5-inch executive, who has been at the helm throughout the company’s 34-year history, has created a company that has consistently received accolades for employee loyalty and strategic employee benefits. In the past decade, SAS has nearly doubled its staff—to more than 11,000 from about 6,000—and more than doubled revenue—from $1 billion to $2.31 billion last year. It has made Fortune magazine’s 100 Best Companies to Work For ranking every year since it was first compiled 13 years ago. This year, SAS ranked No. 1.

SAS received Workforce Management’s Optimas Award for general excellence in 2000, largely for programs related to its ability to attract—and keep—talent. At that time, the technology industry struggled to fill gaping labor shortages as new jobs were being created at dizzying speeds. There were five jobs for every skilled worker. Turnover averaged about 20 percent industrywide; at SAS, it was only 5 percent.

Today, turnover at SAS is 2 percent, which is the lowest in the industry, Mann says. Forty percent of SAS employees have been with the company 10 years or longer. And last year while other companies were forced to slash benefits and staff, SAS actually added employees and expanded benefits. Goodnight says that from the beginning it was his intention to create the kind of company that he himself would want to work for, a place where creative people could develop new ideas in a supportive, respectful environment—whether serving customers or writing software code. Because of its exceptionally low turnover, Mann and industry watchers estimate that SAS saves hundreds of millions of dollars a year. That provides a lot of money to offer perks to employees.

“We have great HR at SAS in two areas,” Mann says. “One, we understand how to attract talent and are very connected to university students who often become employees. And, two, we have very innovative benefits.”

SAS was born in academia and continues to recruit many students from nearby colleges such as North Carolina State University, which offers a master’s degree in analytics. SAS leaders make frequent trips to campuses to build relationships, search for talent, support technical academic programs, and promote SAS internships and science and technology “boot camps.”

The company also forms strong links with high school science and math teachers who are invited to bring their classes to the SAS campus to learn more about technology. Special emphasis is placed on reaching out to young women while they are still in high school. Because women continue to be underrepresented in science and engineering, a special effort is made to reach out to high school girls and to bring them to SAS to visit the campus and talk with them about career opportunities.

Expanding their horizons
Mann says one of the biggest HR changes in the past decade has been its expanded business focus. In addition to fulfilling traditional HR responsibilities, she and members of her team now play a larger role in broader business areas such as customer service. They’re responsible to customers just like employees in other areas of the business. For example, HR is expected to conduct three client meetings a month, such as a session with a customer’s CEO task force, to address subjects like risk taking or health and wellness.

“At SAS, we share what we do,” Mann says. “We’re always looking for ways to connect with our customers. Over the years we’ve found that our own extensive employee programs and benefits make a powerful impression on our customers—and prospective customers.”

SAS’ laundry list of benefits includes 90 percent coverage of health insurance premiums; free health care at an on-site medical center staffed by 56 employees, including physicians, nurse practitioners, nutritionists and dietitians; a 66,000-square-foot fitness center and natatorium; unlimited sick days (which has never been an issue, Mann says, as company data show the average employee uses only four a year); flexible work schedules; three weeks of vacation for entry-level employees—not including the week between Christmas and New Year’s; an on-site child-care center that costs employees a below-market price of $410 a month, which is roughly $900 less than average in the market, Mann estimates; a summer camp that served more than 100 children last summer; and a work/life center staffed by eight social workers who offer services ranging from adoption and parenting classes to disease management and elder care.

Then there are the numerous goodies and services, not thought of as perks, but as expressions of employee respect. Mann calls them “programs that eliminate stress and attract talent.” Included in this category are: a hair and nail salon; a car detailing service; a restaurant and bakery honored with culinary awards where employees and family members can eat during the day or order dinners to take home; break rooms stocked with snacks and beverages; art classes; ski trips; and a special nursing room for new moms equipped with cozy chairs and a sound system that plays classical music.

Lisa Arney, a corporate communications manager who has worked at SAS for nine years, enrolled both of her children at the child-care center. Now pregnant with her third child, she says she can’t fathom how she could have been such a happy, productive mom if she had stayed at the other companies she worked for.

“SAS understands that your life doesn’t stop when you come to work,” Arney says. She’s in touch with her children during work days, can take them to the SAS medical center if they’re sick, receives e-mails with photos of what her children are doing during the day, and has a lunch date with her daughter every Thursday at the SAS cafeteria just steps away. “My children’s teachers are my co-workers,” Arney says. “They get the same benefits I do. Some of them have been here for 25 years.”

Ten years ago, the average age of employees at SAS was 30. Today it is 45. Consequently, SAS has refined its workplace programs, Mann says, adding more wellness and elder-care information and a listserv to help retirees stay in touch with one another.

Milton Moskowitz, co-founder of the Great Places to Work Institute and co-author of Fortune’s 100 Best Companies to Work For, says that great benefits are a symbol of how much a company cares about employees. But it’s the broader culture that sets SAS apart, he says. SAS, for example, maintains staff in all areas and doesn’t outsource. All employees—whether landscapers, food service workers or software engineers—are treated the same and have a vested interest in the company.

SAS faces more competition in recruiting employees as companies such as Google Inc. also offer a wide range of workplace benefits. Still, as a privately held company, SAS can provide employees with more security than public companies driven by quarterly results and stock prices.

Gareth Herschel, research director at Gartner Inc., has studied SAS and says the company is strong because it has always had a very clear focus and a very consistent management team.

“I asked the CEO, Jim Goodnight, a couple of years ago how he viewed his role in the company,” Herschel says. “He said, ‘The value of SAS walks out of the building at 5 every night. My job is to make sure they want to come back.’ He sees his people as his biggest asset. He views his job as supporting the needs of his people.”

“SAS is paternalistic,” Herschel continues. “Some people would find that disturbing, the kind of ‘Big Brother’-is-watching-you aspects—going to the company doctor, sending your kids to the company school.”

Until now, Herschel says SAS has been the 800-pound gorilla in the field of business analytics. But as new players emerge and competition intensifies, he believes the company eventually will be “more like one of the seven dwarfs.”

“Now that the market is changing, it will be a challenge for management to remain competitive,” Herschel says. He expects it to be “fascinating” to watch how the company changes when Goodnight is no longer running the show. Even if experienced leaders already are in charge when the boss is away, Herschel says, it’s “still like there’s a babysitter in charge. Everyone knows the parent is coming back.”

Now 66, Goodnight is spending more time away from the office on global projects. But he is not the kind of leader who has to micromanage, SAS’ Mann says. Company executives are already accustomed to being in charge and to understanding every facet of the organization. Succession planning isn’t an issue, she notes, adding simply, “At SAS, we grow organically.”

Workforce Management, October 2010, p. 37-38 -- Subscribe Now!