Sas Case Study
In 1976, James Goodnight, John Sall, Anthony Barr, and Jane Helwig established SAS Institute, a privately owned software company headquartered in Detroit, Michigan. SAS prides itself in creating a utopian environment for its employees by offering unique benefits such as an on site gym, cafeteria, preschool, medical care, casual dress code, private offices, and flexible work hours.
These benefits have led to a less than 4% turnover rate for employees, which is well below the average for the competitive software industry.SAS believes it is providing an environment that frees its employees from outside distractions and will allow them to be as efficient and creative as possible. The focus is on teamwork where everybody is an equal and nobody is a stand out. Individuals who desire praise, promotion and status need not apply. However, when we take a closer look at the culture being generated, concerns begin to surface.
The environment SAS is creating could actually be detrimental and less innovative without additional intrinsic and extrinsic motivation and by changing the egalitarian workplace.Intrinsic motivation is based solely on the interest or enjoyment of the task itself, apart from any external incentives or forces. While the current environment at SAS is designed to eliminate outside forces and allow the employee to focus on his work, this does not meet the true definition of intrinsic motivation. We learn from the article “Motivating Creativity in Organizations,” that intrinsic motivation is maximized when an employee matches skills and experience with something they truly love to do. The article suggests that managers need to hire people that have a spark or passion for their work to take full dvantage of the creative process.
SAS recruits employees that have the skills and experience, but it can be argued that the spark could be missing. A spark is something usually found in top performers that excel and like to be awarded for excelling. We will emphasize later in our analysis on how SAS actively discourages this type of behavior in their organization to create a culture that is free of super stars. This is amplified when you look at the balance of power in the corporation, which tends to stay with Mr. Goodnight himself.Managers have very little power in this organization and this could effect how they see value in their contributions.
If they have very little input and their ideas are not realized, the passion for their work will most definitely suffer. In a research study involving college students and the art of making a collage, the results determined that there was noticeable difference in the amount of creativity exuded from individuals that perceived that an award was attainable upon completion of the assignment versus those individuals who were simply paid to complete the job.By completing a task as a means to an end creativity suffered, whereas creativity flourished where interest was highest. There is a lack of this perceived award within SAS, which could stifle the intrinsic motivation amongst its employees. Without performance reviews, individual bonuses, or praise, the intrinsic motivation naturally found in its workers will begin to diminish.
Extrinsic motivation is generated by receiving rewards such as money, fame, recognition, status, and other privileges based on employee performance.SAS is flawed because their philosophy lacks extrinsic motivation, which can negatively affect high performers and innovative thinkers. SAS typically pays out a 5. 5% to 8% bonus to all employees based on company performance and not individual performance. Furthermore, the sales staff’s compensation is 100% salary with no commission plan. No matter how well or poorly they do their job, their extrinsic benefit remains the same.
Is SAS really creating the best environment for individuals to excel and innovate, or are they just creating a complacent workplace with average workers?SAS does offer several extrinsic benefits such as the 5-8% bonus, 15% 401K contribution, on site gym, medical care, daycare and more. The issue here is that all these benefits are offered upfront with no performance needed to attain them. These benefits are an attractive perk at first, but after time they become expected. Instead of being a motivator, they become part of the perceived base compensation for just showing up and doing average work. SAS is incurring extra cost for what may be marginal production increases compared to a more traditional incentive program.
Furthermore, the company bonus program is based on a shared sales target, which only rewards the performance of the entire organization. With a shared goal there it is likely that people will underperform and shirk responsibilities under the assumption the slack will be picked up elsewhere. They will not work to their full potential costing SAS innovation, efficiency, and profits. SAS Institute’s objective of providing workers the tools to do their job and then giving them the freedom to accomplish it lacks the use of effective managerial tools like perceived external incentives.Attainable extrinsic rewards play a valuable role in providing an employee motivation in a task that they either do not enjoy, or their intrinsic motivation for the task is not sufficient to meet the company goals.
Status plays an important role in motivating employees and encouraging a healthy work environment. SAS operates on a theory of equality where everybody is considered equal and achievement goes somewhat unnoticed. Goodnight himself is quoted as saying, “All people are treated fairly and equally. ” While the concept of an egalitarian culture may seem favorable, the issue of fairness creates a motivational problem.Over performers or super stars have no advantage in a company like this. The harder they work and the more successful they are, the more they will feel under appreciated and ultimately their work will begin to decline.
In addition, SAS does not disclose and salary data in an effort to keep the motivation away from money and status and more on team and equality. If everybody is entitled to the same benefits, there will be no motivation to work beyond their own intrinsic motivation, which is variable from employee to employee.Lastly, the egalitarian culture at SAS inhibits career growth with its flat organizational structure and lack of performance reviews. There is no motivation to perform in hopes of achieving promotion or a raise. SAS states that most workers will have 3-4 careers in their lifetime and they would like all of them to be at SAS. They promote this through lateral movement in the company, which limits the opportunity for advancement.
According to Glassdoor. com, a website where employees review and rate their current employers, one of the repeated concerns is the inability to be promoted.As we know from Maslow’s hierarchy of needs, people’s motivation will change through time based on a change in needs. The longer they stay at SAS the more important their physiological needs (money and security) will become. The lost opportunity to fulfill these needs will continue to hamper motivation and results. In conclusion, it is evident that SAS Institute will most likely, if not already have some motivation issues, which will effect innovation and creativity.
They do a solid job of removing external obstacles with the benefits they provide employees, which allows intrinsic motivation to occur effectively.What is lacking is an additional incentive plan focused on external awards that are attainable based on individual performance. Combined with the perks offered to all employees, an attractive bonus paid to those that perform above and beyond will promote innovative behavior that will keep SAS competitive for the future. The bonus needs to be structured in a way that assures that the behavior rewarded is the behavior targeted by the company. Furthermore, SAS needs to provide recognition to its employees in the form of status.This can be done as simply as recognizing a job well done at company meetings or in a newsletter.
These recommendations do not solve the motivational issues stemming from lack of promotion in a flat organization, but it is a step towards providing both financial and status oriented incentives in a company that is burdened with complacency. In a competitive market like software, SAS can use these tools more effectively to keep talented workers who want to perform and utilize the innovation produced to remain a market leader.
