Paper 2-Are the expenses justified at SAS?


Jim Goodnight, SAS CEO
(Source: Bloomsburg Businessweek)

Intro: A state of the art gym, masseuse, car detailer, pool tables, golf course, tennis courts, and day-care all at work…I wouldn’t complain. The software company SAS knows how to treat its employees. Rated #1 best company to work for in 2010 and 2011 by Forbes, SAS wants its employees to be happy, healthy, and the most productive that they can be (Kaplan). To achieve this, the SAS campus in Cary, North Carolina, offers a vast array of amenities to its employees, from an on-site doctors office to a work-life center that helps employees manage financial debt and home life. The company emphasizes an environment that fosters creativity. To aid this, SAS implements many tactics, including a no dress code policy and encouragement to use the many facilities at any time during the day.  CEO Jim Goodnight has the right idea when taking into account his employees and SAS boasts the fact that it has never laid off an employee. One employee even remarks that he would not leave SAS even if someone offered him double his salary (World’s Best Employer). In addition to treating its employees right, SAS is also committed to making the world a greener, more sustainable place to live in. Overall, SAS spends millions each year to keep its employees happy and productive.

SAS History: SAS is a company that develops software solutions and analytics to other businesses. SAS was developed at North Carolina State University, initially as a project to analyze agricultural data. The company was founded in 1976 as SAS Institute (SAS stands for “Statistical Analysis System”).  Jim Barr and Jim Goodnight worked as a team to found and lead SAS and soon the company’s software became licensed in many fields, from pharmaceutical to banking industries. The software turns raw data from companies into useful information to aid companies to better their business processes (SAS website).

SAS’s benevolent treatment of its employees started early on by recognizing the value of its employees. With a motto of “every job is everyone’s job,” the employees at SAS were initially set apart from the rest. “When a shipment of users manuals arrived, everyone stopped what they were doing and formed a human chain to hoist each box, person to person, to storage space on the second floor. Anyone within reach was enlisted to pack boxes to ship the documentation to users” This shows how SAS wanted to treat all employees equally and not value certain jobs and positions over others (SAS website). Additionally, Goodnight would take employees down the street for pizza every time the company gained another 100 customers. Soon, SAS began offering free M&Ms to employees, which later became the company’s trademark in SAS offices worldwide.

By 1980, SAS continued to grow quickly and the company moved to its current headquarters in Cary, North Carolina. As the company grew, so did the software business and technology. SAS was quick to adapt the new changes in technology and therefore it stayed ahead of the game by creating software that could run across all types of platforms. In 1981, SAS opened its first day care in Cary, North Carolina, to entice new mothers to come back to work. Soon after, an on-site fitness center, health center, and gourmet café were also added to the campus to serve employee’s needs. These were somewhat revolutionary ideas at the time but SAS was convinced that these amenities were investments in better work from employees. The company continued to grow rapidly in the 1990s and 2000s, especially since software became increasingly crucial for all types of businesses. SAS has always stayed in the private sector of business and is still private today.

SAS Today: SAS has been rated “Best company to work for” by Forbes two years in a row  in 2010 and 2011 (Kaplan). Ever since its beginnings in Cary, North Carolina, the employee benefits and amenities have been growing. There is a 66,000 square foot recreation center where employees can get weekly massages or play pool. They have a state of the art gymnasium and fitness center, which includes an Olympic sized swimming pool, daily fitness classes, and sauna. They also have a campus barber and manicurist. The golf course on campus offers a discounted membership to SAS employees for 10% of its commercial membership price of $30,000. The on-site health center offers doctors, cooking lessons, and therapists. Most of these offerings are free to employees or offered at an extremely discounted price and are designed to keep employees relaxed and happy, as well as to save time. Google, another company known for its relaxed atmosphere and impressive amenities, used SAS as a model when designing its company headquarters (Kaplan).

SAS is a leader in environmental sustainability in businesses and has implemented many new environmentally friendly practices. For example, there are 2 solar farms on the SAS campus in Cary. These solar farms, which are large fields full of solar panels, lower CO2 emissions by 1600 tons annually and collectively generate 3.6 million kilowatt hours of clean and renewable energy (SAS website). To cut the grass underneath the panels in the field, SAS uses sheep that eat the grass instead of a gas-emitting lawn mower. SAS has also installed a system that captures the renewable energy from the elevators. This works by capturing the energy that the elevator develops when going down, which is then transferred to power computer modems and desktops at the company. Other environmentally friend features at SAS include solar thermal systems that provide hot water for the campus and the new building being constructed that follows green building guidelines (Corporate Sustainability video).

Jim Goodnight, current CEO and founder of SAS, says “My chief assets drive out the gate every day. My job is to make sure they come back,” (Kaplan). Goodnight argues that it is important for employees to feel valued, as they are at SAS, because it makes them more productive, invested, and exceed expectations. Keith Collins, Senior Vice President and Chief Technology Officer for SAS, comments on this by saying, “Treating employees with respect fosters the environment of innovation and creativity that surfaces in our products and distinguishes us to our customers” (SAS Computerworld 2012). This company value model, which is based on trust, shows how SAS values the relationship between all of its employees.

Application of Ethics: Is the cost for all of these employee benefits at SAS justified? Jim Goodnight seems to think so, but on what basis can one justify these costly expenses? John Rawls would argue that these expensive amenities are worth the cost because they are closing the gap between productivity and compensation. Rawls said that to account for any discrepancies, we need to either modify the account of the initial situation or revise our existing judgment. In this situation we can view these discrepancies as the gap between productivity and compensation. Therefore, we need to re-define productivity or compensation in order for the two to be in equilibrium once again. SAS redefines compensation by increasing employee benefits not in the form of wages but by shared benefits and offerings. This increase in compensation to meet productivity exemplifies Rawl’s idea of reflective equilibrium. “It is an equilibrium because at last our principals and judgments coincide,” and therefore the variables are in balance once again (Rawls). Justification is a matter of mutual support of many considerations, meaning that everyone involved must support the new definition of productivity and compensation. If this support is met, then the re-definition is justified.

Rawls also addresses the cost of the employee benefits in terms of utility for society. Utilitarianism, an idea introduced by philosopher John Stuart Mill, is to maximize happiness and pleasure while minimizing pain. It also states that the moral worth of actions is determined by the outcome of the action, and actions are right if the consequences of the actions are beneficial (Mill). Rawls discusses this idea of utilitarianism in terms of utility for society, which means that utility for society should be maximized and evenly distributed and that the well being of society relies on the fulfillment of desires of the individuals in the society. This can be applied to SAS in that SAS tries to accomplish the overall well-being of its employees by offering its employees many benefits and fulfilling employee needs and desires. Therefore, the monetary cost of all of the elaborate employee benefits is justified because SAS is achieving company-wide utility, which is evenly distributed.

Although the costs of SAS employee perks seem justified in terms of utilitarianism when viewing the company as a micro-society, it does not necessarily mean that SAS’s model is the best solution for all of society. SAS is still a privately held company, which means people outside the company do not have the option to invest in or gain from the company’s success. Why hasn’t SAS gone public, when it could lead to Goodnight becoming one of the richest men in America, as well bring in billions in liquidity to the company and make many of its employees into millionaires? The short answer is that CEO Jim Goodnight does not want to go public because he likes being private. “I don’t have to worry about pressure from the board about being fired if I don’t improve earnings,” Goodnight explains (World’s Best Employer). Also, Goodnight does not want to be associated with the other public CEOs who feel the need to lie and cheat for their companies. He sees SAS as a sanctuary from all of the craziness and unreliability of the public markets (Kaplan). Goodnight does not feel that he needs to take SAS public to prove the success of the company. If there is no board of directors or shareholders to answer to, then Friedman’s shareholder theory need not apply and Goodnight can use the company profits and resources however he pleases. SAS exemplifies the fact that some companies today are choosing not to go public when offered the opportunity. Is America giving up on the public corporation? According to a NPR Planet Money podcast, many innovative start-ups no longer strive to become public (The Cool Kids Don’t Want To Go Public). Instead, these companies aim to be bought out and the money from a private investment. Going public used to be an inevitable part of the process for a successful company, but now many companies don’t want to take the risks, such as following in the footsteps of Facebook’s disappointing IPO. If fewer companies decide to go public, less people can share ownership in a company and buy into a part of the American dream. Another negative ramification of this is that companies may be less motivated to dream big and come out with new innovations if they do not go public. The podcast poses the question that if Steve Jobs wanted to just get bought out by IBM or Microsoft, would he have dreamed so big? Rawls would say that staying private does not give maximum utility for society that is evenly distributed, as other people cannot contribute and buy into a company. SAS may think that it is offering the best it possibly can for its employees but it might not be doing the best for American society in the long term.

 

Bibliography

“The Compensation-productivity Gap.” U.S. Bureau of Labor Statistics. United States Department of Labor, 24 Feb. 2011. Web. 10 Nov. 2012. <http://www.bls.gov/opub/ted/2011/ted_20110224.htm&gt;.

“The Cool Kids Don’t Want To Go Public.” Planet Money. NPR, 26 June 2012. Web. 10 Nov. 2012. <http://www.npr.org/blogs/money/2012/06/26/155794582/episode-382-the-cool-kids-dont-want-to-go-public&gt;.

 “Corporate Sustainability Video: SAS Goes Intelligently Green.” YouTube. SAS, 06 May 2010. Web. 10 Nov. 2012. <http://www.youtube.com/watch?v=n-4GsQr6_ss&gt;.

Kaplan, David. “SAS: A New No. 1 Best Employer.” CNNMoney. Cable News Network, 21 Jan. 2010. Web. 10 Nov. 2012. <http://money.cnn.com/2010/01/21/technology/sas_best_companies.fortune/&gt;.

Mill, John Stuart. Utilitarianism, Liberty, and Representative Government. London: J.M. Dent, 1914. Print.

Rawls, John. Theory of Justice. Cambridge, MA: Belknap of Harvard UP, 1971. Print.

“SAS on Computerworld 2012 Best Places to Work in IT List.” Business Wire. N.p., 18 June 2012. Web. 10 Nov. 2012. <http://www.businesswire.com/news/home/20120618005163/en/SAS-Computerworld-2012-Places-Work-List&gt;.

“SAS website” SAS | Business Analytics and Business Intelligence Software. N.p., n.d. Web. 10 Nov. 2012. <http://www.sas.com/&gt;.

“World’s Best Employer, SAS – Part 1.” YouTube. 60 Minutes, 15 Sept. 2007. Web. 10 Nov. 2012. <http://www.youtube.com/watch?v=N-ebIGpZIWI&gt;.

“World’s Best Employer, SAS – Part 2.” YouTube. 60 Minutes, 15 Sept. 2007. Web. 10 Nov. 2012. <http://www.youtube.com/watch?v=9SCxJTmS1Eo&feature=relmfu&gt;.

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