How SAS Became The World's Best Place To Work

CEO Jim Goodnight shares his philosophy for building a company that people are clamoring to work for and don't want to leave.

Trust men and they will be true to you; treat them greatly and they will show themselves great.—Emerson

Ahh-choo! If your phone is ringing off the hook these days with employees calling in sick, you should know that the outbreak of influenza that’s wreaking havoc across America will by no means prove as undermining to your organization’s productivity as the epidemic of employee dissatisfaction that took hold in business long before this flu season began.

How bad is it?

After checking the vital signs of U.S. workers late last year, prominent research organizations declared an outright crisis.

Specialists at the Conference Board calculated that over half the U.S. population now hates their job. And the diagnosis from Gallup is just as dire: Fewer than 3 in 10 workers admit to having their hearts in their jobs. This lack of employee engagement will cost business upwards of $300 billion this year alone.

What’s now fully understood is that traditional remedies to disengagement no longer are effective. Where once the promise of greater pay could quickly restore spirits, workers have grown more immune to its influence.

The common prognosis now is that employee satisfaction and commitment cannot be restored to full health until leaders adopt more supportive management practices. The cure lies in fundamentally changing how we lead people.

The question now is, how?

The Great Place to Work Institute in November named analytics software giant SAS as the world's best multinational workplace.

While it’s long been debated whether “happy” workers are indeed more engaged and productive than their discontented comrades, and whether organizations that invest themselves in more generous practices get rewarded with greater profitability, SAS’s performance provides irrefutable proof that it does. They’ve had 37 consecutive years of record earnings—$2.8 billion in 2012.

But dig well below the surface of generous perks and benefits that characterize SAS (and most other perennial “Best Companies To Work”), and you’ll discover its management team operates with uncommon philosophies, methods, and intentions.

They’ve discovered that feelings and emotions are the true drivers of employee loyalty, innovation, and productivity, and purposely have made workforce happiness one of their primary missions.

Just last week, I traveled to SAS’s American headquarters in Cary, N.C., where I spent the day with employees, senior managers, and the founder and CEO, Dr. Jim Goodnight. What I learned in my visit should prove invaluable to any CEO, senior leader, or workplace manager seeking to sustainably reinspire its people.

More than anything, SAS has found that by being an especially benevolent and respectful organization, they consistently produce the most optimal workplace performance. Their highly nontraditional insight is that workers instinctively and positively respond to an organization that routinely demonstrates that they matter and are individually valued.

This understanding alone could provide the antidote to this country’s long-enduring employee engagement ailment.

Here are four of the unique leadership values that have made SAS an especially great and productive place to work—across the globe:

Value People Above All Else
In the fall of 2008, at the onset of the Great Recession, SAS customers suddenly stopped buying its products. Fears of a long downturn influenced businesses to dramatically cut spending, and the entire analytics software industry was directly affected.

Several of SAS’s competitors soon announced massive layoffs, and SAS’s own workforce immediately grew worried that job cuts would be forthcoming in order to prop up the bottom line.

But in early January 2009, Goodnight held a global webcast and announced that none of its 13,000 worldwide employees would lose their job. He simply asked them all to be vigilant with spending and to help the firm endure the storm.

“By making it very clear that no one was going to be laid off,” Goodnight told me, “suddenly we cut out huge amounts of chatter, concern, and worry—and people got back to work.” What likely will be astonishing to many is that SAS had record profits in 2009 even though Goodnight was perfectly willing to let his then-33-year track record of increased profit come to an end.

At 70 years old, Goodnight holds the conviction that “what makes his organization work are the new ideas that come out of his employee’s brains.” He therefore holds his employees in the highest esteem. So while he fully anticipated that the recession would constrain the firm’s short-term revenues, he instinctively knew that his team would produce breakthrough products while his competitors were cutting costs.

And even four years later, his commitment to his people has paid off handsomely. Said Goodnight, “new stuff we’re rolling out this year is going to take the market by storm.”

To Give Is To Get
It’s widely known that SAS’s munificence toward its workers is virtually incomparable in business, with the exception of Google—an early emulator of SAS’s practices and now the best place to work in the U.S. for 2013.

SAS employees, and their families, have free access to a massive gymnasium featuring tennis and basketball courts, a weight room, and a heated pool. An on-site health care clinic, staffed by physicians, nutritionists, physical therapists, and psychologists also is entirely free. Deeply discounted child care is available, in addition to no-cost “work-life” counseling which helps employees more effectively manage the stresses of everyday life. And, of course, common work areas are routinely filled with snacks and treats.

If you’re at all inclined to judge the company’s generosity as either extravagant or unnecessary, SAS has reconfirmed what’s routinely forgotten in business: You reap what you sow.

Keeping in mind that SAS just as easily could give people more pay and forgo all the unique programs and benefits, Goodnight long ago figured out that perks are symbolic representations of how he and his company values its people. The whole assortment of benefits exists to constantly remind workers that they’re important and greatly matter to the success of the firm. According to Jack Poll, a 28-year SAS employee and director of recreation and employee services, “when people are treated as if they’re important and truly make a difference, their loyalty and engagement soar.”

It soars so high that the highly skilled and talented workers SAS needs to remain competitive and innovative rarely leave. The company experiences annual turnover in the range of 2-3% compared to an industry average of 22%. And monies the firm otherwise would spend on headhunters, training, and restoring lost productivity are effectively diverted to further enhancing the work-life experience of employees.

Tens of thousands of people apply for the few hundred openings available at SAS every year. “What this proves, said Poll, is that “people want a life with money, not money without a life.”

Trust Above All Things
The foundation of employee happiness at SAS, Goodnight believes, is its culture of trust. By ensuring that workers consistently respect the organization’s management, he knows that they will put forth their greatest commitment and contribution.

The company therefore goes to great lengths to measure worker sentiment, and engages the Great Place to Work Institute to independently evaluate the standing of its entire leadership team every year.

SAS workers are surveyed on the characteristics of trust proven to be most influential on engagement: open communication, respect from fellow employees, transparency into career-paths, and being treated as a human being.

To earn trust, the firm gives employees tremendous freedom on the hours they work and when they use any of the campus services. It’s not uncommon to see people in the gym long after the traditional lunch hour. Goodnight recently had his hair cut on campus at 3 in the afternoon.

“While we say we have a 35-hour workweek,” says CMO Jim Davis, “I don’t know anybody who really works 35 hours. The reality is if you trust people, and you ask them to do something—and you treat them like a human being as opposed to a commodity where you try to squeeze something out—they’re going to work all sorts of hours. But they’re going to enjoy those hours as opposed to ‘slaving in the office.’”

To earn a spot anywhere in management at SAS, you must first demonstrate a natural inclination to support and help people. The primary responsibility of its leaders is to facilitate the career success of other employees, not their own. Consistently, managers who display the greatest advocacy for others get rewarded with better and better assignments.

Ensure Employees Understand The Significance Of Their Work
The first time Goodnight programmed a computer, as a college junior at North Carolina State University, he found profound joy in the accomplishment. He knew he was developing software that other people would use and benefit from, and it gave him a terrific feeling.

In that moment, Goodnight intuited that everyone thrived on doing significant things, and from knowing their work had inherent value. And ever since, he’s seen it as his role to ensure his employees take great pride of ownership in all the work they do knowing “what they produce will be used all over the world, by people all over the world.”

Securing feelings of fulfillment and meaning through one’s work has become one of the most important ambitions of people in the 21st century, and SAS goes to great lengths to ensure employees understand how they make a difference.

Software programmers get to “own” the work they produce for as long as they’re employees of the firm. Knowing that customers likely will use what they create for a decade or more inspires people to fully invest themselves in the quality of all they do.

But Goodnight wants not just his programmers, but all SAS employees to know their work matters. Landscapers employed by the firm, for example, are given dedicated acreage to care for so they come to treat it as their own.

Why More Organizations Don’t Lead Like This
If it’s crossed your mind that how SAS manages is blatantly obvious on its effects to inspire human performance in the workplace, you likely are wondering why more organizations don’t get on board. A big part of the reason, it seems, is because SAS has an advantage that many Fortune 500 companies do not. It’s a privately held company and not influenced by the short-term objectives of shareholders.

But what Wall Street, and all of corporate America, should realize, is that SAS has proven the effects of a far more abundant leadership model—one that greatly rewards all constituents. Employees are made happier, more engaged, and produce exceptional work. Customers are more loyal because products have fewer bugs, and their contacts at the firm rarely change. But company ownership is, perhaps, the most richly rewarded. According to Forbes, Goodnight is now the 47th richest man in America, with an estimated net worth of $7.3 billion.

—Mark C. Crowley is the author of Lead From The Heart: Transformational Leadership For The 21st Century. Reach him on Twitter @markccrowley, Facebook, or his website, markccrowley.com.

[Image: Flickr user Daniel Ansel Tingcungco]

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14 Comments

  • Guest

    I'm sure some of the readers realize how much marketing/PR $$$ it takes to 'maintain' this rating. Obviously, SAS takes a lot of pride in this, and rightly so in order to be able to attract qualified professionals who might otherwise lean toward the west coast or part of the NE corridor, NY, Rte 128, etc. If only these philosophies were truly followed by his underlings, some of whom have been known to take liberties and manage by their own beliefs and bias'...

  • Mark C. Crowley

    In response to several questions I've received from readers, I'll reiterate that much of the leadership practices SAS employs are indeed adoptable. It's very much my belief that the wisest of Wall Street analysts soon will discover that organizations who manage more holistically return far more to investors. Focusing on short term earnings above all else, therefore, is inherently flawed.

  • Scott Seming

    Wonderful article. I wrote about SAS several years ago in my book The Brand Who Cried Wolf and talked about many of these employee engagement processes. They are truly a company to study and emulate.

  • Alik Must

    Privately held company! This is the root cause of success in combination with great personality. All those public companies are bragging about their incomes, and have to do everything to keep the bragging possible. Even killing people.

  • Chredon

    SAS had the opportunity to go public in the late '90s during the tech boom. It was hard to attract talent in those days without offering stock options. But Goodnight decided that he didn't want his company's success to be measured by how well SAS hit quarterly earnings targets that were set by Wall Street analysts. He also didn't want SAS to compromise quality and customer support in order to coddle shareholders.

    People who invest in tech companies should take note. Google was rated this year's Best Place to Work (SAS was #2). Both of these companies seeks to keep employees happy, and both of them are extremely profitable. While shareholders around the globe are screaming for companies to cut costs, reduce benefits, reduce headcount, and keep employees in fear of losing their jobs, companies that do just the opposite are more stable, more profitable, and more innovative.

  • BPS

    You hit the nail on the head; I have worked at multiple enterprise SW companies, and the quarterly beatings to hit earnings just wears on the employees; You can only take so much, hence a revolving door at most SW organizations.

  • Scott Smith

    The lack of Employee Engagement costing business upwards of $300 billion this year alone is a sobering thought and one that should cause any business owner to take action!

  • Steve Bannister

    A great article with a simple but powerful message for all leaders, the CEO "...holds his employees in the highest esteem..." and behaves accordingly.

  • Juan Gironella

    Outstanding article; you trully get motivated by the mere fact of reading it! As a business owner myself I believe in this philisophy, but it´s extremely hard to get to it. In the last couple of years we´ve focused our efforts on developing a different culture from peer market players and this has proven to be a success: we´ve made our HR policies and rewards sistem sort of a "Farmville" program, where according to the accomplishment of your objectives and exceeding your KPIs you unlock different "perks". Extremely valuable! we switched from an anual turnover of 45% on 2008 to 9% on 2012. Great article!

  • Peter Gruben

    Congratulations
    to SAS! Great outline how the leadership team facilitates and enables the best
    performance stage for its team. A good reminder that success is not magic or tweaked (that
    is called deception and repair). Probably far too simple for those that place
    focus on the wrong side of performance enablement?

    Thank you
    for sharing Mark!

     

  • Srini A

    Wonderful and inspiring article! It hammers home the point that "trust and not money is the currency of business and life".