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Under Pressure

Uh oh. One of my favorite companies, the SAS Institute, is under increasing pressure from big, deep pocketed rivals. This NY Times article, Rivals Take Aim at the Software Company SAS – NYTimes.com, elaborates on the details. Since I’m confident that they’ll overcome the competitive threat, that’s not what this post is about. It’s about what the SAS leadership, led by founder, CEO, and PHOR, Jim Goodnight, does to continuously grow and develop both the company and its people. Here are some snippets from the article and this linked-to 60 minutes article that reinforce my faith in the company’s ability to overcome all odds:

There is the subsidized day care and preschool. There are the four company doctors and the dozen nurses who provide free primary care. The recreational amenities include basketball and racquetball courts, a swimming pool, exercise rooms and 40 miles of running and biking trails. There is a meditation garden, as well as on-site haircuts, manicures, and jewelry repair. Employees are encouraged to work 35-hour weeks.

The office atmosphere is sedate. There are no dogs roaming the halls, no Nerf-ball fights, no one jumping on trampolines — no whiff of Silicon Valley. The SAS culture is engineered for its own logic: to reduce distractions and stress, and thus foster creativity.

Employee turnover at SAS averages 4 percent a year, versus about 20 percent for the overall software industry.

SAS has never had a losing year and never laid off a single employee.

“No, we’re not altruistic by any stretch of the imagination. This is a for-profit business and we do all these things because it makes good business sense,” says Jeff Chambers, director of human resources at SAS.

“You know, I guess 95 percent of my assets drive out the front gate every evening,” says Goodnight. “It’s my job to bring them back.”

Academics have studied the company’s benefit-enhanced corporate culture as a model for nurturing creativity and loyalty among engineers and other workers.

SAS invested heavily in research and development, and even today allocates 22 percent of the company’s revenue to research. The formula has paid off in steady growth, year after year. Revenue reached $2.26 billion in 2008, up from $1.34 billion five years earlier.

Unlike many other tech companies, SAS has had no recession-related layoffs this year. “I’ve got a two-year pipeline of projects in R & D,” Mr. Goodnight says. “Why would I lay anyone off?”

Mr. Goodnight recalls those days as a brief period of New Economy surrealism, and going public as a path wisely avoided. SAS, he says, is a culture averse to the short-term pressures of Wall Street, which he characterizes as “a bunch of 28-year-olds, hunched over spreadsheets, trying to tell you how to run your business.”

Goodnight says it’s pressure from Wall Street to please shareholders by delivering rising quarterly earnings that has poisoned the corporate well.

Mr. Goodnight, though 66, has no plans to retire himself. His fingerprints, colleagues say, remain all over the business, especially in meeting with customers and in overseeing research.

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  1. February 17, 2010 at 1:07 am

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