The SAS case began with Jim Goodnight questioning whether SAS could and should keep its current culture and system of benefits and compensation. And, by doing this would they be able to sustain their competitive advantage. The unequivocal answer is YES! All this being said, the question that Jim Goodnight should be asking himself is: will the company be able to continue its culture and system of compensation and benefits when he retires and/or leaves the company?
A comparison to the Nordstrom case: While both Nordstrom and SAS have a people competitive advantage, it is SAS and not Nordstrom that really values their people. This is evidenced by their different (perceived) philosophies to business—while both companies are in business to make money…it seems that Nordstrom’s only motivation to highly compensate its employees is so that it can maximize revenue. SAS on the other hand focuses on making SAS a great place to work—by intrinsically and extrinsically motivating its staff—with the understanding that great revenue and customer sustainability will follow. As such, it is no surprise that Nordstrom’s compensation seems to have more punitive than positive elements to it. The compensation and other benefits at SAS are the direct opposite.
The SAS compensation and benefits system include some really great perks such as:
- Paying everyone the competitive wage for the job they are doing
- Annual bonuses: 5 ½ to 8% of salary—and the bonus eligibility requirements for each employee is done quarterly rather than just annually
- The company making all the retirement contributions (to the max allowable by the IRS), They say a raise is just a raise 30 days, after that it’s just someone’s salary
- Onsite medical facility and care, Montessori-level child care, $5 massages, a subsidized cafeteria, a free gymnasium—and while these services are provided on the main campus in NC, they also strive to provide as much of these services at their other campuses
Another big difference between Nordstrom and SAS is their approach to revenue. While both companies are focused on making money, each company approaches revenue in a different manner. Nordstrom’s core value when it comes to selling is achieving the highest dollar amount for each sale. SAS, on the other hand, values getting more customers in the door and retaining these customers—they expect to maximize the revenue of each customer in the long-term, through cross selling and up selling products to them a later date.
Another interesting approach that SAS took was to do away with their annual performance review system; managers instead just providing consistent feedback (at least three times a year) to employees. And, the culture of relying on internal locus’ of control reinforces that.
Based on my comments, I am sure it is clear that I would love to work for this company. I believe that SAS should continue to do what it is doing. Unless the industry they work in collapses, the company should continue to enjoy a competitive advantage. My only concern for the company is: are the company’s systems of compensation and benefits strong enough to withstand the departure of its biggest champion—Jim Goodnight?