SAS Institute A Different Approach To Incentives And People Management Practices In The Software Industry Case Solution

1. Part A: Memo to CEO Jim Goodnight

SAS is one of the few companies in the software’s industry that follows best human resource practices and has an excellent customer retention rate. As the company has grown enormously in the past and made gigantic profits, it has reached a point where management and decision makers of the company have to make a wise decision to keep going as a privately owned company or become a public limited company. With a company making massive profits over the years, and enjoying the excellent reputation in its target audience, it is time for the company to analyze its key strengths and weaknesses. Why does SAS want to go public?

As a private limited company, SAS offers best customer solutions and support, with excellent customer retention rate of 98%. The company follows the best HR policies and practices and believes in maintaining relations based on trust and mutual respect. SAS currently is the only company that has successfully managed to enhance the employee’s productivity and performance and has the lowest turnover rate in the industry. The company is also contributing in welfare projects by helping building school and has a vision to educate people through technology. The company simply has the best business model and culture. SAS strongly believes in “happy employee, happy customer” culture. If, they disturb that balance, they run the risk of disturbing the whole business model." Coming towards the financial position and status, SAS hit the $1billion revenue in 1999 and was the largest privately owned company. Moreover, with most of the companies firing employees in the industry, SAS hired the employees, which reflects the strong financial position of the company. Now, while enjoying the best working conditions, why SAS should go public?

I believe that if the company goes public at the right place and the right time, it is the best deal for the company. The company also follows best HR policies and practices, as the employee’s performance and productivity are extremely good, so by going public company can offer its share to the employees as well, so that they can become part of the organization. Furthermore, SAS needs to make its image and marketing brand. That can be possible by going public as it will draw media attention and exposure, so people will know more about the company. Also, the company can raise a lot of capital by going public only a small fraction of the company.

However, there is a cost associated if the company wants to become a public limited company. First thing is the legal fee, which is required to register the company as a public limited company. Then the company will have to update its financial reporting system to reflect the true financial position to the public. Then, the most notable thing is that they need to change the way they do business, with their customers. After going public, they cannot make every thing public, and they need to be extremely careful about the information they want to share with customers.