Compensation Management

Analyse the case given below and answer the questions in your own words analytically:

SAS Pvt Ltd is probably the least-well known major software company, in India. The company makes statistical analysis software (hence the acronym SAS). And the company is growing very rapidly from 1900 employees five years ago, it now has 5400 employees. But SAS is not your typical software company. It is not your typical ‘anything’ company.

At its headquarters, just outside Bangalore, there is a 36,000 square-foot gym for employees. There is a full-length basketball court, pool tables, a private sky-lighted yoga room and workout areas. Outside, there are soccer and cricket fields. Massages are available several times a week and classes are offered in dance and tennis. The company also operates the largest day-care facility in India. To encourage families to eat lunch together, the SAS cafeteria supplies baby seats and high chairs. To encourage families to eat dinner together, the company has a seven-hour work day, five days a week. Unlike many work-obsessive software firms, most SAS employees leave the office by 5pm. Management likes to call its work place culture “relaxed”.

The list of employee amenities at SAS goes on and on. Unlimited tea, coffee and juice. One week paid vacation during Diwali. An on-site health clinic staffed with six nurses and two doctors. Zero cost to employees for health insurance. Casual dress everyday.

Is this any way to run a business? Management thinks so. SAS’s strategy is to make it impossible for people not to do their work. Even though the company provides no stock option plans and salaries no better than the competition, the company has built an unbelievably loyal workforce. Whereas competitors typically have turnover rates above 30 percent, SAS’s rate has never been higher than 5 percent. Management claims that it saves Rs. 75 lakhs a year just in employee replacement-related costs such as recruitment, interviews, moving costs for new hires and lost work time.

Just in case any one wonders if the company makes any money, we’ll add the following. SAS is owned by just two people – Rahul Sharma and Deepak Ahuja. They were recently listed as being in the top 100 richest people in India.

Questions:

1)      List the important facts in the case. (5 marks)

2)      Are progressive HR practices like those at SAS,  a cause or a result of high profits? Discuss (5 marks)

3)      What possible problems could the management at SAS face (from employees) due to the benefits offered? (5 marks)

4)      If you are appointed as the HR manager at SAS, what changes would you recommend in the compensation structure? (5 marks)

(Case Study of Human Resource Management November 2005)