As we have seen along the case, SAS employees get the average salaries for the Software Industry. The Base salaries are competitive and are adjusted regularly. SAS gives merit increases once a year based on supervisor´s evaluation of the employees’ performance. Also, the company contributes maximum permitted by Internal Revenue Service Regulations , 15% into employees’ profit sharing retirement plans.
SAS Institute gives Bonus based in part on the company´s financial performance (51/2% to 8%). The Bonus, similar to merit increases, are also based on the feelings of managers need to give it. Each manager gives a report that will be used to compute the total bonus for each employee at the end of the year. Give bonus based on feelings is not the best way to assign them; a better way is when they are determined as a percentage of annual salary. Bonuses are a way that companies can more directly reward outstanding achievement .
SAS Institute don´t offers stock options because Goodnight referred to them as Ponzi Schemes (fraudulent investment operations). The company doesn´t give any sales commission to sales force because they assure that do not encourage taking care of the customer and building-long term relationships. They prefer to use sales targets to keep score and help focus behavior. SAS doesn´t have incentive plans, they just tell people what they want them to do and what they expect of them. Now-a-days big and important companies offer incentive packages to their employees. This is a way of showing approval and creates a sense of participation of the employee in the company. A well-made incentive-pay plan can help pull people together in the direction you want them to go .
With this compensation system SAS Institute is looking to deemphasize financial incentives as a source of motivation.
Oracle, which is one of the direct competitors of SAS Institute, has a compensation system totally different and more similar to the rest of the industry. The Base...