Dear Colleague,

In December Gatti & Associates, Rita B. Allen Associates and Northeastern University’s College of Business Administration and Office of Corporate Partnerships hosted the annual Executive Breakfast Forum “Best Companies – Best Practices – Keeping the Competitive Edge.” As usual it was extremely informative.

Both Boston-based Liberty Mutual, a leading global multi-line group of insurance companies, and SAS Institute headquartered in North Carolina, the market leader in business intelligence software services and member of Fortune 100’s Best Companies to Work For Hall of Fame, recognize that their people practices are among the most critical elements necessary for them to retain their leadership positions in their industries. Presenting for Liberty Mutual were Helen Sayles, Senior Vice President and Manager, Human Resources and Administration and Gary Gregg, President, Agency Markets. Representing SAS Institute was Jeff Chambers, Vice President, Human Resources. The focus of this year’s forum was
on the rewards and recognition aspect of their businesses.

Liberty Mutual is a $19.6 billion organization with 39,000 employees in 900 offices in 17 countries. They are the sixth largest property and casualty company in the United States . Due to the changing landscape of the insurance industry and deregulation in the early 80’s, Liberty Mutual realized that, to gain and keep a competitive edge, they would have to change their business model and the way they retained and rewarded employees. After decentralizing functions, consolidating into four major business units with dozens of P&L’s, granting local decision making authority, they came up with a Pay for Performance model that has decreased turnover and increased company and employee growth. In the short term, Liberty Mutual re-evaluated their compensation programs, brought their pay scales
up to market level and developed clear communications for this process. In the long-term, they restructured the process to drive performance based pay. This phased-in process had
a tremendous impact – it meant that higher performance leads to higher pay, that performance objectives are aligned with business goals and that Liberty could attract top candidates and retain top performers. Interestingly revenues have increased from $12.3 billion in 2000 to $19.6 billion in 2004!

SAS Institute, the business behind the benefits, is a $1.5 billion global organization with 9,000 employees in 51 countries having started just 29 years ago. Every year has seen double-digit revenue growth with no debt. SAS Institute has 4.5 million users with a customer bases in financial services, manufacturing, life sciences, to name a few. Their business model has three facets: unchanging business values; creating long term relationships with customers, suppliers and employees and attracting and retaining the best talent. SAS Institute’s employee model also has three facets: long-term commitment, investing in employee satisfaction and low turnover. They treat their employees like they treat their customer, which results in increased revenue growth. The company has a long and rigorous interview process to ensure that they hire the right person to fit their unique challenges and culture. SAS Institute’s three biggest investments at their corporate headquarters: on site day care, on site health care (saving over $1-million a year) and on site recreation and fitness for families and domestic partners. These perquisites have created a tremendous amount of loyalty. Voluntary turnover last year was 3%, which saves over $70 million in replacement costs alone. Their investment in R&D is huge and also plays a big part in loyalty as well. Technology employees have a strong desire to work with the latest technology. SAS demonstrates their commitment to clients and employees by a work/life balance infrastructure, which helps perpetuate long-term commitments software.

The morning session, as usual, ended with a lively question and answer period, moderated by Len Glick of Northeastern. Other participants from the University included Tom Moore, Fred Hoskins, David Abdow and Marian Stanley. This was the fourth annual Executive Forum.