Question assignment case study harrahs entertainment inc rewarding our people

Assignment Case study: Harrah’s Entertainment,
Inc- Rewarding Our People
Name

Lucia Veronica Denis Senwayo

Student

2B4047

Number
Case Name

Harrah’s

Entertainment,

Inc:

Date

2014.11.10

Rewarding our people

1. What are the strengths and weakness of Harrah’s gain-sharing program?
Strengths
Harrah’s gain-sharing program allowed competitive mindset among employees and
improvements on costumer service. By introducing this program, employees could
understand that if they work hard, they would be rewarded, and could also feel they
were at the heart of the company.

Management bonuses were determined by multiple components: 25% based on
market share, 25% based on customer satisfaction, and 50% based on operating
income. This ensured that managers manage properly their department and thus,
allowing the company to gain market share.

Weakness


Raising service improvement levels was becoming harder and harder work. Some
employees tire of working hard and coming close to reward levels and then not
getting rewarded. E.g customer service metrics had increased positively but not to
levels that merited a payout at most properties.

Another weakness is that Operating income results do not affect costumer satisfaction
goals. If for example the company is registering losses in operating income, it might
require extra investment in incentive plan for employees and thus annulling the merit
of the program. So, the company improve in overall costumer services through the
gain-sharing program did not result in increasing bottom line for the organization.

In long-term the program may result in employee demotivation and high turnover.

2. What advice would you have for Winn about her recommendation to
Loveman?
I would recommend Winn to reevaluate the gain-sharing program.
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The incentive program should fit to the company Operating income. Whether
the company gets decrease/ increase in Operating income it should be
reflected in the incentive, thus, rewarding employees based on the return on
the investment. Otherwise, the company may reward employees even when

revenues are getting down.


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Harrah’s should ask feedback from employee about the effectiveness of the
program and find out what motivates and excites their employees just as they
have done with their customers. So, based on the results, if necessary, Marilyn
should recommend to management that they start to value their employees

•
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with the same regard that they do their customers.
The company should introduce reward for individual performance
For long-term benefit, the company should enrich employee growth
opportunity, so that the success rate will be higher and have a much longer-

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term effect on employee’ attitudes.
Marilyn Winn should bring an understanding of human behavior and

motivators.
3. How has Harrah’s aligned its human resource practices with its strategy?
How well (or not) do you think they conducted is alignment work?

Harrah human resource focus on employee evolvement has a source of low turnover
and increase motivation. This would be achieved by:
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First, finding people appropriate for the job – Harrah’s has focused on

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recruiting the most qualified candidates.
Second, the socialization process around bringing new employees into the
company – This initiative focused on pre-90-day turnover, “quick quits”, that
allowed new entry employees to move to a different role if they are unhappy


with their current roles, enhance interaction with Human Resources and
functional mangers, to analyze and validate commitment. So, through

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communication with new employees, they could lower turnover.
Third, the long-term maintenance of employee motivation and performance –
Gain-sharing program was introduced to improve costumer satisfaction, as a
result, employee would reward for improving costumer service.

Satisfied employees tend to provide high quality service, and it would result in
satisfied costumer and finally brings costumer loyalty. Has Winn stated: “I cant
deliver great costumer service unless I have a stable workforce. You need to get
our people to stay with us”. So, prioritizing low turnover was a key strategy for
sustainable growth, but there were no guarantee of long term benefit Gain-sharing
program, since it was difficult to be achieved and it may lead to employee
demotivation in future.
This article is a case study of hiring policies and reward system at Harrah’s Entertainment.
Harrah’s want to install an incentive pay plan that instill competitive spirit in the employees and

competing against rival casinos as well as their own past records. I think it is an excellent
benchmark to start the project. Also, I am impressed with the efforts of Harrah’s in converting the
product based company to marketing based company. They brought new experts in database
marketing from other industries; they introduced Total Rewards program that helps to understand
customer preferences.


It is not surprising to know that the long-term managers and employees felt entitled to be employed
in Harrah’s regardless of their performance. This was the big challenge to Phil Satre when he took
over the company as the president. He wanted to replace the institutional priorities of long-term
tenure and employee happiness with ideals of excellence and customer satisfaction. This does not
mean that Satre threw the employees under the bus. He brought a new human resources manager,
Winn, who is familiar with field operations. He hired Gary Loveman, who is very familiar with
Harrah’s operation, as a new Chief Operating Officer. New hiring philosophies were introduced.
Instead of hiring a person who meet the job requirement, Harrah’s want to hire the best person for
that particular position. I am pretty sure that can be accomplished only with higher pay and
rewards.
I understand that it is not easy to satisfy casino customers who, in most of the cases, lose money. It
is the establishment’s responsibility to make the customers happy by providing valuable experience
so that they will come back again. Loveman and Winn worked hard to train their employees to
provide such an experience. Loveman introduced gain sharing program where employees were
rewarded for improving customer service regardless of the improvement of operating income.
Managers used to be awarded solely based on the improvement in the operating income. Loveman
changed that structure. Now, Customer satisfaction determines 25 % of the bonuses.
It is interesting to know the regulations in the casino industry. If an employee handshake a
customer, that employee has to raise his/her hand, pull the sleeves and show the hands to the
cameras installed at the ceilings. This procedure is followed to make sure that the employee did not
get any bribe. But the negative part is that employees were hesitant to hand shake with the
customers.