2002 annual report Increased customer satisfaction & employee morale Employee turnover went down from 70% to under 50% in one year Encouraged working together & team building Gainsharing
Trang 1HBS: Harrah’s Entertainment, Inc- Rewarding Our People
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
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1937, Harrah’s Inc was founded by William F Harrah at Reno, Nevada
1971, Harrah’s Inc went public
1980, Harrah’s Inc was acquired by Holiday Inn
Trang 21990, Holiday Inn Hotel business was acquired by Bass PLC and The Promus Companies was formed
1991, The Promus company's headquarters was moved from Reno to Memphis, Tennessee
1995, the company was renamed to Harrah's Entertainment, Inc as a spin off
1999, Harrah's Entertainment, Inc moved its headquarters from Memphis, Tennessee to Las Vegas
2005, Harrah's completed the takeover of Caesars Entertainment, Inc
2008, delisted and taken by Hamlet Holdings2010, renamed to Caesars Entertainment Corp
http://en.wikipedia.org/wiki/Caesars_Entertainment_Corporation
Incentive Program
Bryan Ashline
Linda Larsen
Nathan Phillips Stacey Papanikos
Phoebe Stonbely Fadong Yan
Introduction
1 History
2 Background
3 HR strategy
4 Strengths
5 Weaknesses
6 Recommendations
7 Conclusion
History
Headquarter: Las Vegas, Nevada
Employees: over 85,000
70’s: Bill Harrah’s era Harrah was particular about the condition of the properties
Mid 80s, Satre took over as president They did not want to share information across
properties
1997: Operation strategy change from product-based company to marketing based company 1998: Average turnover rate of 45%
2001: Struggling economy after 9/11 disaster
Background
Financial
Trang 32002 Harrah’s shareholder report
Summary of Property Information
Harrah’s Entertainment Inc 2002 annual report
Executives
Harrah’s
Entertainment
Inc 2002 annual report
Increased customer satisfaction & employee morale
Employee turnover went down from 70% to under 50% in one year
Encouraged working together & team building
Gainsharing payout would be paid regardless of the operating income results
Strengths of Gain Sharing Program
Who is actually taking the Targeted Player Satisfaction Survey (TPSS)?
Surveys are more often taken by un-happy customers
How was individual level of performance measured?
Bias by management is likely
No absolute level to reach, solely based on percentage increase
$200 not a huge motivator for employees
Particularly those with a higher pay
Will employees continue to have interest in the program if payouts do not increase? Mixed opinions/acceptance of program
High cost to organization -$16 Million in 2 ½ years
Benefit?
Did not translate to improved company profits
Weaknesses of Gain Sharing Program
In order to align with the organization’s differentiation strategy, Harrah’s must provide superior customer service to distinguish itself from competitors
Goals:
Improve customer service
Reduce turnover
Achieve financial goals
Trang 4Reward employees
Recommendation
Question
What types of incentive plans do you think would best help Harrah's reach it’s organizational goals?
Invest in human capital
Motivate employees
Create new incentive plan
Recognize employee contributions
Solutions
$200 Customer Satisfaction Payout is not an effective motivator
$16 million too costly to Harrah’s bottom line
Does not reward employees for maintaining excellent customer service; only rewards for converting non A grades to A’s
Low valence
Eliminate Gain Sharing Program
Recommendation
Harrah's Gain Sharing Program
HR Strategy
Marketing-Based Company
Large Size
Mature Stage
Formal/Hierarchy Culture
Job Security & Distributive Justice
Economic Recession
Post 9/11 Travel Impact
High Competition
Industry Regulations
EEO Requirements
OrganizationalDemands
Environmental & Regulatory Issues
HR Challenges
Differentiation Strategy
- Customer Service Driven
Trang 5- Harrah’s Total Rewards
-“Home Away From Home”
Employees Critical to Success
- High Level of Customer Contact
- Need Stable Workforce
- Build Competitive Culture
- On-Going Improvement
Refocused Organizational Strategy
1 Compensation & Benefits
Goals/Incentives
2 Property Products & Services
Training & Assessment
Reduce Turnover
3 Executive Search & Leadership Development
Functional vs Industry Knowledge
Internal Promotion/Development
Tripod Structure
Winn’s HR Plan
Strategy Execution
- Recruitment & Selection
Knowledge Based Exams
Better Interview Process
Realistic Job Preview
- On-Boarding Process
Eliminate “Quick Quits”
Support New Hires
Development & Training
Lower Turnover
Build Competition
- Goal/Incentive Programs
Challenge, Motivate, Reward
- Gain-Sharing Program (Customer Service Improvement) Show Commitment/Loyalty
Trang 6- Specialized Training Opportunities
Customer Service
Two Days, On-Site, Paid
- No Layoffs
Competitors Reducing Staff
Profit Sharing
Stock Options
Encourages collaboration and teamwork among employees
Controls labor costs
Aligns employee contributions with the goals of the entire organization
Profits are important!
Introduce Profit Sharing Plan
Based 50% on customer satisfaction and 50% on length of employment
Does not require the reinvention and implementation of a new performance management system
Too costly and time consuming
Recognized by cash payouts at company BBQ
Profit Sharing Plan for Non-managerial Employees
Non-managerial Employee Performance Evaluation
Examples of Payouts
Mary has been employed at Harrah’s for 6 years and received an A on her customer
satisfaction survey (TPSS) = 100% of profit sharing payout
Joe has been employed at Harrah’s for 7 years and received a B on his customer satisfaction survey (TPSS) = 75% of profit sharing payout
Jane has been employed at Harrah’s for 9 months and received an A on her customer
satisfaction survey (TPSS) = 10% of profit sharing payout
Mike has been employed at Harrah’s for 10 years and received an D on his customer
satisfaction survey (TPSS) = 25% of profit sharing payout
Profit Sharing for Managerial Employees
Based on 3 components:
25% Multi-Source Feedback
25% Length of employment
50% Operating Income
Allows for comprehensive and accurate evaluation of managers
Trang 7Rewards for longevity
Rewards teamwork
Managerial Employee Performance Evaluation
Breakdown of Managerial Performance Evaluation
Multi-Source Feedback Evaluation
Question
What are the advantages and disadvantages of this profit sharing plan?
Increases committment of employees
Provides incentive in years of no profit
Allows employees to buy and sell shares for 1 year and realize gain immediately
Price of share based on performance and length of employment
Capped at 35%
Introduce Stock Option Plan
Stock Option Plan Details for non-managerial employees
Stock Option Plan for Managerial Employees
Bob is a cashier and has been employed at Harrah’s for 5 years and 3 months He received an
A on his customer satisfaction survey (TPSS) so Bob is eligible to buy Harrah’s stock at 50%
of it’s market value for 1 year
Jennifer is the Manager of Valet and has been employed at Harrah’s 2 years and 6 months Jennifer received a B on her Multi-Source Feedback Evaluation so Jennifer is eligible to buy Harrah’s stock at 87.5% of it’s market value for 1 year
John is a Senior VP of Marketing and as been employed at Harrah’s for 13 years He received
a C on his Multi-Source Feedback evaluation so John is eligible to buy Harrah’s stock at 85%
of it’s market value for 1 year
Examples of Stock Purchases
Would this incentive plan motivate you?
A: Yes
B: No
Why or why not?
Question
Motivates employees to provide excellent customer service
Rewards employees for length of tenure which reduces turnover
Promotes teamwork
Recognizes employee contributions
Trang 8Aligns HR Strategy with organizational goals and culture Conclusion