Case 5 Harrah’s Entertainment Inc

1. What problems has Marilyn Winn faced as HR Director at Harrah’s Entretainment?

The first problem Winn faced as human resources director was the group of senior managements who wanted her to focus mainly on executive compensations instead of addressing the needs of the field. The group of managers represented management, not leadership since the last human resources director didn’t understand the gaming industry and wasn’t interested in addressing the needs of the field and his only concern was designing senior executive packages. Additionally the upper managers opposed to change because they were used to the way things had always been done, they resisted a greater centralization or oversight, didn’t want to share information across properties and wanted to promote people as a reward for a job well done, instead of using the assessment test to determine if the people had the skills necessary to be promoted.

The second issue Winn dealt with was a high turnover rate; Harrah’s needed to have a stable workforce in order to deliver a great customer service. The main cause of terminations was absenteeism because the employees were working very long hours, weekends, holidays and all-nighters. In some properties turnover was estimated to be higher than 70%. The average turnover rate of all the company was 45%, she achieved her goal and brought down turnover to below 34%.

The third issue Winn encountered was improving customer loyalty and achieving a larger market share of gaming customers by improving customer service metrics. The last challenge Winn experienced was designing a new incentive program to improve service levels that at the same time motivates employees to compete against other casinos and against their past performance. The program was a continuous improvement program, raising the service levels was becoming even harder, as a consequence the previous quarter service had increased but not to the level that deserved a payout, the employees were growing tired of working hard, coming close to reward levels and not reaching them in the end. Revenues were decreasing due to global economic conditions and the current incentive plan represented $16 million in the last year, Winn needed to find a more efficient way to achieve a service and customer driven company, while maintaining employees at the center of the new strategy.

2. How would the different motivation theories explain the situation? Which one fits better?

Motivational specialists have put a great effort in generating a happier and more productive workforce by studying the needs of the individual and how they can be fulfilled through one's job through motivation. And according to our case we were able to identify and relate the different theories.

Goal-setting theory:
The application of this theory can be found when setting a goal to improve customer loyalty and achieve a larger market share of gaming customers by increasing customer service metrics. In order to achieve this objective, Winn introduced a collective team-focused bonus based on improvements of customer service metrics. The Targeted Player Satisfaction Survey (TPSS) evaluated the improvement of customer service scores and employees were awarded bonuses for percentages of improvement.

The theory states that people are generally more motivated when they are required to meet specific goals. And Harrah’s was very successful in implementing many incentives through the gain-sharing program to motivate employees; like monetary incentives based on percentages from raising the customer satisfaction scores through surveys and many others. Which lead to increasing the motivation in the employees looking towards their incentives by improving their customer service level which is what Harrah’s was after from the beginning.

Equity theory:

According to the Equity theory that states that people compare their effort and the results they obtain to that of others the gain sharing program was successful at the beginning but management kept raising the par on their expectations on customer service improvements which resulted in the employees not being able to reach the targeted results therefore they felt that they have been working much harder than before without getting the proper recognition they deserve or expect.

Expectancy theory:

The expectancy theory basically describes that an individual will decide to behave in a certain way because of the expectation of being rewarded. Employees expected to get a monetary incentive based on the increase of customer service percentages that was set by management. But the program started falling down as the goals were being raised continuously until they were unrealistic and extremely hard to achieve. Employees felt that they have been working harder and harder and not achieving the required goal as if they were being set up for failure and did not receive the incentive payouts, as promised by the company, despite working tirelessly.

To conclude, we think that the majority of the characters represented in the gain-sharing program relate to the goal setting approach. Anyway the program started failing, because the goals set over a long term view haven’t been accurate and lead to decreasing the level of motivation in the employees.

3. What considerations of personality, perception and attribution can be made to evaluate the situation?

To know and understand what boost the employee’s performance to go over and beyond we looked into what affected their performance wether positively or negatively and this takes us to the big five traits of personality which are:

Agreeableness: employees that are more agreeable tend to perform better in teams. Harrah’s main aim was to increase customer satisfaction levels and by hiring employees with such trait it would allow them to work better together which conveys in their performance.
Extraversion: As we all know that un-happy employees results in un-happy customers. When employees are less motivated they will be more likely to be less enthusiastic in delivering exceptional customer service. So employees who are more likely to feel better about themselves would definitely show on their customer service performance.
Conscientiousness: Employees that are more cautious are less likely to take risks and less open to customer needs so people with lower conscientiousness are preferred.
Openness to Experience: Employees that are open to new experiences are more likely to take risks to make a customer happy. So a balance of both conscientiousness and openness are needed.
Emotional stability: Employees with more stable emotions tend to be more confident and relaxed in stressful situations with customers.

The perceiver’s schemas, motivations and mood affected the perception process, hence, different employee have different performance, as Marilyn Winn knew there was murmuring in the system by some employees that the goals were too aggressive and that some employees were tiring of the constant focus on achieving performance goals, Which was an accurate example of the contrast effect as Winn perceived the employee’s perception of the situation. Also before Winn all the HR directors had only headquarter backgrounds which projected on the plans used at the time and did not project the reality of operating the business.

4. What are the strengths and weaknesses of Harrah’s gainsharing program? What advice would you have for Winn about her recommendation to Loveman?

The biggest advantage of Harrah’s gainsharing program is the rapidly increasing customer satisfaction and in line with this, the gaining of market shares from competitors. This works, because Winn understood, that less employee turnover and satisfied employees are able to create a welcome atmosphere to the customers, even when clients lose money in gambling. Other strengths of the gainsharing program is, that the HR department is better connecting with recently recruits, due to various feedback rounds and meetings with HR responsible. This means in case of new upcoming employee problems the HR department gets rapidly informed and can adapt the gainsharing program or perform other HR related changes to increase employee satisfaction.

Having a look to the weaknesses of the gainsharing program there exists the fact, that especially on the lower employee level, who have the majority of the customer contact, there exists no financial performance figure regarding rewarding. This means the main indicator for that employee level is the ‘customer satisfaction goals’, based on questioners. From a customer satisfaction perspective this is a good approach, anyway if business’s revenue does not decrease to less customer satisfaction, the gainsharing program has not sufficient other indicators. Mentionable possible scenarios are e.g. financial crisis or the consequences of September 11th which means customer, have less money available to spend in Harrah’s and following ask for less service or spend less money there.

Regarding advices to Winn it is to mention that in future a financial indicator should be implemented for the before mentioned employee level. Anyway this is not easy to execute and have to be implemented carefully, because dramatic changes to the previous rewarding system can lead to unsatisfied employees (bonus decrease), which could be contra productive because of an increase in employee fluctuation. The main problem is due to decreasing revenues, it will be tough for Winn to get more money from Loveman to adapt and optimize the gainsharing program, because it is assumable that Loveman wants to have Winn cutting labor costs. And so the challenge for Winn will be, implement the second indicator without cutting or decreasing the already implemented ‘customer satisfaction bonus’.