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Case Study - Harrah's Entertainment, Inc.: Rewarding Our People

1) Harrah's Entertainment instituted an incentive pay plan to reward employees for improving customer service metrics as part of a new strategic focus on customers. However, many employees did not receive payouts despite working hard, causing dissatisfaction. 2) The gain-sharing program successfully increased customer service but was not tied to financial outcomes and kept raising expectations. Advice included setting clear targets and measuring financial impact. 3) HR practices like the incentive plan needed to align with the new customer-focused strategy by lowering turnover and increasing motivation through rewards and career development.

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Neha Patil
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711 views

Case Study - Harrah's Entertainment, Inc.: Rewarding Our People

1) Harrah's Entertainment instituted an incentive pay plan to reward employees for improving customer service metrics as part of a new strategic focus on customers. However, many employees did not receive payouts despite working hard, causing dissatisfaction. 2) The gain-sharing program successfully increased customer service but was not tied to financial outcomes and kept raising expectations. Advice included setting clear targets and measuring financial impact. 3) HR practices like the incentive plan needed to align with the new customer-focused strategy by lowering turnover and increasing motivation through rewards and career development.

Uploaded by

Neha Patil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as ODT, PDF, TXT or read online on Scribd
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Case Study - Harrah's Entertainment, Inc.

: Rewarding Our People

Section I - Case Overview


Harrah'S Entertainment, a fortune 500 and one of the largest casino entertainment companies
had decided to move away from being a product based to more of a strategic marketing
oriented company whereby tailoring its products and services based on customer data and
creating a customer focused reward prop-am. At the heart of Harrah's reward program are its
ernployees who would ultimately carry it out in the field. Therefore, to motivate and get
employees energized, Harrah's had instituted an incentive pay plan in order to reward
employees in all its properties for improving overall customer service metrics. Harrah's goals
behind the said incentive plan were to implant a competitive mindset in its employees as well
as to show that the employees are at the core of the company's strategic customer focus plan.
Through Harrah's strategic customer reward program, the company gained the market share:
however, it is not quite at the expected level. As Such, employees in many properties did not
get the incentive payout regardless of their tireless effort. This resulted in employees feeling
like their hard work was not recognized and that the management kept raising the bar on
customer service goals. Harrah's head of Human Resources was concerned that employees
could ultimately become discouraged which would result in a failure of the company's new
strategic plan on improving customer service.

Section II a - strengths and weaknesses at Harrah's gain-sharing program


Harrah'S gain-sharing program had successfully instituted a competitive mindset in its
employees and increased customer service level. Through the program employees had stated
to understand that they had a stake in improving the overall customer service. The gain-sharing
program also gave a sense to employees that the company was ready reward employees for
their hard work. In addition, managers' bonus payouts were based on multiple factors such as
gain in market share, improvement in customer satisfaction, and increase in company's
operating income. This allowed the company to hold mangers more accountable for managing
their teams effectively and Successfully contributing towards harrah's customer reward
program.
Despite its much strength, the gain-sharing program was not as effective in gaining the
expected lever of customer Satisfactions. Harrah's management kept raising the bar on their
expectations on customer Service improvements whereby implicitly indicating that employees
would not be able to meet the targeted results. The caused a breach in the psychological
contract as many employees did not receive the incentive payout, as promised by the company,
despite working tirelessly and fulfilling their end of the bargain. Another weakness of the gain-
sharing program was that it was not tied to the company's operating income. Any such
strategic incentive program should be tied to company's bottom line. In other words, if the company
is not earning more revenue through program such as gain-sharing, which requires investment in
incentive plan for employees, it ultimately invalidates the merit of such program. As such, Harrah's
increase in overall customer services through the gain-Sharing program did not result in increased
bottom line for the company.

Section II b - Advise for Merilyr, Winn

Ms. Winn should re evaluate the incentive program she had designed to motivate employees to
partake in company's strategic plan on focusing on customer satisfaction. First, the incentive plan
should be tied to the company's bottom line. In other words, Harrah's should, on a regular basis,
measure the effectiveness of the gain-sharing program by comparing it with its operating income. If
the operating income has an upward Shift, the gain-sharing can be deemed as
monetarily effective as the company is getting a return on its investment. Second, the gain-
sharing program should have a set target on customer satisfaction. This would allow
employees to feel a sense of accomplishment once they hit the defined customer Service target and
thus would strengthen the psychological contract. Third, Harrah's should solicit feedback from
employees and include them in the overall evaluation of the gain-sharing program's
effectiveness. Fourth, Ms. Winn should plan on developing a program that is fully employee focused
in order to keep them motivated. for example., employees who hit the gain-sharing target would get
the bonus and in addition, would qualify to enter a draw for an all expenses paid vacation. The
employee focused plan also could include components such as, any division that positively
contributes to the company's bottom line ether through gain-sharing or other medium would get
additional budget to reword their employees monetarily. In addition, Harrah's could utilize various
organizational currencies such as employee recognition, advancements, and visibility in as
motivational factors. As part of the employee focused plan, Harrah's should allow employees' input
how to be more customer focused, efficient, cost conscious, and effective organization. The upper
management should then leverage these input to devise long-term strategies to further the
organization.

Section II c - Alignment of the HR practices to the companv's strategy.

Since Harrah's new operating strategy calls for employees' commitment and participation,
lowering turnover and increasing motivation were key factors. Ms. Winn's instituted a plan that
would focus on recruiting most qualified people for a given job, anchor the new hires to stay with the
company by allowing them to move to a different role in the event they are
unhappy with their current roles, enhanced interaction with HR and functional managers to verify
and validate commitment. In addition, a gain-sharing program was introduced to induce employees
to focus on improving customer satisfaction in return for monitory reward.
Employees would receive an incentive payout of up to $200., regardless of Harrah's operating
income., & they were able to satisfy quarterly customer satisfaction target.

Section III a - What did you learn from this case

The Harrah's case study has taught me that at the heart of any company's successful strategies,
employees are always the key. End of the day, it is the employees who carry out the plans
crafted by upper management. Therefore, in order for employees to help corporations to be successful
in their ventures, organizations need to institute a strong psychological contract with employees.
Without any measurable reciprocity, the psychological contact can be broken. It is merely not enough
to incentivize employees to partake in organizational strategies but additional organizational
currencies needed to be traded such as recognition, career advancement, visibility, and importance in
exchange for commitment and loyalty. In addition, all corporate strategic plans must have a set target
and need to be evaluated and measured from the perspective of employees as well as bottom line.
Companies that make decision without blinders and incorporate a check and balance mechanism in
their strategies become successful and gain the largest market share.

Section III b.- Use of this information in my current or future iob

In order for me to motivate, encourage, and solicit buy-in from my employees on any new initiatives, I
would keep them at the center of my decision making. I would remove blinders on my decision
making by self critiquing the strategy and looking it from multiple perspective. In addition, I would
develop a feedback loop mechanism whereby employees ultimately carry out the plan would have
input. I would also implement a reward system that would recognize employees contribution based on
the achieved target.

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