Name Lucia Veronica Denis Senwayo Student Number

2B4047

Case Name

Harrah’s Entertainment, Inc: Rewarding our people

Date 2014.11.10

Memo1. 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.

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.

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

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-

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:

First, finding people appropriate for the job – Harrah’s has focused on

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

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.