Case Study

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  • Topic: Harrah's Entertainment, William F. Harrah, National Automobile Museum
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  • Published : February 3, 2013
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REV: JANUARY 7, 2003

THOMAS DELONG
VINEETA VIJAYARAGHAVAN

Harrah's Entertainment, Inc.: Rewarding Our People

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How do you change the working premise for our people from being controlled by their limitations to realizing their possibilities?
—Gary Loveman, Chief Operating Officer, Harrah’s Corp.

Marilyn Winn ordered a cappuccino and sat down at a quiet corner table in the French Roastery Café at the Rio Casino. She had a half hour to collect her thoughts before meeting with Gary Loveman, the president and chief operating officer (COO) of Harrah’s Corporation. As the head of human resources, Winn had been a central force behind getting employees excited about Loveman’s customer service goals. She had helped implement his incentive pay plan to reward employees for improvements in customer service metrics at each of the Harrah’s properties. The incentive pay plan was supposed to instill a competitive spirit in the employees, both in competing against rival casinos as well as competing with their own record of past performance.

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The secondary motivation for the incentive plan was to tell employees that they were at the heart of Harrah’s strategy, that even though the company prided itself on being customer obsessed, it also respected and rewarded its employees. The trouble was, in the previous quarter ending August 2001, customer service metrics had increased positively but not to levels that merited a payout at most properties. Because the program was a continuous improvement program, the low-hanging fruit had by now been picked. Raising service improvement levels was becoming harder and harder work. Winn knew that some employees tire of working hard and coming close to reward levels and then not getting rewarded. At what stage would employees say, “Forget it”? How could they keep the incentive plan fresh?

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Loveman had asked Winn to meet with him on this topic, and he expected her to give him a full evaluation and recommendation of how to motivate employees either with this incentive plan or through newly designed programs. The incentive plan had cost $16 million in the previous year, and that felt like an especially big number now that revenues were dropping off because of broader economic conditions. Were these customer service payouts the most efficient way to make Harrah’s a service-driven and customer-driven company? Winn had an operating background. She understood what making budget meant. She also knew that Loveman was tough minded and numbers driven. As she played with the Equal packets on the café table, Winn felt she was in a perplexing situation.

________________________________________________________________________________________________________________ Professor Thomas DeLong and Research Associate Vineeta Vijayaraghavan prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

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This document is authorized for use only by Ashwini Purandare at Symbiosis International University until September 2011. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860.

Harrah's Entertainment, Inc.: Rewarding Our People

Harrah’s Operating Strategy

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Harrah’s in 1997 began to shape a new operating strategy that distinguished it both...
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