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 program. At the heart of Harrah¶s reward program are its employees 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

Are Harrah¶s rewards large enough to be used as incentives? How much money makes management¶s commitment seem credible?
Ms. Winn should reevaluate 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 either through gain -sharing or other medium would get additional budget to reward 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

and increase in company¶s operating income.despite working tirelessly and fulfilling their end of the bargain. Another weakness of the gainsharing program was that it was not tied to the company¶s operating income. Despite its much strength. Harrah¶s increase in overall customer services through the gain-sharing program didnot result in increased bottom line for the company What are the pitfalls of increasing the percentage of rewards versus base pay? What if the company handed out fewer. cost conscious. efficient. 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 . As such. which requires investment in incentive plan for employees. but larger awards? Should bonus pool be fixed or varying according to overall financial results? Through Harrah¶s strategic customer reward program. if the company is not earning more revenue through program such as gain-sharing. In other words. it is not quite at the expected level.to be more customer focused. The gainsharingprogram also gave a sense to employees that the company was ready reward employees for their hard work. The caused a breach in the psychologicalcontract as many employees did not receive the incentive payout. the gain-sharing program was not as effective in gaining the expected lever of customer satisfactions. and effective organization. Harrah¶s management kept raising the bar on their expectations on customer service improvements whereby implicitly indicating that employeeswould not be able to meet the targeted results. as promised by the company. managers¶ bonus payouts were based on multiple factors such as gain in market share. As such. Did the gain-sharing plan improve organizational learning and co-operation? What difficulties did Harrah¶s face in increasing co-operation and communication between work team members? Harrah¶s gain-sharing program had successfully instituted a competitive mindset in its employees and increased customer service level. The upper management should then leverage these input to devise long-term strategies to further the organization. This allowed the company to hold mangers more accountable for managing their teams effectively and successfully contributing towards Harrah¶s customer reward program. the company gained the market share. however. This resulted in employees feeling like their hard work was not recognized and that the management kept raising the bar on customer service goals. employees in many properties did not get the incentive payout regardless of their tireless effort. Through the program employees had statedto understand that they had a stake in improving the overall customer service. improvement in customer satisfaction. it ultimately invalidates the merit of such program. Any suchstrategic incentive program should be tied to company¶s bottom line. In addition.

Growth of the individual in monetary and non monetary terms but not of the group or department. Lack of team effort and co-operation. stress. It will initiate healthy competition amongst the employees of different departments and ensure increased standards of service.The disadvantages of increasing percentage of rewards versus base pay would be: y y y y y y Increased level of competition which would lead to higher turnover. Employee will focus more on meeting the numbers of performance rather than increasing the performance quality. It will ensure that in a time of economic downturn the company does not suffer loss due to fixed payment of incentives. . Employees will decrease focus on customer service and focus on servicing more customers rather than servicing with quality. The bonus pool should be variable because of the following reasons: y y y y It would provide a way for judging how well a property is doing among the properties doing well. If the company starts handing fewer but larger rewards then turnover rate would increase as most employees would be left with no incentive and only the so called individual star performers would be happy leaving the rest of the employees dissatisfied and having similar disadvantages as the individual incentive scheme. Lack of job Security due to reduced base pay which would lead to higher turnover and reduced organisational citizenship behaviour. The employees will get to know how well they are doing and how much are they contributing to the organisation¶s growth. absenteeism etc.

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