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Harrah's Incentive Program - Team 5

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Linda Larsen

on 27 April 2014

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Transcript of Harrah's Incentive Program - Team 5

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1937, Harrah’s Inc. was founded by William F. Harrah at Reno, Nevada
1971, Harrah’s Inc. went public
1980, Harrah’s Inc. was acquired by Holiday Inn
1990, Holiday Inn Hotel business was acquired by Bass PLC and The Promus Companies was formed
1991, The Promus company's headquarters was moved from Reno to Memphis, Tennessee
1995, the company was renamed to Harrah's Entertainment, Inc. as a spin off
1999, Harrah's Entertainment, Inc. moved its headquarters from Memphis, Tennessee to Las Vegas
2005, Harrah's completed the takeover of Caesars Entertainment, Inc.
2008, delisted and taken by Hamlet Holdings2010, renamed to Caesars Entertainment Corp.

http://en.wikipedia.org/wiki/Caesars_Entertainment_Corporation
Incentive Program
Bryan Ashline
Linda Larsen
Nathan Phillips Stacey Papanikos
Phoebe Stonbely Fadong Yan

Introduction
1. History
2. Background
3. HR strategy
4. Strengths
5. Weaknesses
6. Recommendations
7. Conclusion

History
Headquarter: Las Vegas, Nevada
Employees: over 85,000
70’s: Bill Harrah’s era. Harrah was particular about the condition of the properties.
Mid 80s, Satre took over as president. They did not want to share information across properties
1997: Operation strategy change from product-based company to marketing based company
1998: Average turnover rate of 45%
2001: Struggling economy after 9/11 disaster.
Background
Financial
2002 Harrah’s shareholder report
Summary of Property Information
Harrah’s Entertainment Inc. 2002 annual report
Executives
Harrah’s

Entertainment

Inc. 2002 annual report
Increased customer satisfaction & employee morale
Employee turnover went down from 70% to under 50% in one year
Encouraged working together & team building
Gainsharing payout would be paid regardless of the operating income results
Strengths of Gain Sharing Program
Who is actually taking the Targeted Player Satisfaction Survey (TPSS)?
Surveys are more often taken by un-happy customers
How was individual level of performance measured?
Bias by management is likely
No absolute level to reach, solely based on percentage increase
$200 not a huge motivator for employees
Particularly those with a higher pay
Will employees continue to have interest in the program if payouts do not increase?
Mixed opinions/acceptance of program
High cost to organization -$16 Million in 2 ½ years
Benefit?
Did not translate to improved company profits
Weaknesses of Gain Sharing Program
In order to align with the organization’s differentiation strategy, Harrah’s must provide superior customer service to distinguish itself from competitors.

Goals:
Improve customer service
Reduce turnover
Achieve financial goals
Reward employees
Recommendation
Question
What types of incentive plans do you think would best help Harrah's reach it’s organizational goals?
Invest in human capital
Motivate employees
Create new incentive plan
Recognize employee contributions
Solutions
$200 Customer Satisfaction Payout is not an effective motivator
$16 million too costly to Harrah’s bottom line
Does not reward employees for maintaining excellent customer service; only rewards for converting non A grades to A’s.
Low valence
Eliminate Gain Sharing Program
Recommendation
Harrah's Gain Sharing Program
HR Strategy
Marketing-Based Company
Large Size
Mature Stage
Formal/Hierarchy Culture
Job Security & Distributive Justice
Economic Recession
Post 9/11 Travel Impact
High Competition
Industry Regulations
EEO Requirements
OrganizationalDemands
Environmental & Regulatory Issues
HR Challenges
Differentiation Strategy
- Customer Service Driven
- Harrah’s Total Rewards
-“Home Away From Home”

Employees Critical to Success
- High Level of Customer Contact
- Need Stable Workforce
- Build Competitive Culture
- On-Going Improvement
Refocused Organizational Strategy
1. Compensation & Benefits
Goals/Incentives
2. Property Products & Services
Training & Assessment
Reduce Turnover
3. Executive Search & Leadership Development
Functional vs. Industry Knowledge
Internal Promotion/Development
Tripod Structure
Winn’s HR Plan
Strategy Execution
- Recruitment & Selection
Knowledge Based Exams
Better Interview Process
Realistic Job Preview
- On-Boarding Process
Eliminate “Quick Quits”
Support New Hires
Development & Training
Lower Turnover
Build Competition
- Goal/Incentive Programs
Challenge, Motivate, Reward
- Gain-Sharing Program (Customer Service Improvement)
Show Commitment/Loyalty
- Specialized Training Opportunities
Customer Service
Two Days, On-Site, Paid
- No Layoffs
Competitors Reducing Staff
Profit Sharing
Stock Options
Encourages collaboration and teamwork among employees
Controls labor costs
Aligns employee contributions with the goals of the entire organization
Profits are important!
Introduce Profit Sharing Plan
Based 50% on customer satisfaction and 50% on length of employment
Does not require the reinvention and implementation of a new performance management system
Too costly and time consuming
Recognized by cash payouts at company BBQ
Profit Sharing Plan for Non-managerial Employees
Non-managerial Employee Performance Evaluation
Examples of Payouts
Mary has been employed at Harrah’s for 6 years and received an A on her customer satisfaction survey (TPSS) = 100% of profit sharing payout
Joe has been employed at Harrah’s for 7 years and received a B on his customer satisfaction survey (TPSS) = 75% of profit sharing payout
Jane has been employed at Harrah’s for 9 months and received an A on her customer satisfaction survey (TPSS) = 10% of profit sharing payout
Mike has been employed at Harrah’s for 10 years and received an D on his customer satisfaction survey (TPSS) = 25% of profit sharing payout
Profit Sharing for Managerial Employees
Based on 3 components:
25% Multi-Source Feedback
25% Length of employment
50% Operating Income
Allows for comprehensive and accurate evaluation of managers
Rewards for longevity
Rewards teamwork
Managerial Employee Performance Evaluation
Breakdown of Managerial Performance Evaluation
Multi-Source Feedback Evaluation
Question
What are the advantages and disadvantages of this profit sharing plan?
Increases committment of employees
Provides incentive in years of no profit
Allows employees to buy and sell shares for 1 year and realize gain immediately
Price of share based on performance and length of employment
Capped at 35%
Introduce Stock Option Plan
Stock Option Plan Details for non-managerial employees
Stock Option Plan for Managerial Employees
Bob is a cashier and has been employed at Harrah’s for 5 years and 3 months. He received an A on his customer satisfaction survey (TPSS) so Bob is eligible to buy Harrah’s stock at 50% of it’s market value for 1 year
Jennifer is the Manager of Valet and has been employed at Harrah’s 2 years and 6 months. Jennifer received a B on her Multi-Source Feedback Evaluation so Jennifer is eligible to buy Harrah’s stock at 87.5% of it’s market value for 1 year.
John is a Senior VP of Marketing and as been employed at Harrah’s for 13 years. He received a C on his Multi-Source Feedback evaluation so John is eligible to buy Harrah’s stock at 85% of it’s market value for 1 year.
Examples of Stock Purchases
Would this incentive plan motivate you?
A: Yes
B: No
Why or why not?
Question
Motivates employees to provide excellent customer service
Rewards employees for length of tenure which reduces turnover
Promotes teamwork
Recognizes employee contributions
Aligns HR Strategy with organizational goals and culture
Conclusion
Full transcript