Loveman and Harrah’s…A Winning Pair

Phil Satre, the former CEO of Harrah’s was no stranger to making bold moves during his time at Harrah’s.   In the 1990s, while other casinos in the Vegas area were trying to  make their properties as big and outrageous as possible, Satre took a different approach in expanding Harrah’s casinoes into 10 states.  Similarly, in 1998 Satre decided to make another bold and risky move when he decided to hire Gary Loveman, an associate professor at Harvard Business School, to be Harrah’s COO. 

Loveman began developing a relationship with Harrah’s and Satre over the years as a service management consultant.  Through thee interactions, Satre saw something in Loveman that made him decide to offer him a position before even consulting with any of his stakeholders.  Loveman had the leadership skills and marketing know-how that Satre was looking for even though he didn’t have the practical management experience in the casino industry.  Nonetheless, Loveman took the job and made some critical moves within Harrah’s, which proved to be a great success.

During Loveman’s initial period at Harrah’s, he implemented several changes regarding Harrah’s employees and customers.  In order to generate a more loyal customer base, Loveman took advantage of the rich data Harrah’s had collected over the years regarding their customers.  The data was mined (evaluated and tested) to understand Harrah’s customer base, and develop marketing strategies that were relevant to the customers they had, wanted, and wanted to sustain.  In addition, Loveman created a tiered rewards program that openly showed customers distinctions between the service levels of the tiers in order to tap into the customers’ desire to try to achieve a higher loyalty level.

Also, Loveman made several changes for/to employees in order to ensure Harrah’s had the right people on board to not only fit within the culture they were trying to create, but also to ensure employees were providing a high level of service to customers to promote customer loyalty.  For example, Loveman created a bonus incentive program for the employees based on customer service ratings for teams who had high ranking scores.  What is great about this incentive program is that it promoted teamwork rather than promoting individual competition and employees could receive these bonuses even if their hotel did not have outstanding sales figures.  Another move Loveman made regarding employees was not only to make sure they were hiring people based on the “right fit,” but they also turned positions into a meritocracy.  Loveman believed that noone owned their positions, they had to work for them instead of allowing people to move into and stay in positions based on tenure and then become so comfortable (lazy) in those positions that they were no longer effective.

I think Loveman understood that its employees were its competitive advantage and he made sure they had the training and technology necessary to keep the employees happy, which trickled down to Harrah’s customers and was evident in Harrah’s more profitable bottom line.

The challenge for Loveman in the future is to sustain this success.  I think loyalty goes a long way when it comes to customers and employees.  If Loveman continues to treat its employees well, it will continue to help their bottom line, especially in times of recession when people are more concerned about where they spend their money.  Specific corporate culture is harder to replicate, which is why it has the capability of ensuring a sustainable competitive advantage.

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