Harrahs: It’s All Love. Man

Gary Loveman’s tenure at Harrah’s was an interesting one to follow.  The changes he made to the company when he was there changed the corporate structure of the company to its very core.  He did this in multiple ways.  But the most interesting ones to me were the ideas of meritocratic management, accountability, and using data in his rewards system.

Meritocratic management was the idea that the company should be managed and employees should be punished or rewarded based on merit.  When employees know that they cannot be promoted based on anything but their merit, they will be certain to try as hard as they can to increase the perception of said merit.  While this was good in the sense that it got all of the employees working harder, there is a chance it could have also increased competition among employees.  This had the potential to create competitive silos.  A silo occurs when employees become pitted against each other and end up hurting the whole as they focus more on the improvement of the individual parts.

Accountability was a big part of Loveman’s strategy.  This goes hand-in-hand with the meritocracy.  Making employees accountable for their every action insured that they paid attention to  every action.  Loveman drove this point home by being accountable himself.  He admitted his own mistakes and did not try to hide his faults.  This created a level of trust between Loveman and his employees.  When the Harrah’s employees saw the Loveman had credibility and practiced what he preached, it made it easier for them to trust him.

Loveman improved Harrah’s customer service by introducing a tiered reward system based on data.  This is gone over in more detail in my earlier posting entitled “Getting Lucky With Data”.  But basically what he did was look for trends in players and use it to project their lifetime value.  Those with higher lifetime values were catered to more so than those with lower projected values.  The tiered system he introduced gave customers different levels of rewards.  They were inspired to spend more at Harrah’s casinos because they saw others that had the higher levels of rewards (like Diamond level).

Loveman brought a lot of change to Harrah’s, and it seemed that he did well.  It would be interesting to see not only how these strategies have aged, but also an article that addressed more of the negatives of this strategy. No strategy is perfect, and I don’t believe this one was either.  Do you?

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