Casino Journal published our article, “Lines of Communication” in April 2005. The report reviewed the
efforts being made by some leading gaming companies to involve their staffers through better, more
frequent communications, so dealers, other gaming floor employees, food service workers,
housekeeping personnel and front desk clerks would all take a greater interest in meeting their
property’s goals of enhancing guest experience through better customer service and improved productivity.
We revisited a good number of the executives interviewed in our 2005 survey, to ask what efforts they were now making to motivate their employees, which ones they found effective, and which ones were not (see Table I).
The bottom line: while many gaming industry executives understand the importance of motivating their employees, many admit their efforts are not particularly effective. The result, they say, is often high turnover, less than sterling productivity and occasional labor unrest.
Shunned by assembly line workers in the factories of foreign transplants (Toyota), the United Auto Workers Union has taken aim at the gaming industry. The UAW has managed to organize over 8,000 industry employees in gaming establishments in Michigan, Indiana, Connecticut, Rhode Island and New Jersey.
For example, in December 2007, the UAW won representation rights at a small unit (165 employees) at Casino Aztar in Evansville, Ind., winning 65 percent of the employee votes. In the previous month, the same union managed to organize a unit of about 2,600 workers at Foxwoods, the largest private employer in Connecticut, with about 60 percent of the vote. The Auto Workers are joining the Teamsters-whose hold on Las Vegas and Atlantic City, N.J. casinos is notorious-as major players in the gaming industry.
Why motivate workers?
Most of the casino executives we interviewed wanted better ways to motivate their workers.
When asked, “Motivate them for what?” the answer was often vague: “To work harder.” Because staff expenses are such a large part of a casino’s operating costs, anything that can be done to get employees to use their brains for more productivity, better quality service and more return guests is critical to its success. But how?
How to motivate workers
Techniques to motivate staffers can be divided into two rough categories: non-economic and economic. Behavioral scientists and personnel specialists have long discussed which is more important-often without asking the workers themselves what they thought about the matter.
Hedging their bets, many gaming industry executives are now trying both categories.
Non-economic techniques for motivating workers include practices like service award lunches, recognition (special lapel pins with property logos recognizing superior performance or service), preferred parking places, good attendance awards, catalog gift items for staffers providing exemplary service to guests, etc.
While non-economic methods do build team spirit and provide workers with a sense that management cares, the survey indicated most executives felt these efforts were of questionable effectiveness. There were two reasons why.
First, in our permissive society, such recognition tokens are now considered entitlements.
Staffers expect them as their due, and resent their absence. But these entitlements provide little positive motivation. Because of employee expectations, once started, such efforts endure with a longevity matched only by government subsidies. Take government payments started during World War II for hemp and beeswax production, commodities needed for the war effort.
Although history books tell us we won in 1945, Federal checks keep appearing in hemp growers’ and bee keepers’ mailboxes like clockwork.
Secondly, because entitlements are expected, employees now expect extra rewards for any “extra” efforts they exert for guest service or higher productivity. And, usually, the “extra” they want is something in their wallets. Again, how do casinos provide the economic extra, without it becoming an entitlement?
Most executives expect rewards for their personal performance in the form of year-end bonuses for better profitability, higher earnings per share, inflated stock prices, etc. Their pay-offs come in a mind-boggling variety of forms-stock options and private jets in publicly held companies, phantom stock and company cars, etc. in private ones, with golden handshakes and parachutes for all. Some of these pay-offs are so innovative that the Securities and Exchange Commission has “nominated” some of them for “Enron Creative Accounting Awards,” to be bestowed by a Federal judge-along with 10 years in Leavenworth.
Many of these same executives have realized what is good for the goose is good for the gander, and have extended reward programs downwards. Like themselves, they realize their employees want to earn a buck, and will respond if given the chance.
Profit sharing plans are common. So are merit raises and discretionary year-end bonuses.
Unfortunately, the former are often given to all employees, and are just “disguised” general increases. The latter are often based on ill-defined or illusionary criteria. Are they effective?
Perhaps for a majority of managers, a minority of first line supervisors (up from the ranks with no training), but only a hand-full of hourly-paid staffers have horizons long enough to equate what they do today with a year-end bonus, to say nothing of a 401(k) paid out 20 years from now on retirement.
Sure, few employees at any level refuse a “merit” raise or year end bonus-it’s like palming a couple of aces. But when asked, few pool attendants, laundry workers, dealers, or maintenance men can tell you why they received the amount they did, nor can they answer what specifically they have done to earn it.
Effective economic motivators are transparent, easy-to-understand, and short term-they match the horizons of the workers whose behavior they are designed to affect. Today, the more astute executives I interviewed told me that pay-for-performance programs with short-term reward horizons, like Gainsharing, are the most effective ones. Today’s Gainsharing plans reward group effort and cooperation with management to achieve company goals of better staffer performance,
i.e., better guest service, higher productivity, etc.
Improved employee performance is quantified and given a dollar value, which is shared (hence the name) 50/50 with staffers. Thus, for every dollar paid out in employee bonuses, the property saves a like amount through higher productivity (more rooms cleaned per housekeeper, more meals prepared by room service, thus lower per-unit costs), better quality (fewer guest complaints, better ratings by anonymous shoppers who secretly grade employees on details like pronouncing a hotel guest’s name correctly, or delivering room service within five minutes of the requested time), etc.
Such details ensure higher ratings from Mobil, AAA, Michelin and the other agencies, and higher ratings translate into higher room rates for casino operators. Similarly, casino restaurants covet high rankings, which bring headlines and more big-spending guests. At The Venetian, property owner Las Vegas Sands Corp. was able to raise the average daily room rate in the first three quarters of 2007 by $22 from a year earlier to $259 after it began running secret shoppers through its property at least every two weeks, testing employees on hundreds of AAA and Mobil rating criteria, such as making eye contact, dealing with communication breakdowns, and responding to guest requests quickly. In a Gainsharing plan, employees have to earn and re-earn Gainsharing bonuses monthly which eliminates any employee notion that their Gainsharing Program is an entitlement of any sort.
Sadly, some casino executives think staffers will rise like trout to dry flies in an effort to earn a Gainshare bonus. Since the literature on Gainsharing is widespread, many of these do-it-yourselfers try designing a plan themselves. Although there is also widespread literature on brain surgery, few try that on themselves, book in one hand and scalpel in the other.
A well designed Gainsharing plan will produce improvements in productivity and guest satisfaction of 17 to 22 percent annually. Good ones incorporate a combination of non-economic and economic motivational tools. Employees respond to Gainsharing’s economic motivation: the opportunity to earn extra earnings. Staffers also respond positively to communications: when they realize they are being listened to, when their ideas are co-opted and when they are told how their ideas are making an important contribution to their employer. Combined, the twin motivations are powerful tools to bind employee loyalties to their property-employer, thus reducing the chances for union organizers to find a receptive audience.
Today, Indian casinos are branching out and expanding, using their legal status to avoid pesky state regulations and costs; states like Illinois are contemplating licensing more casinos, thus increasing local competition, and national gaming companies are pouring millions into making their properties in traditional gaming centers like Atlantic City and Las Vegas, in their efforts to attract the gambling public. Property owners are fighting ever more fiercely with each other for the loyalties of that public.
Those who best motivate their staffs to make the gambling guests’ experiences at their casino/resorts pleasantly memorable will win the jackpot.
What are you doing to improve the odds that it will be your lucky day?