I just read a Stanford Business School Case study entitled “Gary Loveman and Harrah’s Entertainment.” It is about a former non-tenured professor from Harvard Business School named Gary Loveman and how he was offered a job as the COO of one of the biggest casino companies in the World, Harrah’s Entertainment. It was a gutsy decision by Harrah’s CEO Phil Satre to hire someone from academia without any casino and any real world business experience, but it has since paid off. Loveman was brought in to streamline Harrah’s at both the corporate and ground level. Harrah’s loyalty program was so data rich that they needed someone like to Loveman and his team of MBAs to decipher all of the data. They were able to use it to develop their “Total Rewards” system that gave each guest a value.
When Loveman came into action, he did not want to micromanage. He was not going to be seen on the casino floor filling out Cash Transaction Reports and he was not going to be in the cage cashing out chips. He knew the people he had in place were good employees and competent, but Loveman still pushed efficiency. There was one instance where he found himself micromanaging a General Manager from the Showboat in Atlantic City, but Loveman caught it, fired the guy and got back to work.
One of Loveman’s greatest accomplishments, in my eyes, was how he “instilled a sense of accountability and rigor (Pg. 7).” Everyone knew how smart he was and the employees wanted to show him they were smart and good at their jobs. Loveman was able to push his employees to be the most efficient fact finding team in the casino industy. Loveman wanted to know what they knew not what they thought. Loveman told the VP of HR, “I eat numbers for breakfast (Pg. 7).” Loveman is a scientist and he wanted every idea tested with a control and their jobs depended on that.
One contribution that I did not like from Loveman was the Meritocratic Management, in his eyes, his greatest contribution. In an evidence-based management system this will be shown as something that works, but I do not believe in it. This system is the exact opposite to the Johnson & Johnson system. Loveman’s first priority was to the shareholder and the shareholders “owned” the jobs, not the employees. Johnson & Johnson’s number one priority was to their customers and their shareholders were last, especially behind the employees. The Meritocratic system works for Harrah’s and with this system they have been able to hire better employees thus lowering turnover by about 50%. I would have a hard time telling an employee the only reason they are there is to make the shareholders money.
The case study ended with Phil Satre stepping down as CEO and Gary Loveman getting promoted to CEO. As CEO, the study says Loveman will have some difficulties expanding Harrah’s any further because they are a big company and they have a lot of processes to go through. The processes or shareholders, the owners of the jobs, were now in the way of Harrah’s future. In an attempt to further streamline Harrah’s, Loveman made Harrah’s private. The buyout occurred at a horrible time and the collapse of the economy is making it nearly impossible for Harrah’s to make their payments. In a better economy, I believe Loveman would have been able to make Harrah’s the most powerful casino company of all times.