Caesars Casino Case Study

Introduction

Success requires a change in corporate culture and to do that companies must look for solutions that will help them achieve that success.  Such is the case for Caesars Casino the world’s most geographically diversified provider of casino entertainment (Hyer, Hirsch & Brown 2017).  With the growth of competitive gaming and increases in customers non-gaming spending, General Manager and Senior Vice President Brad Hirsch of Harrah’s Metropolis Casino and Hotel in Metropolis Illinois knew improvements at the Casino were needed.  Reflecting on his previous experience at the Caesars Casino in Tunica Mississippi where he implemented the Lean process, Brad Hirsch needed to consider if implementing the Lean process at the Metropolis location would yield positive results.  

Through the case study, Implementing LEAN Operations at Caesars Casinos, we will learn about the Lean implementation at Tunica Mississippi, analyzing the challenges they faced and how they overcame them.  We will use their experience to propose a Kaizen event and Lean implementation applicable for the Metropolis location.

Keywords:  Metropolis⋅Lean⋅Kaizen⋅Implementation

CAESARS CASINO

Like many other corporations, Caesars Casino felt the burden of the macro economic collapse of the 2008 Great Recession.  For Caesars Casino, the recession led to a decline in revenue in various regions, reduced customer spending, and increased competition for market share.  For Brad Hirsch, these consequences were apparent at his Tunica Mississippi Casino location.  A location that was the fourth-largest gaming market in the world with more than $1 billion in annual revenue (Hyer, Hirsch & Brown 2017).  These challenges also drove home the importance of customer service, an essential element of Caesar's corporate operating strategy.

To reverse the effects of the 2008 recession and improve customer service, it was apparent that Tunica would require a process that would instill a consistent and systematic problem-solving approach.  For Brad Hirsch, this process was called LEAN, a systematic approach that incorporates a fundamental philosophy of continuous improvement.  

The implementation of Lean at the Tunica location spanned a little over a year.  The outcome yielded an improvement in customer scores, an annual cost saving of $3 million and increased employee engagement that spanned to other departments who wanted to conduct kaizen events of their own.  Given the success of Lean implementation at Tunica, it was now time to consider what approach to take at the Metropolis location, an expert-driven or employee-centered Lean process.

Describe two challenges that Caesars experienced during the Lean implementation process. What were actions taken to overcome each challenge? Were they effective?

Although the implementation of Lean was a success at the Tunica location, it was not without its share of challenges.  One of the challenges the implementation of Lean presented where the employee's perception of what Lean meant.  For some, the word Lean implied cutting jobs which resulted in a low level of engagement.  Due to low engagement employees needed reassurance. During the Kaizen event; the Tunica management team consistently communicated the goals of using the Lean process.  Reassuring employees that the objective of Lean was to “improve the customer experience, increase process effectiveness, teach problem-solving tools, and improve employees’ work environments” (Hyer, Hirsch & Brown 2017).  They also immediately began conducting Kaizen events knowing that for employees seeing that jobs were here to stay would drive home the message and offer reassurance.

With the consistent assurance and ongoing Kaizen events, employees perception of the Lean process began to change.  Many expressing how easier their job would have been if LEAN had been implemented earlier on.

Another challenge Tunica faced where obtaining financial support needed to make physical changes within the organization.  With departmental budgets already submitted for the year, requests for additional financial support required higher-level approval and often pose a challenge due to senior leadership wanting to maintain expense discipline.

However, resistance slowly diminished as Kaizen recommendations began to yield tangible results.  As the organization was able to see the benefits from Kaizen, support to fund new infrastructure changes increased.  The commitment by Tunica to continue kaizen events and implement as many recommendations as they could help support that Kaizen event was working and improving the organization.  

Assume you manage hotel housekeeping at Harrah’s Metropolis location, and service scores have declined over the past year.  As part of the lean roll out, you and some of your front-line employees will participate in a Kaizen event focused on improving guest-room housekeeping operations.

• What KPIs would you propose to track to determine whether the changes implemented through the Kaizen effort improve performance?

         At Metropolis customer service is of the utmost importance and to attract new guest and retain existing ones Metropolis have to offer high-quality services.  It is important to create, implement and monitor KPIs that align with organizations culture of optimizing customer experience.  Housekeeping, for instance, housekeeping is perhaps the strongest association with a hotel.  Selecting the most important KPIs relevant to cleaning and housekeeping services will help measure housekeeping performance but also save costs.  KPIs to consider would consist of:

• The number of guests per employee- Being under or overstaffed can affect cost and customer service. Being understaffed can affect the level of customer service by overworking your staff and accruing over time.  Being overstaffed can increase unnecessary labor costs.
• Average cleaning supply cost per room- Cost for supplies for each guest room involve other elements besides cleaning and laundry supplies.  You have to factor in theft, loss, spillage, improper dilution and dispensing, and improper use.  Cleaning supplies include overuse of chemicals or not truly wearing out a sponge before being discarded.  Laundry supplies might include running less than a full load in a washer or having it set for the wrong fabric.  These types of expenses should be identified and discussed on how they can be reduced.  In some situations, individual steps can be changed, while others are related to an entire department or area.  Which may attribute to attitudinal, process, training or physical layout issues, all of which can have a negative impact customer service.
• Turn-around time/Minutes Per Room-  It’s essential for rooms to be readily available for guests.  Housekeeping department must determine what rooms are to be cleaned in priority order while accounting for setbacks such as guests checking out late or other accommodations that may present a challenge and reduce turn-around time. Maintaining real-time status of every guest room is key to reducing the time guests must wait before entering their accommodations.  Tracking turn-around time/MPR will help assess employees who may need additional work, or those may be slower and need assistance.
• Equipment and Machinery efficiency- Maintaining working equipment is one of the pillars of high-functioning housekeeping.  When equipment performance slack, housekeeping is unable to execute job responsibilities, and that trickle-down effect can negatively impact the guest experience.  It’s important to err on the side of preventive maintenance vs. reactive maintenance.  Knowing when to replace equipment saves on spending more on unexpected repairs and labor.
• Staff Development- Staff development includes education and training which is crucial to improving housekeeping job performance.  Staff equipped with training in commercial cleaning, safe and hygienic sanitization practices can provide personalized services to guests.  Also, yielding increased productivity.
• Inventory management- Being equipped with proper supplies is important.  Is inventory organized in a way that’s easiest for housekeeping to get to the needed items in the shortest amount of time?  Does housekeeping have the needed supplies to do their job?  Having too little or too much inventory can affect cost and negatively impact guest experience.

Continuing with the Lean roll out for improving guest-room housekeeping operations, develop a detailed agenda for a kaizen event.  Outline the event’s activities, timing, duration, and Lean tools.  Explain your rationale for each agenda item.

With the creation of housekeeping KPIs, we can create a Kaizen event to help identify waste and propose recommendations for improvement.  The Kaizen event will be for five days and will begin promptly at 8:00 am and end at 6:00 pm.

Kaizen Day 1-Begins with welcome and introduction to Kaizen and team training.  Document current state of housekeeping process.  Waste recognition is then introduced using the acronym DOWNTIME (defects, overproduction, waiting, not engaging people, transportation, inventory, motion, and extra processing) which helps identify various types of waste in work processes.  Also during Day 1 introduction of Lean tools introduced.  Day 1 ends with selecting a process that would present the greatest opportunities to improve customer service and reduce waste.