After reading so many articles about customer service, motivation and evidence based management, I know that all of these are essential for a company to excel. Both of the articles are very similar and talk about the same company and that is the reason why I chose to combine them in one post. The articles are very interesting and I learned a few things I did not know about Harrah’s Entertainment. Many entertainment companies offer flashy décor inside and out. This can be seen on the Las Vegas strip or downtown Reno. Flashing lights, large projection screens, commercials and billboards all focus on entertainment and rightly so. Entertainment such as shows, movies, restaurants and shopping provides 3 times larger revenue for casinos than gambling. Such must see properties would generate good revenue only for the first 2 years and would decrease thereafter due to customer service issues. People seek these properties and view the shows, but after a while they seek other flashy properties, because they don’t build a loyal customer base. The properties that have good customer service build a loyal customer base. However, those that like the thrill of gaming would not enjoy this type of properties, because they bring family and kids. Harrah’s on the other hand focuses on distinguishing itself with gaming and customer service. In order to do this Harrah’s had to know its customer base and focus on providing exceptional service. Service starts with employees and in order to provide that extra level of service Harrah’s would have to reward its people. Harrah’s strategy was to focus on people, similar to that of SAS and Nordstrom. They introduced incentive plans for non management. The plan would reward employees for improvements in customer service as well as let employee know that they are the heart of their business. By doing this they showed their employees that they are respected and that they are willing to offer them rewards for their service. This would increase customer service matrix and motivation, but how far could Harrah’s go with this. Can customer service be improved infinitely? Also, Harrah’s was not sure if this newly introduced incentive plan was an efficient way to make Harrah’s a better company. Harrah’s was ensuring that its customers were treated like  royalty, that their employees were an asset to them and they used evidence based management to introduce frequent customer rewards programs. By doing all of the above, Harrah’s would benefit in many ways by building a loyal customer base, by learning customer behaviors and having a happy workforce. This happy workforce would be much more efficient and would turn themselves into assets no other entertainment company has. With support from Phil Satre and Gary Loveman, Harrah’s became one of the most reputable entertainment companies in the world. The move that focused on customers and not on entertainment like other gaming properties have would appear very risky and others saw Harrah’s as a failing giant. Instead, Harrah’s was building competitive advantage over other casinos that would have the most loyal customer base of any casino in the world. The move, though risky, would be seen as one that gave Harrah’s glory. As described in the articles by Gary Loveman, Harrah’s had to know its customer base in order to offer them this exceptional customer service. As customer service can be only improved so much and if we don’t know customers we cannot be successful. That is why they introduced Total Gold Rewards that would offer customers free food, rooms and money to play in return for them giving Harrah’s their information such as gaming habits, money spent, residential information and frequent surveys. This information would be stored into a database that would be researched by analysts and provide Harrah’s with valuable information about their customer base. This would also allow them to adjust their service where they needed it. One surprising discovery was that most of their customers were locals that stopped by to their casino after work. Also they found out through surveys that their customers who said that were happy increased their spending by 24% per year and the customers that were not happy decreased it by 10%. They found out that this data mining would allow them to do wonders and they started collecting even more information and analyzing even more data. Soon after many other companies followed. Today we see frequent shopping cards, frequent flyer miles cards and numerous others that are following the footsteps of pioneer in data mining. Harrah’s became a successful company in the midst of change in the entertainment industry. They chose adaptation unlike that of their rivals and succeeded. They truly mastered the effectiveness which is evident through the use of their rewards program by all in the entertainment industry. While other casinos adapted to Harrah’s ideas of a rewards programs and data mining, Harrah’s continues to focus on customer base rather than on its facilities.

The article Evidence Based Management by Pfeffer and Sutton discusses use of evidence to guide managers through their jobs. The article starts with evidence based medicine where it claims that most doctors do not make decisions based on evidence presented to them. Rather, they use evidence acquired throughout the life. It is hard for one to disregard what they know especially if what they know has worked for such a long time. Many of us are afraid of that change and avoid that risk. The risk with taking a new approach is usually smaller (especially in medicine), as extensive research has to be done with great success. Most doctors or managers disregard this good evidence available and prefer to take less risky approach or one they are accustomed to. They are convinced that they have enough knowledge and have proven that through work success, rejecting any new evidence.

I see this as ignorance. Many individuals are so confident that their confidence makes them incompetent. Just because you have done it 100 times and it has worked does not mean it will work again. Also just because another company or doctor took the same approach does not mean you have to and you will get the same positive results. This is an example of Southwest and their competitor United. United introduced Shuttle by United in order to compete with Southwest. They copied all the important operations procedures. As a result of this creation United was expecting to increase its market share. Contrary to what was perceived, Shuttle by United failed miserably and helped increase Southwest’s market share in California. When you are copying you are not looking at yourself but just at the original. By doing so you are not asking the necessary question. Why? If United cared more and asked this question, perhaps it would be able to compete with Southwest. This goes on for anything an individual does. Looking at the others and trying to copy them will result in failure. If a manager or doctor takes a more risky path, more reward follows.

This article is a review of a book Good to Great by Jim Collins. The article discredits Collins methods used at identifying great companies and claims that there is no statistical significance that would make the companies selected different from others. The authors of this article do not claim that Collins’s conclusions are incorrect and state that Collins did not provide any evidence that his finding is anything other than random pattern.

With that said, the companies selected are not really good indicator of performance and many readers would be skeptical of his findings today. This is true due to failures of some companies on the list and also financial information available from others. I cannot believe that Circuit City and Fannie Mae are on the list. Also it is hard to believe that Philip Morris is very successful as everyone is aware of health risks associated with smoking. Also anti smoking campaigns are at its highest ever. I can see how other companies are on the list and they did go from good to great. I think good example is Wells Fargo. The company we need to look at first is Norwest Bank that primarily solicited business in the Midwest. This small bank grew to become a giant and purchase Wells Fargo, much more known name. Also I can see how Walgreen made a list as it turned into a leading drug store chain in America. These are the companies that are all very conservative and do not provide a very good investment return.

We can argue all we want about the book Good to Great, but the book was a bestseller and I am sure it provides guidance to leaders and managers around the world. Many parts of the book could still be used to help make decisions that would provide some benefits. I am sure Collins made this book very entertaining and motivating. At times this is all we need to achieve greatness.

The article talks about decision-making in the midst of the crisis. The theme discussed is war in Iraq and United States engagement. The main argument is whether United States was supposed to intervene and with what measures. Many executives find themselves in similar situations. Leaders know that they have to act on news and move in the right direction in order to create a better and more secure positioning for their company. Similarly, this was an intention of US government in aftermath of 9/11.

The problem with Iraq war is that reputation of our country came at the line and that the country was put in jeopardy by cost of war. Intelligence community failed to deliver credible information to decision makers who again failed to analyze it and interpret it correctly. The intelligence community suffered from “group think”. The leaders or managers failed to adequately manage analysts and collectors of information. All analysis was focused on proving that Iraq had WMD. The government needed to find a party to be held accountable for the 9/11 and had to act fast under pressure of public and media. Many branches of US government failed at analyzing and proving existence of weapons of mass destruction. This was unfortunately proven after the intervention. I think US government has learned a great deal from this event.

The article about HCL Technologies and newly appointed CEO Vineet Nayar was very interesting as it is the first article we read that show whole transformation process with a lot of success. The HCL Technologies is a well established Indian company that is a leader in software and hardware production. The company’s success in India was helped by the government that discouraged multinational corporations from doing business in India. Many world companies ceased operations in India and move elsewhere allowing for HCL to move into other fields. When IBM moved out HCL got permission to move into hardware manufacturing.

In April 2005, Vineet Nayar became President at the request of the founder and chairman Shiv Nadar. At the times HCL was in a struggle especially in Sales and Delivery. Many clients were cancelling contracts and Vineet knew that the change was necessary. He said “The company needed more than a band-aid; it needed a tourniquet.” Vineet had a new vision for the company’s future, one that will transform company into a global leader in hardware and software manufacturing. Vineet hoped to move the company up the value chain while providing his clients with innovative and integrated services that would change the way business is done. In order to this Vineet had a transformation strategy. The first strategy is “Employee First, Customer Second”. HCL was putting focus on its employees and gaining trust from them. This would make employees more loyal to the company and improve productivity. Employees were skeptical but then at the Global Customer Meet in Delhi, Vineet made a public announcement about their EFCS strategy. By doing this he energized employees even more, ensured them that the company cared about them. This strategy was very risky as it was putting customers second contrary to many other companies but Vineet knew that he would have much more benefits in a long run from loyal employees. Also such strategy would allow HCL to differentiate itself from competitors in India. The second strategy was to think big and focus more on a long run rather than short term. Also HCL would form strategic partnerships to offer more value added services to its customers. Vineet was very diligent about the transformation process. He would travel to many locations where HCL was present and would analyze if the change was feasible. Vineet demanded from every employee to think about adding value to everything that they do. He also focused on unity as fragmented company would not do well. The employees went for the big deals offering customer integrated business solutions. Every employee had a goal or multiple goals depending on their job duties. Also employees would participate in 360 degree feedback that would be visible to all. This type of feedback created competition and employees performance improved as a result. Also as another incentive the company introduced “Trust Pay”, which was just another way of saying we will pay you performance bonus because we know you will perform well. Trust pay affected 85% of employees and excluded senior managers and sales department. Soon after all these changes HCL Technologies started getting new clients and its first big contract was for Autodesk in California worth 50 million dollars. This was at times single biggest contract HCL received. In years after, many other companies gained trust in HCL.

The HCL was transformed with great success. The company expanded worldwide. Vineet said”Employees First, Customers Second had rejuvenated the company, and HCL was no longer losing market share.” The company has reported revenue increases in each year after and has gained more trust with employees and customers.

The article Strategies of Effective New Product Team Leaders was very interesting to read and I found it very valuable as it talked about many challenges managers and leaders face every day. It really could be used as a reference and should be read by all managers. The article talks about effective leadership and challenges that are present for such leaders. The main theme is the transforming leadership style and development of effective leaders. The article also puts emphasis on investing time and resources in learning.

Recent and constant improvements in technology are necessary for effective and efficient product management. Globalization leads to more projects being managed by local and global teams. In order to be ready for such projects one must be ready to take initiative and participate in groups and be ready for challenges faced while working in the teams. In the article (pg.38), author says “Leaders also act in ways to insure that members feel a greater sense of control over the team’s destiny by loosening control over information and resources.” I think that this is one of the best ways to motivate employees and engage them in projects. As a result productivity and innovation increases. This is especially true in research and development environment and engineering firms.

The article about compensation and performance reviews at the Arrow Electronics was very interesting. Being a local company my interest in this article was amplified. The CEO of Arrow Electronics, Steve Kaufman, was not satisfied with their current performance evaluations and compensation management. Kaufman argues that their performance evaluation system is wrong and that management is not evaluating the employees in the right way. The reason is that the average of all employees’ ratings was 4.5 points on a scale of 1 to 5. Also his unhappiness is fueled by the fact that no employee got a 1 or 2 on this performance rating. I understand his aggravation especially since he has been rated at 2 by the board of directors. The current average is just bellow perfect score and it would mean that there is very little room for improvement. I have always been in favor of the system that truthfully evaluates employees and have admired bosses that are straight forward. If one is not given right feedback they do not know how to improve and what to work on. It would be ok to rate employees in customer oriented settings with such high numbers as they would lead to even better customer service environment. In a company such as Arrow Electronics much of the work is focused on competency, accuracy and as such company Arrow has to address its performance review system right away or it could lead to reduced performance and quality.

The article Sins of Commissions talks about pay for performance system. Personally I am not in favor of such performance system as it is not stable and does not provide for a decent lifestyle. Additionally the system creates sharks, disincentivizes teamwork, and destroys creativity and innovation.  I also think that this type of system allows for companies to discriminate at the hiring process and while employed.

Commission based jobs usually require a lot of time, energy and motivation. One must work long hours and only few are ready to do so. Companies hire single individuals that are competitive, have sports background. Also individuals that are family oriented and that have life outside of their work are less likely to take a job based on commissions as they want to have guaranteed base pay that can pay the bills. The idea that teacher’s compensation is connected to student’s grades is wrong. This idea creates moral hazard and it would leave kids across the country illiterate.

The article by Samuel A. Culbert was very interesting to read as I could relate to much of the situations described in it. A performance review is one of the hardest things managers have to do at their jobs. It is hard to keep anyone happy at these reviews, because they are designed to point out the weaknesses of employees and offer solutions for improving. Anytime an individual is criticized it creates unhappiness as most of the individuals are unwilling to change. Are performance reviews really necessary? They are absolutely necessary and they help employees figure out their weaknesses. The problem is that many managers don’t put enough thoughts into this process and by doing so aggravate employees. I have seen many employees leave offices in tears after their performance reviews. A performance review should be molded to a person’s job and personality, for this reason, a standardized performance review cannot be used for all employees. As a person who wants to improve and supports constructive criticism I like performance reviews. I want to know how I am seen by my manager or others and what they think my weaknesses are. As a result I can judge their perception of me and focus on things I think need improvement. I agree with Samuel that performance reviews are one-sided, subjective and do not increase productivity; but no matter how they are they are needed to keep the employees organized, engaged and manageable. If I was designing a performance review for any company it would be an open conversation every month about our weaknesses and improvements that are necessary of all employees. After analyzing the employees’ weaknesses and their necessary improvements I would delegate tasks to those employees that are the best at doing particular tasks, because no one is the best at everything they do. The article is very complicated and it could be argued with many different positions. One thing is certain, performance reviews are a necessity that managers must carry out.

SAS is a company that was founded in 1976 by students at the North Carolina State University. The company makes statistical software that is currently used by most large corporations. It is a privately held company that has been very successful at what it does over the years. The success does not come by surprise as SAS is one of the most admired companies to work for. The company focuses on education, government and large corporations. SAS has been very successful due to its people and their workplace culture. Unlike Nordstrom, SAS values their employees and rewards them for their hard work. Its strategy is similar to that of Southwest but more formal as it is not a service company. Their strategy focuses on the listening to the customer what they want and provide the product and service they need. The main key to their success is this customer-driven development process along with exceptionally high level of service. The company is very unique when it comes to its pricing and selling strategy. They provide the software at free trail and charge for upgrades, updates and support. The initial sales are low but as the time passes by the revenues increase. SAS also has a very high renewal rate for a software company at 98%. Another reason for such success is that the company provides a range of software products that no other competitor does. The company has many competitors but none that offer such product line. SAS invests largely in research and development and have seen large returns on investment. They are able to accomplish this since they are a private company and they don’t have to think about quarterly earnings, shareholders. Their vision is long run growth. Nothing the company does is short-term oriented. The people at SAS are highly valued and carefully selected. Ones at the SAS they enjoy many benefits and perks. The working environment is friendly, motivating and innovational. The company’s goal is to have low turnover and high retention. The SAS emphasizes intrinsic motivation and trust between co-workers as ingredient for success. As the company is in North Carolina it recruits at local colleges and universities people who are willing to stay in the area. Their strong culture organization contributes to their success. The employees are compensated at very competitive rates; they enjoy profit-sharing that is contributed in their retirement accounts at rates very few companies have.  In general SAS is very generous to their employees in terms of benefits and compensation. As a result they have a system of happy employees that are motivated not just by the financial gain but also by their overall culture in which they work. It is great company to work for.