Stanford Article: Harrah’s Entertainment

March 30, 2010

By Victoria Chang and Jeffrey Pfeffer

This was a very good article that clearly exhibits a great example of leadership by Harrah’s former CEO Phil Satre setting the company up for success when he stated: “Within a year of hiring Gary Loveman, I was patting myself on the back. I thought I was a pretty smart guy for hiring him and shame on me if that was taking a little too much credit, but I did. I thought Gary was doing a terrific job, and I thought he was just the right medicine”.

I love Satre’s statement. He really shows transparency on his words and actions all the way up to his replacement. He recognizes that Harrah’s organization was not performing exceptionally under his administration so he himself calls for a job redesign to mainly restructure the operation and marketing departments. Satre really exercises his role as CEO from start to finish. Better yet, he realizes that things are going extremely bad so he makes a decision, without consulting his staff, to bring somebody to take over his post, a person that brings value not only to Harrah’s company, but also to customers (CEO’s most important function).

Satre appoints Gary Loveman as the new Harrah’s COO, a very personable and humble person to be around and work with, with great potential and leadership skills who had worked with many young managers on several people-oriented projects, Loveman’s forte, at Harrah’s organization. Satre without doubt did an amazing job by hiring Gary Loveman as the Harrah’s COO, a HBS professor who proves he is capable of doing the job and doing it right even though he did not have any experience in the gaming industry whatsoever. Satre made a brilliant decision based on evidence and fact by bringing Gary Loveman into this role, a very smart leader with great positive attitude and motivation, ready to jump into his new role with both feet, took the chance to enjoy the ranks as the Harrah’s COO, and then officially as Harrah’s CEO five years later when Satre stepped down and never turned back.

Satre’s risky choice worked out exceptionally so he absolutely deserves credit for it as well. In hiring Loveman, Satre and all the insiders at Harrah’s felt some kind of strain by bringing an outsider who had never worked in the gaming industry at all, “an industry dominated by insiders who had spent their careers in gaming, working their way up from the bottom”. However, Loveman’s personality and background help him gain respect and credibility rapidly from all the insiders by “working hard to understand not only the industry and the company, but also the operating challenges of our people” Satre pointed out.

Loveman’s leadership skills were incredibly effective and necessary for the success of Harrah’s organizational restructuration in the operation and marketing-related functions. His management style is as a facilitator as he understands that a leader really needs to facilitate the appropriate tools to their team members so they do their job effectively, coach them and mentor them as opposed to controlling them or monitoring them by loosening control and the resources with their management team so that they make decisions that are best for the company. For instance: he decentralizes power by putting the right person into the GM role to run the property, and have the GM report directly to him rather than to a division manager. Therefore, Loveman’s confidence and direction were key management techniques that allow him to lead the Harrah’s group from good to great.

Loveman also describes himself as a high self-monitor, which help him be able to assimilate into groups of people unlike himself pretty well. Loveman’s leadership style also exhibits a double-loop learning trait on his ability and eagerness to learn and adopt new behaviors to affect change, which eventually he did greatly affect Harrah’s marketing and financial operation approach with remarkable results.

Loveman learned how to direct with the mind instead of the heart “effective decision making”, and so he was not afraid of terminating people and getting hindrances out of his way. “He was not interested in what you thought, but in what you knew” (Evidence-Based Management) – that is to avoid making the same mistakes by not analyzing the data mining that Harrah’s managers had collected over the time, such customers data that was a competitive advantage that was being ignored by them.

In summary, Harrah’s financial operations and marketing areas were successfully improved under Loveman’s management. Furthermore, Harrah’s company had a turnover of 24%, a very low rate for the service industry at the time of this article. So, Loveman’s did a phenomenal job by demonstrating the determination and intelligence needed to improve Harrah’s financial performance.

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