1995 Competitive Advantage Optimas Award ProfileBRMirage Resorts Inc

September 1, 1995
It's just past sunset. Suddenly, the ground rumbles, and the already stifling Nevada heat intensifies. Then, the sky explodes into orange flames as a simulated 54-foot volcano erupts with all the force of a fired cannon.

The scene is The Mirage, a 3,000 guest-room hotel and gaming casino on the Las Vegas strip. Inside the building, slot machine bells ring out jackpots, and gamblers scream in anticipation of a winning blackjack hand; jewel-bedecked women and suit-clad men meander through the casino to a 1,500-seat showroom where they'll soon be dazzled by the Masters of Illusion, Siegfried and Roy, and their magnificent Royal White Tigers; and excited children make their way past a realistic rain forest to ogle seven Atlantic bottle-nosed dolphins swimming in a tank adjacent to the resort's tropical pool.

The name of the game here is not just blackjack or craps, but entertainment—in all forms. Mirage Resorts, which owns and operates The Mirage, Treasure Island and The Golden Nugget, draws Las Vegas' 30 million annual visitors to its properties with its volcano eruptions, pyrotechnic pirate battles (in front of Treasure Island, located on the strip adjacent to The Mirage) and top-rated nightclub shows. (Treasure Island hosts Mystére , a production by Cirque du Soleil, and The Golden Nugget, located in downtown Las Vegas, puts on Country Fever , a country/western music and dancing review ranked among the best new shows of the year in 1994 by the Las Vegas Review-Journal .)

Yet, officers of Mirage Resorts know that these attractions only bring people to its resorts once, maybe twice if they don't visit often. After all, there are 89 other casino/hotels in Las Vegas—each with its own brand of entertainment, ranging from thrill rides to adult-oriented nightclub acts—vying for these same customers. So, Mirage Resorts relies on the service it offers customers to bring them back again and again.

"We spend a great deal of time and money making the buildings very attractive, but we're also convinced that the building doesn't do a thing for us once you get people in the door. If the service is no good, the building is a waste of money," says Arthur E. Nathan, vice president HR for The Mirage. "The Chairman of the Board, the Board of Directors, the presidents of our properties, all know that intuitively, and thus give [HR] a great deal of resources to make sure the staff is selected properly, is well trained and is highly motivated."

Indeed, in Mirage Resorts' 1994 annual report, Chairman and CEO Stephen A. Wynn states: "We spend whatever it takes to hire and train the best and the friendliest employees possible, people who enjoy their jobs and who help us nurture that customer goodwill. Our people are the mortar that holds together the bricks; they breathe life into mere buildings."

The strategy is working, for although a large number of people who visit Las Vegas do so just once a year, approximately 50% of the people who stay at The Mirage once stay again. Considering that 58% of Treasure Island's revenues, and 45% of The Mirage's come from non-gaming sources—a significant percentage being room rentals—the repeat visit is vital. "We are proud that a very substantial percentage of our guests are repeat customers," states the company's 1994 annual report. "We attribute this to our employees."

In a highly competitive environment such as the Las Vegas strip, it's ultimately the workers that make the difference. That's why Wynn calls the office of human resources, "not just a department, but the department." It's the department that recruits the best workers, makes their training a business priority and keeps them motivated with job advancements. It's the department that ensures friendly desk clerks, helpful dealers and efficient maids. It's the department that provides Mirage Resorts with a much-needed competitive advantage.

HR is looked upon as City Hall.
From the volcano outside to the showroom indoors, The Mirage is glitz and glamour, fun and games. The picture looks quite different, however, behind the closed doors marked "Authorized Personnel Only," where the human resources offices for The Mirage are housed. Back here, there are no exotic animals, no gaming tables and no decorative fish tanks. But there is an employee restaurant, called The Strip Joint, that serves workers some of the same food found in The Mirage's guest restaurants, free of charge; a benefits center where workers can obtain information about medical coverage, volunteer activities or educational assistance; and an employee services center where workers can file health-insurance claims, receive payroll information or check the status of their pension plans.

Back here is the City Hall of sorts for the City of Mirage, the inner workings that keep the city—the place that people come to visit—thriving. And back here is where Nathan has his offices, although he's rarely here, preferring to spend more time in the community of workers or networking with his counterparts at Treasure Island and The Golden Nugget. "If you were mayor for a town of 18,000 people [the employee population of Mirage Resorts], you'd have a lot of things going on, and [workers] affectionately refer to me as the mayor of Mirage," says Nathan, who unofficially serves as the corporate HR representative.

I don't know what percentage of payroll we spend on training. What's the difference? I determine we need to do something perfectly and spend the money.

In this role, Nathan sets the philosophical tone for Mirage Resorts. "I'm supposed to be the spiritual leader and show everybody the way," he says. By "the way," Nathan means the Mirage Resorts' Way, encapsulated in its philosophy that the employees are the company's #1 asset and should be treated as such. This philosophy is what links the different properties together, and gives the human resources staffs common ground. For although each resort has its own autonomous HR staff, "We're all working for the same company and working toward the same goal," says Helen Kyle, vice president human resources for Treasure Island. "And the goal is to have the best employees we're able to have and to keep them on top at all times."

This commitment to human resources is something the corporation takes seriously. So seriously, in fact, that Nathan was the second employee Wynn brought on board for The Mirage (after hiring President Bobby Baldwin). And this was 30 months before the casino/hotel opened in November 1989. "Human resources is the key value, and the company knew that before I got here and so brought me in early to be the spokesperson for the human resources issues," says Nathan.

In this role as spokesperson, Nathan participated in the design of The Mirage, advocating for designs that would best facilitate workers in their jobs. This included such things as allocating dedicated routes to parking spaces for the valet parkers, installing automatic conveyor systems for the bellmen and placing service elevators next to room-service kitchens.

Being on board so far in advance also enabled Nathan to evaluate the openings of other businesses, taking note of what worked and what didn't in the recruiting process. He studied more than 200 companies: hotels, casinos, manufacturing firms and retail establishments—all of which had opened in the previous 10 years. From these he was able to put together a successful recruitment strategy to staff The Mirage for its opening and Treasure Island for its opening four years later in October 1993. (For more about this strategy, see the end of the article.)

The Mirage received 57,000 applications for its 6,500 positions. The high volume can be partly credited to the fact that The Mirage was the first new casino/hotel to be built on the strip in many years. But, judging by the fact that Treasure Island received close to 70,000 applications for its 5,500 positions, despite the fact that it was opening within days of two other major resorts—MGM Grand and Luxor—there seems to be more to it. Treasure Island's Kyle, who came from The Golden Nugget, says it's reputation. "Even when we had just one property in Las Vegas [The Golden Nugget], we allocated far more money and time to making events successful for employees and to developing, putting in place and keeping up successful employee programs than most of the places in town," says Kyle, who throughout her career has worked at several casino/hotels in Las Vegas. She says a lot of the other resorts in town are doing more programs today than they were two years ago, but Mirage Resorts is still the leader.

Fun is emphasized at Mirage Resorts.
Certainly, Mirage Resorts looks out for its workers in terms of offering several different medical plans; multiple life and disability insurance programs; paid time off and bonuses for perfect attendance; and retirement saving through 401(k)s. But even more than that, Mirage Resorts offers a fun work environment. Now, you're probably saying to yourself, it's a casino, of course it's fun. But a casino, like any other business, has jobs that can be monotonous or mundane. Checking in people at the front desk, for example. Or making change. So part of what draws workers to Mirage Resorts is the emphasis placed on fun.

Front-desk personnel, change vendors and restaurant hosts and hostesses all are taught to put their personality to work and to have fun. "I test service all over the world," says Nathan. "I see the worst forms of routine presentation of service and it's horrible—not just for the customer but also for the employee. It makes the job boring, and if the worker gets half a chance, he or she will leave that job and go someplace else." This obviously doesn't happen much at The Mirage, where turnover was 14% last year and is heading toward 10% this year—compared with a 40% average in Las Vegas and 80% in the hotel industry nationwide. Since retention of good employees is important for sustaining a competitive advantage, having fun is vital.

Dealers, for example, are taught how to interact with customers and are encouraged to banter with them and have some fun at their tables. "Most companies historically have been afraid that talking with customers would develop some level of coercion," says Nathan. "That's baloney."

Desk clerks, too, are told to engage the guests in conversation, personalize service and keep the job fun. For instance, they should talk to the guests about where they're from (I went through North Dakota once on a train), about their reasons for the trip (business or pleasure?) and joke with them about the winter coats they came in with (you won't need that here, sir—it's supposed to be 120 degrees today). Nathan admits that keeping managers focused on making the workplace fun is probably the greatest challenge that he faces. "Managers tend to be get-the-tasks-done types of people," he says. "My job is to change them to have a greater people orientation, to better deal with the full range of issues that come up when managing people."

Mirage Resorts extends the element of fun beyond the workday by offering entertainment events for workers and their families throughout the year. These include Family Days at the local water park and annual holiday festivals.

Training is a business priority.
Of course, the jobs that need to be performed for a business to run—even if the business is providing entertainment—can't be all fun and games. Providing quality service is serious business. And doing so requires training.

Although training always has been important to Mirage Resorts, even before the new casino/hotels were built, Nathan learned in his research before opening The Mirage just how important training is to a successful opening. "Most organizations didn't do much training when they opened because they didn't have much money," says Nathan. "Afterward, all of them said that they would have done more training if it had been possible."

As a result, Mirage Resorts spent approximately $3.5 million on pre-opening training for The Mirage and nearly $3 million for similar training at Treasure Island. But it didn't stop there. According to Nathan, the company spends approximately $8 million per year corporatewide on training. And this number isn't qualified. In fact, the human resources function doesn't even have a training budget that it has to adhere to. "I don't know what percentage of payroll [we spend for training], or what percentage of gross revenues that training expense is," says Nathan. "What's the difference? I look at a program, determine we need to do it and need to do it perfectly, so I spend the money needed to do that."

Kyle agrees. "We spend a lot of human resources and a lot of money on training, but it's one of the single-most important things we do."

Each property has a training director, as well as training managers for each division—gaming, hotel, food and beverage, retail, security, entertainment, human resources. In addition, division training managers select and train team leaders who in turn are responsible for a group of approximately 20 employees; the leaders conduct job-specific training for the company's 433 separate identified jobs.

This job-specific training requires that workers learn somewhere between 10 and 15 required tasks before being allowed to do their job. For example, every maid employed by the Mirage Resorts must demonstrate to his or her trainer that he or she is able to make a hospital corner on a bed.

Mirage Resorts also teaches its workers key behaviors and strategies. For example, it doesn't just teach cocktail servers what the various cocktails are and how to serve them, but also teaches them how to help people if they get too intoxicated, and how to stop serving someone without causing a scene.

And rather than only teaching the casino's blackjack dealers the various tasks associated with dealing the game, such as shuffling, dealing and paying out, Mirage also teaches them how people cheat the house. "This has changed the way dealers look at the game and look at us," says Nathan. "It used to be that they looked at surveillance and security as some Big Brother mechanism intended to catch them. So we turned it around and showed how it was protecting us, and thus protecting their security with the company. Now dealers catch more cheats than surveillance does because they see the scam as it develops."

In addition to job-specific training, Mirage Resorts offers its employees classes on everything from how to balance their checkbooks to how to communicate with deaf patrons in sign language. Treasure Island, for example, has had classes on wallpapering, on nutrition and on saving for the future. It brings an instructor from Immigration and Naturalization in to help noncitizens get their citizenship. And it has an in-house Weight Watchers program for those employees trying to shed a few extra pounds.

"We try to do the kinds of classes that will make our employees well rounded and better individuals in their private life as well," says Kyle. "Plus, if we can provide them some kind of advice on how to handle their finances, they won't have financial worries when they come to work and will concentrate on the job. Or, if they don't have child-care problems, we'll get better performance out of them."

Most of the classes are offered free to workers, with the exception of something like Weight Watchers, for which the company has to pay per participant and therefore charges the employees nominal fees. Human resources at each property conducts periodic employee surveys to help determine what classes the workers might be interested in taking. Thus, each location may have different programs going on. At Treasure Island, for example, a lot of employees have requested sign-language classes—something workers at The Golden Nugget or The Mirage may not have any interest in.

Management training is a key component to Mirage Resorts' training strategy.
Two training programs that all the properties have are a Management Associate Program and a Management Development Program. Mirage Resorts recruits managers from among hotel-management majors at universities around the country. Candidates must have earned grade-point averages of 3.0 or better, served as interns and been given high recommendations from their colleges to be selected for the Mirage Resorts team.

People recruited through this process, as well as those workers who have been promoted into management from within the organization, go through the Management Associate Program. Participants in the program attend 26 weeks of structured training and hands-on management experience that is specific to their chosen profession, be it as a food and beverage manager or as a human resources manager.

Later, managers and supervisors can attend a series of workshops and training courses through the Management Development Program designed to strengthen their practical management skills. These include courses on motivation, speech making, business writing and payroll cost control.

If a manager can't explain why a task needs to be performed in a certain way, then the employee doesn't have to do it. It's planned insubordination.

All Mirage Resorts properties offer the same management courses but, Kyle says, each of the different properties has its own, unique touches, its own way of getting the customer to come back. "We have a buccaneer sea battle and an arcade, and The Mirage has a dolphin tank," she says. "These require some special tailoring of the programs."

Plus, because each of the properties has its own autonomous human resources staff, the programs may vary a bit according to what the different human resources heads feel is important for their people. At The Mirage, for example, managers are taught that they must always be able to explain why. "That's the driving element of our management philosophy," says Nathan. "We learned that from people who are specialists in adult education. Adults need to understand why." Nathan says that if a manager can't explain why something needs to be done, or why a task must be performed in a certain way, the employee doesn't have to do it. Period. "It's planned insubordination," he says.

Nathan credits this one simple rule as a major element in virtually eliminating grievances. As of the writing of this article, there hadn't been a grievance filed by either union or nonunion workers in two years. "Employees all have access to a grievance process at all times," says Nathan. "But because we're in the business of explaining why, that usually takes the wind out of people's sails when they're disappointed about something. Whether they like the answer given or not, they usually feel better getting an explanation rather than hearing 'because I told you so.'"

A growing company provides room for growth.
Nathan also attributes employee satisfaction to the fact that workers have ample career opportunities. The properties maintain public books that list every job function and describe the minimum qualifications for each job. Immediately upon completing their first 90 days, and anytime thereafter, employees can fill out a Job Interest Card requesting to move to another job. For example, if someone is hired to be a maid, but decides later that he or she would like to be a food server, the person would fill out the card indicating this preference, and include a list of skills and experience. When managers are looking to hire additional help, they must interview these internal candidates first before ever going to the outside to recruit. According to Nathan, approximately 76% of the openings are filled internally every year either through these kind of lateral moves or through promotions of current Mirage Resorts employees. Says Kyle: "Employees who were kitchen workers when I came to work for the company in 1989 are now assistant food and beverage managers. The opportunities are never ending."

That's partly because current employees also are given first opportunity to move to new Mirage Resorts properties when they open. Of Treasure Island's 5,500 initial employees, for example, 2,000 came from either The Mirage or The Golden Nugget. "What happens is you wind up almost doing an opening staffing for each location," says Kyle.

This can be burdensome on managers who must restaff and retrain if they lose workers to other Mirage Resorts casino/hotels. Some have complained to CEO Wynn, hoping to change the policy. But, according to Kyle, he's adamant about keeping it. "He won't even listen to the arguments," says Kyle. "He knows the reason we are what we are is because of the employees who have worked so hard for us, and they should be given the first opportunity for growth or change."

These opportunities soon will abound, as Mirage Resorts gears up to build the 3,000 guest room casino/resort, Beau Rivage, in Las Vegas—which the company claims will be "the finest hotel in the world." Also, Mirage Resorts will soon break ground on Project Victoria, a 3,039 guest room Las Vegas hotel/casino which the company is building in a joint venture with the Gold Strike organization. And third, Mirage Resorts is evaluating building opportunities in Atlantic City and other areas where casino gaming recently has been legalized.

Growth like this takes money, and lots of it. Money that Mirage Resorts has plenty of. With 1994 gross revenues of close to $1.4 billion, Mirage Resorts has the highest productivity of large casino and hotel companies, according to Forbes magazine. The publication reported that Mirage Resorts recorded $7,900 in profits for each of its 15,700 employees in 1994. Forbes also reported that Mirage Resorts ranked highest in sales in the travel, hotel and gaming sector, and was ranked 410th on the magazine's list of the 500 largest public companies in the nation in terms of overall sales, profits, assets and market value.

Of course, having money doesn't necessarily make a success. What a company does with that money is what counts. For Mirage Resorts, investing money into its human resources has been a key. Creating a fun yet challenging work environment has kept turnover down, helping Mirage Resorts maintain a high-quality, motivated work force—a work force that the company has spent a fortune training to provide quality service and provide it with its competitive advantage.

Readers of Las Vegas Business Press chose Mirage Resorts as the best-run company in 1994, proving that Mirage Resorts has a winning strategy. Further proof is the fact that the company's hotels consistently maintain a 98.6% occupancy when others in Las Vegas experience 90%. But perhaps the greatest proof of all lies in the fact that workers believe they work for the best company, and therefore strive to make it so. As Kyle says: "It gives you a good feeling to be part of something that you know is going to be the very best out there, the best that it can be."

Personnel Journal , September 1995, Vol. 74, No. 9, pp. 78-86.