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Rewards and ROI A 'Fuzzy' Science

At MGM Grand, the customers lining rows of slot machines aren't the only ones who can anticipate a windfall. So can the 9,500 employees who staff the sprawling casino on the Las Vegas Strip.

October 4, 2007
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Related Topics: Recognition, Motivating Employees, Retention
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At MGM Grand, the customers lining rows of slot machines aren't the only ones who can anticipate a windfall. So can the 9,500 employees who staff the sprawling casino on the Las Vegas Strip.

    MGM officials offer an array of recognition programs, some of which can be delivered spontaneously to encourage employees to provide top-tier customer service, says Bette Gaines-Snyder, director of slot and employee events at MGM.

    Las Vegas doesn't lack for deluxe rooms and flashy shows to compete with MGM's own plush offerings, she says. And so, "we tell [employees] that they are the reason that customers come back to MGM Grand,'' she says. "We say, 'You are the brand—you are the ones that can make the difference.' ''

    To date, recognition has resulted in some tangible financial payoffs, according to MGM officials. From 2004 to 2005, slot club enrollments per employee increased from 1,052 to 1,582, according to a white paper they recently submitted to Recognition Professionals International. Wedding chapel revenue per salesperson increased 13 percent; revenue per employee in a fine dining restaurant increased 34 percent.

    Christi Gibson, RPI's executive director, cites MGM results as gold-plated evidence that recognition can drive results, if the right behaviors are encouraged. But not everyone is equally convinced that cause-and-effect relationship can be drawn with any level of certainty. Even recognition enthusiasts insist that other factors may influence results, whether it's employee retention or heftier sales.

    Employee retention, for example, can be shaped by other forces, such as the overall economy and managerial competence, says Danny Hackett, program manager for the Living FAST Recognition Program at Reuters. From January 2005 to December 2006, the media company invested about $2.6 million in employee rewards to help encourage specific employee behaviors, including service and a team focus.

    Those dollars, Hackett believes, boosted employee performance. But he's reluctant to isolate a specific return on investment. Measuring ROI on recognition programs, he says, is "at best a fuzzy science.''

    Gibson counters that such doubts will fade as corporate leaders become more adroit at identifying the precise behaviors they desire. "You have to recognize the correct items,'' she says. "You can't just throw money or gifts at people.''

    MGM Grand, which earlier this year received RPI's "best overall'' award for best-practice recipients, gives thousands of awards each year, Gaines-Snyder says. Each quarter, about 1,000 employees receive distinction—called Maximum Vegas Performance Commendations—for fulfilling six core values and 16 service standards, such as timely service and creating a memorable first impression, she says. Award recipients are entered into a drawing; dinners and show packages are among the prizes.

    Another award, the Gold Key, is delivered by a convention organizer who can recognize any employee on the spot (with a key) for exemplary service. Additional recognition occurs in the daily pre-shift meetings, when employees gather to be briefed on the day's activities.

    Officials at the Scooter Store, in New Braunfels, Texas, take a similar customized approach when they launch quarterly challenges. Each one promotes certain employee behaviors, says Burton De La Garza, events and celebrations manager. During a first-quarter challenge this year, the performance of 75 call center employees was tracked and posted daily based on five specific measures, including the number of incoming calls answered, call availability and generating referrals.

    ''You have to take this down to the individual level; you have to make it tangible to that individual,'' De La Garza says. "What are the behaviors that will produce more results? If you're rewarding and recognizing the wrong things, what's the point?''

    Officials at the Scooter Store, a privately held company with about 1,100 employees, say the number of potential sales leads increased substantially during the three-month challenge. But they declined to release numbers to back that up, calling the information proprietary.

    MGM officials have no such qualms. In their white paper submitted to RPI, they pointed out that the casino's annual revenue increased from $714 million in 2003 to more than $1 billion in 2005. Employee recognition efforts, they wrote, "played a key role.''

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Workforce Management, September 24, 2007, p. 27 -- Subscribe Now!

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