Case of the Troubled Casino
Minicase: The Case of the Troubled Casino
The Upper Midwest of the United States has lagged behind the economic recovery enjoyed by much of the rest of the nation. With an economy built largely on the steel, lumber, agriculture, and manufacturing industries, local businesses were hit by the triple challenges of declining commodity prices, globalization, and automation. Countries such as China and Canada offer cheaper steel or lumber, crop prices have been falling, and many manufacturing jobs either were replaced by robots or moved to China, Southeast Asia, or Mexico. Finding thriving businesses in this region can be difficult, and one of the few standouts has been in the gaming industry.A small group of Native American tribal leaders opened the Brown Bear casino about 30 years ago. The facility was built on tribal land and as such is not subject to local, state, or federal taxes. Initially started as a relatively small stand-alone casino, the complex has grown to include 2,000 slot machines, 25 black jack tables, a bingo hall for 600 players, a convention center, a 400+-room hotel, three restaurants, and a golf course. Over the years it has become a destination location for those wanting to play golf, see shows, enjoy good meals, and gamble without having to travel all the way to Las Vegas to make it happen.
The Brown Bear casino complex is now a $50 million business headed up by a general manager, who in turn oversees 11 different department heads, such as the chief financial officer, head of security, director of gaming operations, and so on. These 11 leaders manage the 1,200 employees working at the casino, hotel, convention center, and golf course. Although the casino enjoyed strong growth during its first 20 years of existence, it has not recovered fully from the economic recession of 2007-2009. Many of the good-paying jobs in the area disappeared, and as a result the local population has become considerably smaller and older. Compounding this problem is the fact that the gaming industry is facing increasing competition for customers’ entertainment dollars. The chief marketing officer has implemented a number of campaigns to bring more and younger customers into the casino and increase their average spend per visit, but so far these efforts have yielded negligible results.
Although the casino is the largest employer in the area, staffing and employee engagement have been chronic problems. Many long-term employees appear to be completely checked out at work, biding their time until retirement, and they go out of their way to disparage those who put in an honest day’s work. Despite paying a competitive wage and the relative scarcity of goodpaying jobs the casino averages 30 percent annual turnover, with some positions reporting turnover rates over 100 percent. Turnover is not only taking a toll on the employees who remain (as they often have to pick up the slack for those who leave), but it also has an impact on the casino’s customer satisfaction and financial results. Newer and less experienced staff do not know how to handle more complex customer issues, and it costs the casino $1,000–$5,000 in recruiting fees for each new person hired. With 400 new staff being hired each year, these staffing fees are having a material impact on the company’s bottom line.
The general manager has asked you to help reduce staff turnover, create a more engaged staff,
improve the casino’s customer satisfaction ratings, and ultimately have a positive impact on revenues and profitability.Question 1: How could you use the Curphy and Roellig Followership model described in the introduction to Part 3 to assess employees at the casino?
Question 2: How could you use the five approaches to motivation (Chapter 9), organizational justice, or the two-factor theory to reduce turnover and improve employee engagement?
Question 3: What role do you think top, middle, and first-line management have on employee turnover? How would you assess the impact leadership has on employee engagement and turnover at the casino?