Caesars Casinos Case Study

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Caesars Casinos Case Study

Background

The recession of 2007- 2008 caused a decline in revenues for Caesars Tunica Casinos and increased competition in the gaming industry. To maintain and grow its market share, the

Regional Director of three Caesars Casinos, Brad Hirsch, decided to implement the lean

principle in their operations. Hirsch put together a Regional LEAN team in Tunica and developed

5 day Kaizen workshops in which employees of all levels would actively participate together in

identifying and targeting areas and processes of improvements. Hirsch recognised that these

workshops would be an effective, consistent, and focused approach to improve multiple

aspects of business at Caesars. Some of these aspects include profitability, efficiency, customer

satisfaction levels, and market share. Hirsch’s aim was not to simply create a lean process, but

to make sure the LEAN culture would be a permanent change to Caesars. (1-2)

The initial challenge of this change in management was that employees were fearful that

adopting “lean” processes would lead to job cuts. This added to Hirsch’s expectation that

planning and executing the Kaizen events would be the most complicated aspect of

implementing new processes. Therefore, executives consistently communicated to their

employees that the goal of this change was to improve the customer experience, increase

efficiency, nurture problem-solving skills, and to improve work environments. (2) While

resistance to change, especially from mid management, were important aspects to consider for

the programme to succeed, what was most challenging was “sustaining the gains after and

kaizen event (13)”.

What are the most important elements of the process-improvement approach pursued at Tunica?

The most important element of the LEAN approach was to correctly identify areas of waste

(muda). Hirsch’s LEAN team understood that in order to efficiently and effectively problem-

solve they had to boil the problem down to its fundamental principles. That is why the Kaizen

events were dedicated to identification of wasteful processes from Day 1 through Day 3. On

Day 1, several analytical tools to promote LEAN thinking were introduced; DOWNTIME, value

stream mapping, spaghetti diagrams, 5S, Five Whys, one-piece flow processing, the pull

discipline, and basic problem-solving approaches (4). DOWNTIME was especially important as it

was used to aid waste recognition. The acronym stands for defects, overproduction, waiting,

not engaging people, transportation, inventory, and motion.

Creating measurements were also essential in the process-improvement approach. They

identified and held areas accountable for maintaining consistency and extending the

improvements. The changes made in the Kaizen events would be useless if they were not made

into permanent changes to operations. Hence, KPIs were developed to evaluate safety, quality,

delivery, inventory, organisation, and productivity-cost. And to monitor these indicators as well

as reporting any barriers or sharing ideas for improvements, the KPI Board was created. (10)

What benefits were derived from this process-improvement approach?

The organization-wide process-improvement Kaizen events yielded immediate positive results,

both internally and externally. It lead to higher customer satisfaction measurable by customer-

service score improving from B to A, $3mil in documented savings, and increased employee

motivation(2). The shift of service scores from B to A was especially important since improving

customer satisfaction was a top priority for the company, and a 3% increase of As were an

attractive incentive since it was a requirement for employees to receive their maximum

bonuses. On top of this, 25%-90% of wasteful processes employees identified were eliminated

during the event itself, which boosted confidence in the programme. This approach is effective

for the customers, employees, and company and they all benefit from each other.

What may be some challenges with implementation of Lean systems at Metropolis?

If the LEAN team at Metropolis were to go with the implementation process of involving all

employee levels, like in Tunica, the same big challenge of sustaining gains would be the biggest

challenge. Additionally, the increased number of employees participating in the Kaizen events

would demand a significant amount of time taken from employees’ daily tasks. On the other

hand, if Caesars decides to go with the expert-driven approach, employees and managers may

be more resistant and unmotivated to change any processes. I believe that the employee-

centred approach would be more beneficial to the company as increased employee motivation

leads to long-term profits. Also, if in 5 days processes can be improved, having a specialised

team that would take longer to analyse the company and its processes (assuming the specialists

are not as familiar with the company and need months of researching etc) will cost more time

and money.

You are the manager of the Housekeeping Division. You and your team have recently

participated in a Kaizen event, what KPI’s might you track to determine whether the changes

you’ve made are improving performance?

Some KPIs I would use to track whether my team is maintain gains from the kaizen event are;

Room cleaning time, number of guests per employee, and cleaning supply costs per room.

Room cleaning time is essential to measure as rooms must be available quickly for new guests.

Having to wait extra time for check-in could greatly affect customer satisfaction. Number of

guests per employee is important as being understaffed would affect time to turnaround a

room and employees may make more mistakes due to overworking. Monitoring cleaning supply

costs per room is important to make sure the cleaning techniques that were improved during

the kaizen event are maintained. This could lead to cost reductions as well, if supplies were

over stocked.