What Casinos Can Learn About Performance Management from Microsoft

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How to use technology to automate goal management and tracking

Years ago, when I first started my career at Microsoft, one of the things that I enjoyed the most about the company’s culture was its informality (and I don’t mean walking around in ponchos and Birkenstocks – although that does happen). Work got done not by committee, lengthy process, or hierarchy, but through collaboration, resolve, and passion. At Microsoft, this meant a balance of creativity and discipline.

Discipline was enforced through the company’s performance management process. This structure helped employees:

  • Define goals that were aligned with the business
  • Articulate performance expectations of contributions
  • Understand how the compensation structure was tied to performance
  • Receive feedback on a regular cadence that helped manage progress towards defined goals and outcomes

It’s hard to argue against the tremendous success that Microsoft enjoyed as a result of its rigorous outcomesfocused approach. And although the very notion of performance management today is evolving at many companies, including Microsoft, most would agree that a formalized approach to goal setting and evaluation is critical.

Performance management is a process by which managers and employees work together to plan, monitor, and review an employee’s work objectives and overall contributions to the organization. It can be thought of as a continuous cycle that involves:

Planning goals and setting performance expectations that are aligned with organizational objectives Monitoring progress against measurable performance indicators Developing employee capabilities to successfully execute work assignments Evaluating progress against key performance indicators (KPIs) on a regular cadence to ensure that goals are met Rewarding successful outcomes

Goals help define an intended outcome with KPIs that are used to track progress. A KPI allows you to assess where you are relative to where you want to be (actual vs. forecast). It is important because it can help you understand where to influence time and resources to achieve your desired outcome.

A poorly structured performance management process can be detrimental to the organization. If individual goals are not aligned with the organization’s strategy, time and resources can be spent on activities that don’t move the business. If performance measures are not adequately tracked to monitor progress, problems can fester without resolution. And if employees don’t understand what they are being held accountable for or being evaluated in an inconsistent way, this can affect employee morale and productivity.

Performance management is not a technology capability; it’s an organizational process that you use to drive towards an outcome. But technology can be instrumental in automating the performance management process and making things more operationally efficient.

In casinos, a host incentive program is a good example of where performance management is critical for program success. Hosts and managers need to work together to define performance goals for VIP business. KPIs must be constructed and actively monitored to assess weekly/ monthly progress (theo, theo growth, visit growth, etc.). If problems arise, mitigations must be proposed and implemented. Managers need to give hosts relevant feedback to “course correct” on problem areas. And finally, incentive compensation must be properly rewarded at the end of the period based on the results.

As simple as this framework sounds, it is not always as easy to implement. Most of the challenges are organizational in nature. It can be difficult to hold people accountable for their actions if it is done without a fully supported system in place to capture goals and monitor progress.

How to start?

Clearly communicating strategic business objectives is the first step in the performance management process. This is set from the top, the CEO or property GM. Goals then filter down through the organization, with department managers setting goals that align with their leadership’s strategic direction. Each manager in turn shares the overall goals with his or her team, and meets with employees individually to set performance goals and plans.

Goals should be set that not only address what is expected, but also how it will be achieved. For example, the “what” covers quality or quantity expected, deadlines to be met, cost to deliver, etc. The “how” refers to the behavior demonstrated to achieve outcomes. And all of this should be clear, unambiguous, and align with the top-level strategy.

One widely accepted framework is the use of SMART goals:

  • Specific – Defines the specific goal that you want to accomplish. Example: Increase VIP player revenue by 20% in 2018.
  • Measurable – States quantitative key performance indicators that you will use to track towards your goal. Example: monthly theo, ADT, visits, etc.
  • Achievable – The goal needs to be realistic and attainable; it should stretch you, but still be possible.
  • Relevant – The goal should be in alignment with the rest of the organization.
  • Time-Bound – You should have a target completion date for the goal.

Having a way to codify these goals and then monitor progress on a recurring cadence will be important in the performance management process. Technology can help here by automating goal management and tracking through performance dashboards.

Performance dashboards give an analyst or decision maker a high-level overview of the casino’s most important metrics. For example, in the case of a host program, dashboards can allow you to monitor host or program effectiveness. It also provides a measure of transparency that allows both the management team and the individual host to understand what their goals are and how they are tracking towards completion. Performance dashboards also enable a quick health check of the host program or the host, without spending significant time building throwaway reports.

Regardless of the technology that you use, the creation of goals and their tracking on a recurring cadence should be the primary activity. As Bill Gates once said, “By the time you realize you’re in trouble, it’s too late to save yourself.” With a well-executed performance management process, that “trouble” can be avoided.

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