Strategic Casino Staffing

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Strategic Casino Staffing

Always a Good Bet to Increase Profitability

Highlights

• Casino revenue is down.

• Government oversight of casino labor management is up.

• Cheating is more sophisticated.

• Casino staffing is at the center of the problem.

• Effective workforce management can help.

• Infor10 WFM Workbrain meets the need.

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Executive summary

In the gaming industry, it pays to understand the correlation between employees, customer service, and profitability.

For casinos, the tight relationship between customer service and profitability is obvious. The better the customer service, the better the profits. A second equally important connection in gaming is the relationship between how a casino operator manages employees and the customer-service levels it achieves. The more effectively you train employees, schedule them, and build morale, the better your customer service will be. Given this, it’s easy to see how effective workforce management is directly related to casino profitability.

In recent years, several outside forces have been interfering with the ability of casinos to implement a high- caliber strategic workforce management strategy as a precursor to customer service excellence and profitability. For example, overall casino industry revenue has declined at the same time as the number of casino properties has increased. There has been a marked increase in government oversight of casino adherence to labor regulations as a result of employee litigation. In addition, a new generation of mobile technology is disrupting the relationship casinos have with their employees and their customers. One implication of this technology trend has been the increased sophistication of casino floor cheating.

In this white paper, we take a detailed look at how these external forces are impacting casino operations and how the industry has reacted so far. We discuss how adopting a strategic approach to workforce management (WFM) based on a new generation of software capabilities can lead to improved customer service which, in turn, can lead to improved profitability. We also provide an overview of the Infor10™ WFM (Workbrain) solution, which is designed to help casinos increase their customer wallet share and profitability in the face of the ongoing gaming industry challenges.

Major business pains in the

gaming industry

To fully understand how to best leverage workforce management for casino profitability, we should first explore some of the major trends in commercial gaming.

Casino revenues still down from their peak.

The economic downturn that started last decade and continues today has driven down revenue of

commercial US casinos from a peak of $34 Billion in 2007 to $30.8 Billion in 2010.1_{The American}

Gaming Association’s 2011 State of the States report notes that even though there was a small revenue increase from 2009 to 2010, a return to the revenue levels of 2007 will take a broad-based increase in

US consumer spending.2

1 _{American Gaming Association, “2011 State of the States Report,” pg. 5 and “2008 State of the States Report,” pg. 2.} 2 _{American Gaming Association, “2011 State of the States Report,” pg. 5.}

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Casinos have tried a number of tactics to offset the revenue decline, including cutting back on staffing. The association’s annual State of the States reports show a generally ascending commercial casino employment trend from the late ‘90s, to a peak of 366,197 in 2006. Commercial casino employment has subsequently declined to 340,564 in 2010, an employment level lower than any year since 1998.

Government oversight into casino labor management increases.

The U.S. Department of Labor (DOL) is more closely monitoring how casinos adhere to labor regulations, especially overtime. This added scrutiny is being driven by high-profile litigation against gaming companies by their employees. For example, in December 2010, table game supervisors filed a class action lawsuit against Caesar’s Entertainment Corporation and Harrah’s Operating Company, Inc. The employees claim they are not being paid correctly for mandatory overtime. They say that their per diem pay is cut when they work less than a typical eight-hour shift, yet when they work overtime, they receive no additional pay. Regardless of which party prevails in this lawsuit or others working their way through the courts, the Department of Labor has taken notice. In response, casinos know their labor policies and the implementation of those polices will be closely monitored. Losing an employee class action lawsuit can be a costly problem for casinos, made even more difficult if it comes at a time when they are struggling to maintain profitability in a down economy.

New mobile technologies disrupt relationships with employees.

For gaming companies, mobile technology is a transformative trend with the potential to produce significant business benefit, as well as cause a major disruption to casino operations and profitability. Casino operators are realizing that mobile technology is a ubiquitous part of the workplace and part of their customers’ and employees’ daily lives. It is projected that by 2015, 43% of the US population— about 110 million people—will have and use smartphones. That will be nearly double the number of

people with smartphones at the end of 2010.3_{And most companies—73% according to one report—}

allow employees to use cell phones for work purposes.4

Smartphones are making commensurate inroads in the casino workplace. Casinos are seeking to use mobile technology to improve the quality and quantity of transactions. Pit managers are using smartphones and tablet computers for daily shift administration, which enables them to spend more time on the casino floor.

But from a workforce management standpoint, there are some significant drawbacks. By allowing the use of mobile technology on the casino floor in pursuit of better customer service and higher employee morale, casinos are relinquishing some control over their operations. Court decisions have supported the rights of employees who use mobile phones while working to also use them to comment on their employer or their employer’s customers. In other words, on their time off, your employees can tweet or post bad things about you or your customers without fear of any consequence. Mobile technology is disrupting the casino workplace at such a pace that most organizations are unable to develop and implement corporate polices fast enough.

3_{“The Future of Smart Mobile Devices,” eMarketer.com, (http://www.emarketer.com/Article.aspx?R=1008228), Feb. 2011.}

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Cheating has become more sophisticated.

Driven in part by new mobile applications that enable card counting and other cheating techniques, casinos are facing greater threats to the fairness and security of their operations. The Pennsylvania Gaming Control Board’s director of casino compliance, Gerald E. Stoll, aptly summed up the problem in a 2011 newspaper article, “In table games and slot machines, there’s a whole counter culture that does

nothing but cheat. There are people who are making their living by cheating.”5

Casinos are investing in technology to help uncover cheating, including improved surveillance systems to better monitor the behavior of gamblers and, in at least one instance, the use of artificial intelligence. But if you can believe one well known, self-professed casino cheater, Richard Marcus, technology is no cure for the problem of cheating and the best defense also includes a casino’s employees. In a CNET News.com article, Marcus is quoted as saying, “These people (casino operators) rely upon their technology too much. There is no room for maneuver in their thinking. I don’t have to fool the camera or the technology; I only have to fool the dealer or his pit boss. If I fool them, the technology doesn’t come in to play.”6

Casino staffing is at the crux of all

these pains

Ironically, Richard Marcus does the gaming industry a service by highlighting the importance of employees as the first line of defense against cheating. Employees—and the workforce management processes used to manage them—also can play a similar role in addressing the other pressing challenges in the commercial casino industry.

Because of the correlation between customer service levels and workforce management effectiveness, it’s essential for casinos to excel at staffing their operations. Lower margins mean there is less room for staffing errors that contribute to poor customer service. When there are more casinos and fewer customers with less money to spend, casinos can ill-afford to allow a reputation for poor customer service to become part of their brand image. It’s essential that casinos align their staffing levels with actual demand and avoid overstaffing, under staffing, and unscheduled overtime.

In every industry staffing is important, but in the gaming industry there are special requirements that make it more challenging. Scheduling casino employees has added requirements, like the need to randomize schedules to thwart customer manipulation and cheating. With Department of Labor scrutiny, there is more risk a staffing-related problem will turn into a costly issue. This creates a need for precise, rules-based scheduling. And, finally there is the need for sophisticated training so employees can better identify cheaters, many of whom are now using more sophisticated tools like card counting apps through their mobile device.

5_{Mark Gruetze, “Awareness of casino security knows no bounds,” Pittsburgh Tribune-Review, (http://www.pittsburghlive.com/x/pittsburghtrib/ae/}

gambling/s_733569.html ), April 22, 2011.

6_{Will Sturgeon, “Technology can’t beat us, casino cheat says,” CNET news.com,}

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Workforce management is at the crux of

the solution

If casino staffing is the crux of the pain, then strategic workforce management is the crux of the solution. Casinos that implement a formal workforce management solution can take the guess work out of their staffing processes. Here are some of the core capabilities available in advanced workforce management solutions and the ways they can help casinos reduce costs, improve customer service, employee morale, and the security of their operations:

Automated scheduling. This is especially important in casino operations because of the need for efficient ways to randomize schedules and prevent detectable staffing patterns that can be exploited. Automation also can reduce the time that managers spend creating schedules and briefing employees on those schedules. Schedule automation is relatively new, but according to an Aberdeen Group report, “Workforce Scheduling 2011,” it shows a lot of promise. “Though automation of scheduling processes is still in its infancy, analysis shows that it can pay huge dividends in several key areas such as

accuracy, manager productivity, cost savings and compliance.”7

Increase overall operational efficiency. Casinos and any organization with complex staffing requirements can use workforce management functionality to more closely align staffing levels to actual customer demand. A WFM solution can enable casinos to better analyze rotational mix options and arrive at the best ratio of time at a table and time off. Improving the way labor is deployed will lead to better coverage of unfilled shifts, a reduction in unnecessary overtime, and better manager efficiency. The business value of better labor deployment was reinforced by a leading hospitality researcher, Gary M. Thompson, of the Center for Hospitality Research at Cornell University. In his 2003 report, “Labor Scheduling: A Commentary,” Thompson writes, “Effectively deploying labor translates to higher profitability, both in the short term as overstaffing (periods when more staff are working than ideal) is reduced, and in the long-term, since understaffing (periods when fewer staff are working that are ideal)

is reduced and the better and more consistent customer service translates to more future business.”8

Improve morale. Deploying an advanced WFM solution can give casino operators considerably more flexibility to accommodate employee preferences without compromising their own goals for operational efficiency. For example, using mobile technology to let employees perform administrative tasks like signing up for schedules, reporting on time worked, and scheduling vacation can improve

morale as well as improve operational efficiency.9

Again, Gary Thompson describes the business value to an organization that gives employees more choice and flexibility. “Employees generally have preferences for a wide variety of job characterizations, including the tasks to which they are assigned, when and how long their breaks are, with whom they take breaks, with whom they are working, the time of day they work, which days off they have,

7_{Jayson Saba, “Workforce Scheduling 2011,” Aberdeen Group, April 2011, pg. 14.}

8 _{Gary M. Thompson, “Labor Scheduling: A Commentary,” Center for Hospitality Research at Cornell University, Oct. 2003, p. 5-6.} 9 _{Thompson, p. 4-5.}

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and whether their days off are consecutive…..By taking into account employee’s preferences, and exploiting the complementary nature of those preferences, you’ll get a work schedule that better meets employee desires, which presumably translates to better on-the-job performance and better

customer service.”10

Create a culture of customer service. Using an advanced workforce management solution and processes to improve morale and improve training can help a casino create a culture of customer service. And since customer service is directly related to casino profitability, the bottom-line business value is obvious. Commenting on the importance of customer service to casinos, Dave Newton, former casino HR executive and current partner with the Hospitality Resources (consulting group), writes, “With the current economic climate, lack of available capital and ongoing expansion of gaming, retaining customers (or at least getting more than your share of their play) will clearly be crucial. But this isn’t simple. To create and maintain a culture of service, you need to establish certain leadership practices and human resource systems. The companies that have made customer service a priority in the past will have a huge competitive advantage, because there is nothing harder than changing human behavior once those behaviors have become habits.”

Better comply with labor rules and other regulations. Labor laws and union rules present a complex challenge for casinos that must balance their compliance requirements with their need to operate profitably. By using a WFM solution to automate time and attendance processes, a casino will collect attendance history by employee and give managers alerts when they need to take steps to maintain compliance with labor requirements. The increased precision with which a casino can schedule employees and the better reporting capabilities in advanced workforce management solutions can be a safeguard against inadvertent violation of labor regulations.

Infor10 WFM (Workbrain)

Infor has developed capabilities specifically designed to help commercial casinos implement and benefit from advanced workforce management capabilities. Infor10 WFM (Workbrain) is a comprehensive, demand-driven workforce management solution with industry-leading scheduling capabilities for workforce planning, scheduling, time and attendance, analysis and reporting. Casinos can use Infor10 WFM (Workbrain) to:

• Configure an automated, rules-based scheduling process to meet customer demand, while

incorporating employee preferences.

• Randomize schedules to meet the special needs of casinos to protect against development of

staffing patterns that can enable cheating and compromise security.

• Give employees and managers the ability to perform workforce-related tasks using their

smartphone or other mobile device.

10 _{Dave Newton, Hospitality Resources, quoted in the December 2010 issue of Global Gaming Business magazine, (http://ggbmagazine.com/}

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• Automate time and attendance processes to ensure accuracy and compliance with labor laws, union rules, and company policies.

• Automate and streamline the workforce planning process.

Conclusion

For casinos, implementing an effective workforce management solution tailored to unique gaming industry requirements is critical to meeting targets for short-term and long-term profitability. When staffing is approached strategically, casinos stand a much better chance of properly balancing their investment in labor and other core business objectives. In this white paper, we’ve discussed the ways in which strategic workforce management can help casinos deliver excellent customer service, improve employee morale, better address their security challenges, and comply with labor laws and union rules.

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Strategic Casino Staffing