The Men's Warehouse - Tying it all together, and bringin' it home!

It has come to my attention that there are some threads common to the successful companies we’ve studied this semester. Now, there is a clear distinction between “good” case studies and “bad” case studies. For example, SAS Institute was obviously a good one, while Nordstrom was obviously a bad one. Of the case studies we’ve examined the good ones all seem to operate in a similar way, having congruous base philosophies on the way they manage their employees, their organization and their customer relationships. The Men’s Warehouse (MW) is a striking, and clear, illustration of these similar qualities, and practices, which I believe to be clutch to all the good case study companies’ thriving productivity, and include a focus on long-term value and sustainable growth, upper management participation in training the bottom rung employees, and most importantly valuing the unquantifiable and the intrinsic. These three focal points help each company go above and beyond expectations for customer service, as well as shareholder earnings, and employee satisfaction.
Akin to the SAS Institute, the Men’s Warehouse began as the brainchild of its chairman George Zimmer. At first a very modest operation, where Zimmer himself worked on the floor and served customers, it grew immensely in the 1990s because of the excellent customer service and the low prices offered. And since its inception Zimmer has always been focused on the long-term value. This is demonstrated by his statements regarding his company’s five stakeholder groups with employees being the most important with the customer, the vendor, the community, and finally the shareholder coming after. Obviously if one was only focused on that quarter, or the next, one would definitely not make a point of placing their shareholder last in their chain of focus. And in the case of The Men’s Warehouse their policies prove this standard to be valid and sincere. Versus Nordstrom who, despite a reputation for excellent customer service, espoused commitment for their employees but really instituted policies that were detrimental to employee satisfaction, possibly illegal, and whose true aim was maximizing quarterly earning numbers for investors. At SAS it was the private ownership that enabled the long-term focus, while at the Men’s Warehouse it is their hierarchy of stakeholder groups, combined with the charisma and sincerity of Zimmer and his top executives. If one is the lowliest employee at MW and hears the president talking about his appreciation and value for that individual in that position most likely because that is where they also started, that employee can believe those statements and carry it with them as they go about their daily activities. That sincerity provides a measure of inspiration to go above and beyond in one’s regularly for the customer because they know George Zimmer would do the same if he was in their position.
Hidden away within the commentary on each of these flourishing organizations is a management practice that reinforces and validates the rhetoric disseminating from the higher ranks. It is a practice common at Southwest Airlines, the SAS Institute, Harrah’s Entertainment, and of course The Men’s Warehouse. It is the direct involvement of upper management personnel in employee training in fact at the Men’s Warehouse “training was done almost exclusively by line managers and senior executives – there was relatively little specialized ‘training’ staff.” At The SAS Institute high-level executives welcomed new employees and ran new employee training sessions. Validity and sincerity in communications between upper levels of an organization and lower levels fosters an important team atmosphere and focuses all involved on the shared purpose of the organization, instead of an individual focus on my salary, my advancement, or my bonus/commission. Employees at large corporations, or even sizable regional companies, often have an ingrained skepticism or cynicism directed toward upper management personnel, almost a them versus us mentality most likely stemming from past histories of being “screwed” out of something like a bonus or benefits. Those on the Board, or the top management team, seem so removed from the daily struggle of the lowly employee, making it difficult to subscribe to initiatives that come down the chain of command both practically and intrinsically. But when that employee comes for their first day, or flies to their first Suits University, and their sales training is administered by their regions’ Vice President of Sales that employee is given the opportunity to stare that person in the face, learning from them directly, and therefore free to form their own opinion of that individual, instead of just trying to follow orders from a faceless title. It is a better utilization of power paradigms and is servant leadership in practice.
The employees at the companies we have studied this semester have all been in possession of something intangible, a quality that cannot be sufficiently described or measured, and that is never easily imitated, they all value the unquantifiable quality of human potential in their employees. At Southwest Airlines they are extremely careful to hire only those they know will fit into their culture but you ask someone what that is and they have difficulty answering they only know the type of personality required when they see it. At SAS Institute it is hiring employees with versatile skill sets, and independent streaks as micromanaging is a definite sin. SAS also provides employees with numerous benefits and perks, the effects of which on employee satisfaction cannot be quantified, and one only witnesses the effects in the continued blossoming of their stock value. This perspective of Men’s Warehouse management valuing highly the intangible and uncountable quality of human potential in their employees was fostered by the business philosophies subscribed to by George Zimmer. Zimmer is lucky enough to have an organization where he can apply his hippy liberal management style as the standard for the entire organization. He was probably ridiculed in business school for his flighty, uncountable, “soft” philosophies, but in the end he is able to laugh last and hardest because his approach proved exceptionally lucrative (especially considering the industry) and all should sit-up and pay attention, and if you want proof just look at the top line!

Harrah's Entertainment - Use that technology baby!

Competitive advantage is often discussed in business courses but it is a relatively undefined concept that can vary widely between industries and organizations. In the gaming industry the competitive advantage was long considered to be the ability to attract “high-rollers”, or high-value customers, because they visibly spent a much higher percentage of money gambling than the average every-day gambler. Harrah’s CEO Gary Loveman stated that there was an “if you build it, they will come” attitude in large casino business practices, which couple with the concentration on high-rollers, led Harrah’s to an earnings plateau in the 1990’s. The company’s then CEO, Phil Satre, had a unique vision for his organization and through savvy use of available computer technology the company recognized Harrah’s target customer base and then revolutionized the way they serviced them on their casino floors. This diversion in customer service proved extremely lucrative. The company also established a system of tracking customer information that can be utilized for years to come in retaining customers, all whom have such positive experiences at Harrah’s casinos that through sheer word of mouth Harrah’s can grow its customer base. Though Harrah’s experience was certainly ground breaking within their industry, the lessons they learned can be easily applied to other industries, because there is a quantitative basis to their operations which anyone could duplicate.
It is easy to see why business would want to focus on high-value clientele, as those customers spend more, utilize services more, usually have influential relationships that could increase one’s business, and because it is simply a sexy concept of closing a big dollar deal or ingratiating oneself to a high net worth individual. Many businesses do this such as banks, ski resorts, hotels, universities, and even governmental agencies; and most also have a measuring stick system to see who would fall into said category. Everyone wants a piece of the big players. Now truthfully in some businesses revenue streams are enhanced greatly by these individuals, or large percentages of revenues may come from this category, but in my opinion it is probably a much smaller percentage than realized. Harrah’s began their changes by thoroughly examining their numbers and realizing that 82% of their revenue came from 26% of their gamblers, and that it was everyday/weekly patrons who made up that 26%, not big spenders. This is something that most businesses would probably find true. There is a trend in the ski industry to become a destination resort (where one stays, eats, skis, shops etc. all in one location) because all the big-boy players are destinations. However many resorts just don’t have the terrain or traffic to achieve this and have seen better results catering to pass holders (every-day/weekend skiers) than attempting to bring in whales. Resorts have begun to offer their pass holders discounts on food, shopping, and in the bar (especially important to this season pass holder) as appreciation for being a loyal customer. And it has become more important to resort employees to recognize their frequent visitors which takes real skill when most people’s faces are covered with helmets and goggles. Businesses should do as Harrah’s did and really dive into their numbers to find exactly where their revenue is generated instead of adapting service methods and priorities just because it is what their competitors are doing, or is the industry standard. Though the concept is revisited weekly it seems, it is always good to remember that no sustainable competitive advantage is ever gained through something easily copied from someone else.
Currently those who learn to use the technology available, mine it properly, and utilize it properly within their organization will be at the top of their industry, regardless of what that is. As the gaming industry is largely computerized the technology involved offered Harrah’s a way to collect information on its customers gambling habits quite easily. This is something that can be duplicated in any industry simply by committing to growing their database properly throughout its activities, by for example collecting customer information each time a sale is made or repeated. However this is only the first step. For many years Harrah’s had this enormous database of customer information but were not utilizing it properly, a problem that many businesses have I’m sure. Under the leadership of Loveman they began to take unique interesting steps to slice and dice the data in such a way to gain the maximum benefit from it. They used information technology to establish automated systems that enabled them to further the advantage of collecting all that information. One of the most unique ways I found was their practice of sending a mailer, or tagging someone for a phone call, to someone who had spent at least $1000 and had not visited the casino in three months. Also they flagged those individuals who had lost money on their previous visit and targeted them for event invitations, so that individual would return under non-gambling circumstances and then perhaps (most likely) wet their whistle to begin pulling the one-armed bandit once again.
Importantly as well Harrah’s used their data and technology to drive customer service practices, and not just on the casino floor but everywhere within their casinos from the valet parking, to restaurants, to reception all employees were rewarded for providing good customer service. Not just as individuals either but as teams, therefore placing the onus on the managerial staff to instill a culture of excellent service within each of their departments, and then within their location as a whole. The practice of having pit bosses and casino floor supervisors paged when a customer activated their membership card in a machine, or at a table, is unbelievably ingenious. As a frequent gambler my total pet peeve is when I have to wait to get my free cocktails. As soon change my cash to chips at the blackjack table I would expect a cocktail waitress shortly, and if they do not appear soon I will get peeved. Now if I gambled at Harrah’s and gave my dealer my Rewards card which he would proceed to activate, there would a supervisor over there promptly and most likely calling over a cocktail waitress so Miss Burns can get her Corona with a lime. If that happened, I would be sure to return to Harrah’s more frequently than any other casino, period. Keeping all this in mind the next time that I have the inkling to play a little blackjack, I may just have to try my hand at Harrah’s and experience for myself just how wonderful their customer service is.