South-Western - Management  
Rewards and ROI: A ‘Fuzzy Science’?
Topic Motivation
Key Words Recognition, ROI
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News Story

The 9,500 employees at the MGM Grand in Las Vegas are told that they are the reasons that customers return. All employees of the casino are eligible for an array of recognition programs to help them to set the MGM brand apart from other casinos.

The recognition programs seem to be paying off in increased revenue. From 2004 to 2005, slot club enrollments per employee were up from 1,052 to 1,582. Wedding chapel revenue per salesperson increased 13 percent, and revenue per employee in a fine dining restaurant increased 34 percent.

But even though MGM officials cite these results as evidence that their recognition programs are driving results, not everyone is convinced that the cause-and-effect relationships can be made with such certainty. Other factors may influence results, whether it’s employee retention or better sales.

Employee retention can also be affected by the overall economy and managerial competence. Christi Gibson, executive director at Recognition Professionals International, says that doubts about the “fuzzy” correlation of recognition to success will fade away as corporate leaders get better at identifying the precise behaviors they desire.

MGM Grand, which received RPI’s “best overall” award this year, gives away thousands of rewards each year. Each quarter at MGM, about 1,000 employees receive the Maximum Vegas Performance Commendation for fulfilling six core service and 16 service standards. Another reward, the Gold Key, is delivered by a convention organizer who can recognize any employee on the spot for exemplary service. Additional recognition takes place in daily pre-shift meetings.

MGM officials believe that recognition has played a key role in their success this year, with an annual revenue increase form $714 million in 2003 to more than $1 billion in 2005.

Questions
1.

Why does Danny Hackett, program manager for the Living FAST Recognition program at Reuters say that even though the $2.6 million Reuters invests in employee rewards boosts employee performance, he believes it is a “fuzzy science.” Give at least three reasons why rewards programs can be difficult to tie to results.

2.

Using Hackman and Oldham’s job characteristics model, describe at least three dimensions that determine a job’s motivational potential.

3.

Relative to the schedule of reinforcement, what types of recognition has MGM been giving their employees?

Source “Rewards and ROI: A ‘Fuzzy Science’?” Workforce Management, Sept. 24, 2007 v86 i16 p27
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