MGM Grand: A structure for success

An 88 foot tall, stucco maned lion with laser beam eyes greets guests to the MGM Grand Hotel, Casino & Theme Park in Las Vegas, Nevada. It symbolizes the grandeur of the huge organization, which manages 5,005 rooms located in four 30 story emerald green towers, a 171,500 square foot casino with 3,500 slot machines, a 15,200 seat special events arena, and a 33 acre indoor theme park. Apparently not: Only two months after it opened on December 18, 1993, the MGM Grand was regularly renting out 4,000 rooms, serving 20,000 meals and grossing somewhere in the neighborhood of $1.6 million per day.

At the helm of this city within a city sits Larry Woolf, chairman president, and CEO of Woolf, who grew up on a small farm in Idaho and whose high school graduation class consisted of 36 students, appears to revel in the sheer enormity of MGM Grand. According to Woolf, the only difference between managing a hotel the size of the Grand and a small hotel of maybe 150 rooms is scale. All things considered, he says, he would rather run one 5,000 room hotel than five 500 room hotels. In fact Woolf claims that the Grand, as an organization, is actually not that complicated.

Operating the Grand, though is a complicated process. Outside, on the 15 lane entrance driveway, 86 parking attendants handle the steady stream of visitors and guests. The phone reservation room, with 62 desks, is a constant flurry of activity as the operators field thousands of calls about booking rooms or show tickets. The entrance has a reception area with 38 window and clerks who handle 16,000 pieces of luggage each day. The 740 guest room attendants are deployed in pairs; each pair is responsible for cleaning 16 rooms from top to bottom, in an eight hour shift. The eight in house restaurants expect to prepare 32,000 meals daily once the organization is fully underway. A computerized storage system draws from a reserve of 60,000 garments to uniform more than 6,000 employees.

At the Grand, size has not come at the expenses of quality. Woolf has aimed for high quality service from the start. In selecting its 8,000 employees, the Grand carefully screened 100,000 job applicants and required that each employee test drug free before being hired. In addition, Woolf set the pay at a high rate to encourage high performance and keep the union out.

The structure Woolf put in place distinguishes the Grand from other Las Vegas organizations. The theory X autocratic management style is still firmly entrenched in the Las Vegas gambling industry. The structures of many of the Grand’s neighbors have been built upon a very strong sense of distrust Personnel activities remain under almost constant surveillance and video cameras are located throughout casinos.

As evidence of the value of cross training, Woolf recounts an experience he had as president of Caesars Lake Tahoe:

One day he was working the telephones and one of our purchasing agents called asking top be connected to another in house number. Why don’t you just dial it direct? he asked him. He gave him the number, but he still insisted on being connected. He didn’t know he was talking to the president, and he knew that if he had ever had to work the phones, he would understand why he then changed the policy to ask everyone to use their phone lists instead of making the operators do it.

The efficiency of the company’s switchboard improved as a result of Woolf’s cross training. No one can convince you by memo why it’s important to dial your own phone number, Woolf remarked, but if you have to experience the problem yourself, you’ll have a different feel for it.

Another important aspect of the Grand’s organizational structure is the Quality Assurance (QA) program. Developed under the auspices of the American Hotel and Motel Management Association, the QA program focuses on “Japanese style” participative management. At Grand, management is at the bottom of the structure to support the front line workers who interact with customers. The QA program is based on four core assumptions: the person who does the job is in the best position to know how to do it; people at the lowest possible levels should be responsible for problem solving and decision making; people are the organization’s greatest resource; and empowered employees consistently perform at high levels.

In addition, the Grand is streaming lining its bureaucracy through the addition of an integrated system called Multi-Plan that will keep track of employees’ pension, dental and health plans. The new system will allow employees to perform calculations on loans, withdrawals, and account transfers for all their benefit packages through central hotel kiosks.

Through a variety of innovative management techniques, Woolf has thus provided the Grand with what it will need to enjoy success.