Compliance officers looking for something good to read, look no further! Massachusetts regulators have released a preliminary report from the compliance monitor overseeing troubled casino business Wynn Resorts, with glimpses into everything from tone at the top, to policies and procedures, third-party oversight, internal controls, and more.
The 118-page report became public as part of a hearing held on May 21 by the Massachusetts Gaming Commission (MGC). The commission has oversight of Wynn because the company operates the Encore Boston Harbor resort, and the May 21 hearing was to review progress Wynn has made since it sacked founder and CEO Steve Wynn in 2018 over sexual assault charges.
At the time, the Encore casino still hadn’t opened — so the MGC had extra leverage to squeeze reforms out of Wynn, or else the gaming commission wouldn’t give Encore its operating license. Hence the compliance monitor, and hence the interim report released last week.
The monitor in question is Alejandra Montenegro Almonte, a partner at the law firm Miller & Chevalier. Public disclosure of a compliance monitor’s report is exceedingly rare, so this is worth a close read.
First up: Wynn’s efforts to improve its culture of compliance and tone at the top.
This is a significant challenge for Wynn Resorts for several reasons. First, the root of Wynn’s problems was Steve Wynn himself. He was a larger-than-life CEO, brilliant at running the business and transforming Las Vegas — but he also treated the company and its employees as personal playthings, and the invertebrates who peopled the previous board of directors let him do it.
OK, so one objective is to treat employees respectfully, free from threat of sexual harassment — except Wynn Resorts works in the casino business, “a milieu in which patrons feel that they can depart from acceptable behavior,” as the monitor’s report phrased it. The whole industry’s culture is one of excess, liquor, thrill-seeking, and risk-taking. Which can tempt many a person to plant his or her hand on someone else’s behind.
So how has Wynn’s new leadership been trying to reinvent the corporate culture amid that history and context?
Values, Behaviors, and Authenticity
The monitor team held 32 focus groups with 200 Wynn employees, across all operating divisions of the company and all three shifts of work. Above all, the report said, the monitors wanted to measure the authenticity of the company’s new ethics and compliance message:
We considered not just the facts of certain anti-harassment and anti-discrimination messaging, but also the authenticity of the messaging and the “why” behind it. As with every program that is maturing, especially under such a tight regulatory framework, on the heels of a crisis, and on the public stage, messages can appear to be inauthentic. It is our evaluation that the company is overall motivated by the right reasons, but the company’s commitment needs to be more visible to employees and patrons.
That’s a great point. The vast majority of CEOs and senior executives do truly want to lead an upstanding, ethically rigorous organization. The threat they need to defeat is a cynical employee base who just won’t believe the ethical declarations that senior leaders make.
Wynn first tried to change those perceptions by rolling out a new set of core values for the company:
- Service Driven: We provide the highest quality of service to everyone and everything, including our guests, our coworkers, and our community
- Excellence: We always find room for improvement. If it’s good, make it outstanding. If it’s outstanding, make it spectacular
- Artistry: We look at every detail of our jobs as a blank canvas awaiting our creativity and magic. Whether setting a guest room or setting food on a plate, we find a way to make it artful
- Progressive: We always look to the future, continuing to innovate and elevate the experiences we provide our guests, our employees, and our community
Those values are reasonable enough unto themselves, but they are all about how to run the business. They say nothing about how Wynn wants to conduct itself, including on the high-priority subject of how employees will be treated while at work.
Instead, Wynn housed those questions in a separate set of six “core behaviors” that exist alongside the core values:
- “Care about everyone and everything.”
- “Treat everyone with dignity and respect.”
- “Take personal responsibility for every detail.”
- “Approach everything we do as if it’s a work of art.”
- “Create unforgettable experiences.”
- “Always strive to be better.”
That’s more like it. Those behaviors directly address how Wynn wants employees to conduct themselves on the job. The question is whether keeping those core behaviors separate from the core values detracts from the goal of clarifying and strengthening corporate culture.
The monitor report had this to say:
It is the Monitor Team’s view that the Company’s promotion of, and to an extent, the Core Values themselves, miss the mark in that they promote a service- and brand- focused message as the paramount value to the exclusion of any HR compliance-focused values such as respect, integrity, or tolerance. While those principles are captured in the Core Behaviors, and to some extent in the definitions of the Core Values, the headline one-word Core Values are most known to employees.
That Matters More Than You Might Think
The discrepancies between core values and core behaviors led to confusion further down the line, as employees dealt with casino customers. Wynn employees in focus groups told the monitor team that they perceived a “grey area” in customer conduct, where managers tolerated boorish behavior from customers even after employees complained. That was especially true for big spenders, where Wynn has a separate, explicit protocol for dealing with those characters when they step out of line.
Still, this is where the difference between core values and core behaviors comes into play. When employees witness a messy situation with a customer and wonder how to handle it, one response will be to default to core values — which are all about how to give the customer a pleasant experience. So even as the floor manager is guiding said jackass to the door, the manager is trying to do that as gently as possible.
That can send a message to employees that the customer comes first, even at the expense of the employee’s dignity or well-being. Skilled managers can defuse that perception, such as by talking with the employee later and evoking empathy with the employee’s stress. But if the managers aren’t skilled enough in people management to pull that off, the risk of mixed messages is there.
Which, at long last, brings us back to the monitor’s original point about authenticity of corporate messages. If the company says one thing but practices another, employees will sniff out that lack of authenticity like a stink bomb in church. Then the compliance program is fighting an uphill battle.
So as much as one might sometimes wonder whether the precise language of core values really does matter — yes, it really does. Wynn’s new management is making strides in the right direction, but it still has lots to go.