How Netflix Reinvented HR Case Analysis

1. Introduction

Netflix uses management practices such as recruitment, team orientation, leadership and performance review to be at the top of the market in these changing times. Netflix was founded by Marc Randolph and Reed Hastings in September 1997 in Scotts Valley, California. Their goal is to provide a subscription streaming entertainment package. They offer TV series, documentaries, and feature films throughout various genres and languages. They give the members the ability to get streaming content within a mass of Internet-connected screens, including Laptops, TV, and smartphones.

The company has about 167 million paid members in 190 countries. Both their mission and vision statements are aligned, while the mission focuses on tasks in the entertainment industry, the vision statement underlines the strategic objective of being at the top of the competition. As of 31 March 2020, Netflix Inc revenues increased 28% to $5.77B and their Net income increased from $344.1M to $709.1M.

2. Management practice 1

The first management practice is decruitment. When Netflix had changed from operating with DVDs to online streaming, the company needed to recruit qualified employees with experience in cloud technology.

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Maria, an engineer, who was hired to develop a streaming service for the company in order to find bugs. She was hardworking, intuitive and quick with her work but her skills were limited. As technology was evolving the company decided to switch to automate QA tests which Maria wasn’t good at. The manager then suggested using performance improvement plans but was turned down due to the fact that “PIP” never accomplished its purpose and that Maria cannot adapt to such changes.

Therefore, they had to terminate Maria as her skills aren’t of any use. This is when decruitment comes into action, when an employee can no longer benefit the company, they have to lay them off.. After that the company is able to bring in new talent to sustain the growth of the business. Netflix employees understand this concept when being hired, which is why almost all lay off employees are understanding and accepting of their termination. The company believes and trusts the hired talent to complete the given tasks effectively.

3. Management practice 2

The second management practice is team orientation which focuses on team work rather than working alone. “we frequently told managers that building a great team was their main task. We did not measure them on whether they were excellent trainers or guides as long as they got their paperwork done on time. Great teams accomplish great work and recruiting the right team was the top priority”, and at Netflix, the idea is that managers are held accountable for creating reliable teams that are efficient, effective, who think of the future. That includes imagining themselves as players in a biography and asking themselves questions such as, what specific results do you want or need to see? what is it your team will be accomplishing six months from now? What do you need to make these results happen? How is that different from what your team is doing today? To find the answer to these questions’ managers, need to know what their employees are capable of doing, they must think about the purpose and goals they have and challenge them to create. They need to prove how, as leaders, recruits, and managers of talent, they will put together a team that will make that happen. An example of team orientation is about being truthful about the abilities every individual team member and helping one another adjust if they are behind as long as it helps the team reach its goals which is an example of. Therefore, in team orientation supporting someone on the team because they are likable if they lack skill is unacceptable they need to help reach the teams goals or serve the needs of the clients doesn’t really do either of you any favors. This is an endless challenge for managers and business leaders.

4. Management practice 3

Performance management is the third practice in the company this practice uses the process of establishing performance standards and appraising employee performance. Netflix specifically uses the 360-degree appraisal to allow employees to voice their opinions about actions of certain co-workers, which in turns helps them do work efficiently and effectively without any distractions. The goal of the company was to establish a process of reviewing peers and this allowed the employees to assess the performance of their coworkers. Conventional corporate performance reviews focus largely by fear of lawsuit. The concept is that if they want to dismiss someone, they need detailed history of an employee’s poor achievement from past. The company held formal reviews for a while, but came to realise they did not make sense. Therefore, they asked managers and employees to have discussions about performance as a natural part of their work. They believe that building an establishment with complicated rituals that revolves around measuring performance usually does not improve it. So instead they introduced casual 360-degree reviews which comprehensively goes through any difficulty’s employees might face with each other. The company keeps it rather simple people were asked to classify things that co-workers should refrain form, start or continue. In the start, an anonymous software system was used, but over time, the company changed to signed feedback and many teams resumed using their 360 face to face. review of the employees allows peer review and self-review. When assessing an employee, this all-inclusive assessment procedure focuses only on the performance of the employee. Feedback of employees from peers, seniors, and subordinates can provide a competitive advantage to the company. The case study shows that a holistic environment for performance review helps garner a competitive advantage for the company. However, the success this method of assessment to increase performance has not been proven to be successful.

5. Management practice 4

The final management practice is leading this practice focuses on the fact that every organization has employees and managers need to know how to work through and with these people leaders mold the corporate culture and is a type of mismatch which is a particular problem at start-ups. often in company meetings leaders get a sense of how employees’ function. Frequently CEOs lack an actual plan and are clearly improvising. They work from slides that were put together last minute or were reused from the prior round of VC meetings. employees notice these things, and if they see a leader who is not fully ready and relies on appeal, IQ, and improvisation, it disturbs how they complete their work, it is a waste of time to clear ideas about values and culture if leaders do not model and compensate performance that aligns with the organization’s goals. Another issue is making sure employees understand what make the business rise over competitors. Even if the company recruits people who want to perform well, they need to clearly convey to these candidates as to how the company makes its profits and what behaviors will determine its success. At Netflix, for example, employees focused a lot on subscriber growth, without thinking about the expenses. The employees needed to learn that although revenue was rising, managing costs were also significant. A final issue is known as split personality start-up. Sometimes leaders have to remind employees that there is a big difference between the salaries of professional team at headquarters and the hourly worces in the call centers. The finance team wanted to shift the entire company to direct-deposit paychecks, but some of our hourly workers did not have bank accounts. As leaders shape the company culture, they need to be mindful of subcultures that might need different management.

6. Conclusion

In conclusion, we can say that Netflix uses various management practices in order to grow their company and stay at the top of the game. The four major practices that they use are; Decruitment; in which the company has to lay off those employees who are no longer beneficial to the company or can help the company in any way and lack skills while also compensating them. Whereas Team orientation focuses on team work to achieve the end goal of the company and benefit the company. Performance management is an effective way to assess the behaviours of employees using 360 reviews withour fearing lawsuits, and lastly we have Leading in which leaders hire, inspire and guide employees to improve the company’s growth and financials. Furthermore, management practices are not only used to help corporations succeed but also assist people in their day to day to lives from being effective and efficient to being able to plan for the future, dealing with people and knowing how to use decision-making process to achieve their goals.