Abstract
This report provides a critical discussion of the company’s HRM system. Additionally, the report aims to provide some of the most significant suggestions that can help the company’s board address most of the challenges experienced within the HRM system. This report primarily uses the secondary research methodology, which will play a critical role in the analysis of Netflix’s HRM system. The report found that Netflix has mainly focused on maintaining its effectiveness in the HRM system, which has significantly contributed to its success over the past years. It is important to understand that such findings are short-term, but the company needs to focus on formalizing its feedback to employees in the long run. “Freedom and Responsibility” plays a significant role in empowering employees towards higher performance. “No rules, no policies” is important in ensuring the company’s culture remains as flexible as possible.
Introduction
Changes in Human Resource departments have continued to change in today’s day and age as society continues experiencing various changes. The Human Resource departments have continued re-strategizing their approaches to recruiting and retaining employees. It is important to understand that the traditional approaches have continued to be irrelevant, especially within companies emphasizing more on strategic HR. Reed Hastings, the founder of Netflix, has focused more on HRM by providing the company’s employees with more freedom rather than developing more rules. Employees at Netflix that perform adequately tend to receive generous severance compared to hardworking employees. That has helped create a working environment where the employees do not work hard on pleasing the boss but instead has provided the employees with an opportunity of practicing radical candour.
Aim
As Netflix has turned the status quo of HRM on its head, this report aims to provide a critical discussion about the company’s HRM system. Additionally, the report aims to provide some of the most significant suggestions that can help the company’s board address most of the challenges experienced within the HRM system. Therefore, the report will begin with identifying the company’s different features of the HRM system. The report will then provide an analysis and evaluation of the HRM system at Netflix and some of the most critical recommendations that can be issued to the company’s board to do away with the key challenges the company has been experiencing with its HRM system.
Method
This report will primarily use the secondary research methodology, which will play a critical role in the analysis of Netflix’s HRM system. The key secondary resources included in the report will be peer-reviewed journal articles and websites. The websites will play a significant role in providing the required information about the HRM system, while the peer-reviewed articles, on the other hand, will be used in supporting the arguments.
Overview of findings
The report found that Netflix has mainly focused on maintaining its effectiveness in the HRM system, which has significantly contributed to its success over the past years. It is important to understand that such findings are short-term, but the company needs to focus on formalizing its feedback to employees in the long run. Additionally, the report found that in the long run, the company must still focus on retaining most of its skilled workers.
Key Attributes of the Netflix HRM
Leadership and Culture
Netflix emphasizes a culture with high employee engagement toward meeting the company’s goals and interests. It is important to understand that employee engagement has contributed greatly to the company’s performance over the past years. The HRM system within Netflix is effective because all employees understand what they are expected to do, hence playing a significant role in achieving the company’s goals (Onyusheva & Baker, 2021). It is worth noting that once employee engagement increases, it promotes a positive connection with their jobs and increases the company’s likelihood of achieving its objectives. Netflix generally believes that there are specific categories of people who can positively contribute towards achieving its objectives, including innovative and engaged people.
Motivating employees
Netflix motivates its employees by providing them with the flexibility they require. Therefore, Netflix maintains that no rules or policies should be implemented to make the employees feel like they are being controlled. “No rules, no policies” is critical in motivating employees. It plays a significant role in providing employees with an opportunity to determine the approaches they can use to balance their work time and family time (Netflix, 2020). Additionally, the company’s HRM system is not structured so that the employees work towards gaining approvals of expenses but rather towards meeting the company’s goals (Onyusheva & Baker, 2021). That provides the employees with an opportunity to gain ownership of their actions, which is generally considered a key spirit that helps all employees towards meeting the company’s objectives.
Attracting employees
Netflix mainly attracts new employees through radical candour, which primarily provides them with an opportunity to do what they think is right for the company rather than simply following instructions issued by their leaders. That approach ensures the employees are free to share their ideas even with the leaders rather than keep them to themselves. It is important to understand that such freedom ensures the employees can multi-task and engage in any other activities which they think are the best for the company. Therefore, practicing radical candour has been critical in attracting new employees.
Retention of employees
Netflix generally applies various approaches to retaining its employees. One such approach is providing employees with extensive career and growth opportunities. The promotion opportunities within Netflix aim to ensure that employees have a better opportunity to develop their careers within the company. Additionally, Netflix uses a stock option program to retain its employees where they can select whether they should be compensated through salaries or stock options. Netflix still retains its employees through coaching practices which consequently helps build a strong team working together towards meeting the company’s objectives.
Analysis and Evaluation of the HRM System at Netflix
Based on the key attributes of Netflix’s HRM system, as discussed in the previous section, it is important to understand that the system mainly focuses on ensuring the employees remain as productive as possible. The “Freedom and Responsibility” culture implemented within the company’s HRM system plays a significant role in empowering the employees to achieve higher performances which in turn helps the company in meeting its objectives (Netflix, 2020). Such freedom and responsibilities issued to the employees still play a critical role in improving job effectiveness as the employees become responsible for any actions they take. Implementing the candour culture within the company promotes accountability among all employees. Such culture plays a significant role in creating a working environment that encourages creativity among employees (Onyusheva & Baker, 2021). Additionally, the culture creates an environment where the employees do not feel underestimated, but their ideas are appreciated.
Studies support that providing employees with much freedom helps improve their accountability for their actions (Jebali & Meschitti, 2020). Netflix does not necessarily require the employees to seek approvals from their leaders but rather do what they think is the best for the company. Once there is high employee engagement, then that improves their likelihood of achieving the company’s goals. Implementing the radical candour culture allows employees to share with their leaders what they think works better for the company toward achieving its long-term and short-term goals.
“No rules, no policies” discussed in the previous section plays a significant role in ensuring the company’s culture remains flexible as possible. Instead of the employees working towards receiving approvals, the approach plays a critical role in ensuring there is accountability in any actions the employees take, regardless of whether they will negatively or positively affect the company. Such flexibility helps in ensuring the employees remain as innovative as possible (Jebali & Meschitti, 2020). As the global market trends continue changing over the past years, the “no rules, no policies” approach promotes flexibility that helps the company work effectively during all such situations.
Recommendations
Some of the most significant HRM challenges that Netflix experienced as it tried expanding to different national contexts included maintaining high performance. Therefore, the following are some of the recommendations that should be made to the Netflix boards as it crafts its HRM:
Retention of skilled employees
It is important to understand that Netflix’s employee turnover is at 11% annually (Netflix, 2020). Such employee turnover is not even average of what is expected, considering that the company operates within the technology industry. Therefore, if the company intends to achieve its long-term success, it is recommended to decrease such turnover rate, and all that can be achieved by attracting the most innovative pool of workers while developing effective approaches that can help retain the existing employees. Training is one of the key approaches that the board can consider in retaining its skilled workers.
Maintaining effective communication
Communication is a critical factor for the success of any company. Therefore, since Netflix hires only adults, communication is important as it promotes business growth. Encouraging high performance among the employees is not enough as that does not guarantee whether they are innovative or passionate (Jebali & Meschitti, 2020). However, maintaining effective communication is the only way leaders can learn whether the employees are innovative and passionate or not.
Job security
Job security is an important factor that all employees consider before joining an organization. That is a key factor where the company has been failing greatly as it fires its hardworking employees (Ramachandran & Flint, 2018). Ensuring the employees maintain job security is a critical factor that the organization needs to implement, as all skilled and competent employees can stay within the organization as long as they are sure their jobs are well protected.
Feedback to low performers
The board needs to provide feedback to the low performers within the organization. The company should not ignore such employees as they can also play a critical role in helping the company towards meeting its goals. Rather than simply firing the low performers, Netflix needs to provide them with feedback on areas they are performing poorly and how they can improve.
Focusing on effectiveness
For Netflix to perform in the global economy, it needs to develop more effectiveness on jobs. That can only be achieved by encouraging the employees to learn and develop new strategies to achieve their goals. The employees should be motivated more to accomplish global success.
Conclusion
The report provides some of the most significant attributes that help Netflix HRM in achieving its global success. However, there are still some recommendations that the company needs to consider in achieving its long-term success. Some of such recommendations include retaining the company’s skilled workforce and maintaining effective communication. Incorporating freedom and responsibility has played a critical role in ensuring employee engagement within the company.
References
Jebali, D., & Meschitti, V. (2020). HRM as a catalyst for innovation in start‐ups. Employee Relations: The International Journal.
Netflix. (2020, September 18). No Rules Rules’ explores how Netflix reinvented work culture –
and itself. Retrieved from Netflix: https://about.netflix.com/en/news/no-rules-rules-explores-how-netflix-reinvented-work-culture
Onyusheva, I., & Baker, A. S. (2021). Netflix: A case study on international business strategy development. The EUrASEANs: journal on global socio-economic dynamics, 6(31), 40-52.
Ramachandran, S., & Flint, J. (2018). At Netflix, radical transparency and blunt firings unsettle the ranks. The Wall Street Journal, 25.
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