Human resources represent one of the most important assets that an organization could have. This means that companies’ success is directly related to the performance of workers, which is why Human Resource Managers (HRMs) are tasked to ascertain the most important aspects contributing to employee motivation. Thus, HR planning is concerned not only with choosing suitable candidates for job openings but also with establishing favorable work circumstances, job content, and career advancement, all of which contribute to the engagement and performance of workers. For the purpose of the current exploration, the HRM system established by Netflix has been chosen because of the company’s unique approach of abandoning traditional practices. Operating in a competitive technology-focused climate, Netflix cannot remain successful when following the traditional approach to HRM. At the core of Netflix’s strategy concerning human resources lie such principles as no-compromise talent management, forming high performance, allowing freedom and responsibility, as well as compensation philosophy (Hidayati, 2022). Thus, in order to stay competitive, Netflix gives its employees more freedom to approach decision-making creatively, with innovative ideas that show high performance being greatly compensated.
Netflix, Inc. is a subscription-based streaming service that gives customers access to thousands of the latest film and television content. While based in California, the company has digitally expanded to dozens of countries worldwide as the service is available to customers on their phones, tablets, computers, and TVs. Its vision is “Becoming the best global entertainment distribution service,” which means that the company focuses on hiring the best professionals that could help it fulfill the vision (Hidayati, 2022). Throughout its lifetime, Netflix has transformed from a DVD rental to an online streaming service due to the shifting customer demands and trends, with digitalization becoming more prominent. With the expansion of the Internet beginning in the 2000s, it was no longer cost-effective for a company to rent out physical copies of movies. Therefore, by switching to digital services, Netflix took a significant step in the direction of competitive advantage, setting itself apart from rivals. Based on the latest data, Netflix ended the second quarter of 2022 with 220.67 million paying subscribers worldwide (Stoll, 2022). While this marks a decline my one million compared to the previous quarter, the number of subscribers is substantial and remains larger in contrast to rivals such as Apple TV (40 million), Hulu (45.6 million), and Amazon Prime Video (77.3 million) (Glowacki, 2022). Therefore, despite some hurdles along the way, Netflix remains the most successful movie and television series streaming service.
HRM functions and responsibilities at Netflix are concerned with creating the best team and a climate conducive to innovative ideas that will attract customers. Because the company had been on the brink of bankruptcy and had to lay off a third of its employees back in 2001, the newer approach to HR has entailed recruiting the finest performers (Hidayati, 2022). Thus, HR is tasked with forming the highest-performing team made of the right people who are kept motivated through developing their talents and overtaking challenges.
Talent Management Practices at Netflix
The Talent Team at Netflix is tasked with identifying, attracting, and developing a team of the highest-performing workers. The team includes Recruiting, Employee Services, and Human Resources Business Partners. Talent management has been approached strategically, with the organization setting a goal of never compromising on hires to add to the tea (Denning, 2018). In contrast to other media companies that tend to overlook strategic talent management, Netflix has been consistently looking for hires that will match the company’s culture and strategic vision. Specifically, the company has acknowledged that a B player in another firm could transform into an A player in another organizational climate and culture and vice versa (Denning, 2018). Thus, talent management at the company has been embedded into its strategy.
Another critical component of the talent management process at Netflix is giving more power to the people due to the general problem of many workers at organizations being stuck in the model where the employer holds consistent power over them. Netflix has defied the traditional approach and made it so that the company has become increasingly decentralized. Besides, to ensure that workers are active in taking the initiative, they are reminded of the fact that they hold significant power and could do great work for boosting organizational effectiveness. Notably, the majority of procedural practices that organizations employed were outdated and no longer relevant. Acknowledging this, Netflix has given up many processes in order to return the right to make decisions to employees.
In line with giving more power to employees, Netflix’s HR is expected to think and act as if they are businesspeople. The goal is to ensure that employees understand how the company makes a profit and act in its interest. For instance, a talent manager may ask an employee what they should do in order to get a $10,000 bonus. An ideal employee who understands the inner workings of the company will say that they should increase service subscriptions by 20% in six months or reduce customer turnover from 6% to 4%. However, if an employee does not know what is classified as good performance at the company, no bonus can make them perform at the desired level.
HR Planning at Netflix
HR planning is an ongoing process that entails planning ahead to achieve optimum use of one of the most important assets – employees. Within Netflix, the HR planning process aligns with the main principles of HR that the company’s management has established. Specifically, to meet the demands of the competitive market, only the best professionals are hired. To improve productivity, workers are approached from the sports coach’s perspective – if an individual does not bring high performance to the table, they should be let go.
Therefore, there is no specific HR plan with pre-defined steps that Netflix follows as the main emphasis is placed on hiring individuals who will serve the interests of the organization. The planning relies on the culture of trust, which entails being honest and direct within the company. Notably, managers and employees are encouraged to have routine conversations about performance and progress instead of having formal reviews.
It remains unclear whether the HR planning efforts at Netflix are sufficient for the organization. However, the fact that the company is praised for its HR practices speaks volumes about the way it approaches the process of dealing with human resources. At the core of the company’s philosophy is that workers should not be controlled by their managers; instead, they should be given context to achieve the best results. Only when a worker understands the context of the business, they can help the organization grow and meet its strategic objectives.
Talent Management and Internal and External Trends
Internally, to facilitate the most beneficial talent management, Netflix has been dedicated to following the trend of building a vision for its development and then building a team. The traditional approach is that employees are hired first while the vision is communicated later. With the vision of “becoming the best global entertainment distribution service,” Netflix requires top professionals in cloud services from around the world. To align the HRM with this vision, the company aims to hire the right people instead of spending weeks and months training the workers they already have.
Thus, getting away from the traditional talent management approach is the main philosophy that Netflix has employed in its HRM. The company has effective HRM because it has penetrated by the majority of mass media and understands what is needed from it to remain successful. Because Netflix has understood that there is no need for a carefully detailed HR plan and policy, it has prioritized hiring adult professionals who would act as adults in their positions. For example, going on vacation is no longer a problem for HRM at Netflix – employees can take as many days off as they find necessary as long as their responsibilities are fulfilled. Not forcing employees to stick to a rigid schedule is Nextflix’s response to the internal trend of workers appreciating more flexibility in their work life and the ability to balance it with their personal life.
Another way in which Netflix has responded to HRM trends is moving away from a Performance Improvement Plan (PIP) because it lacks effectiveness in making workers perform better. HR departments in other companies used PIP as a reason to let go of unproductive workers and those who do not fulfill their responsibilities; Netflix has abandoned the approach and now uses an attractive severance package. This ensures that workers that are being let go from the company have enough time and opportunity to find a new job.
Recommendations for Netflix
Analyzing the Human Resource Strategy at Netflix, it has become clear that the company does not have many rules that employees must follow. In the environment of freedom, there are such advantages as increased creativity, engagement, trust, and workplace flexibility. However, the culture of openness has led to managers becoming ruthless in their honest feedback, with the harsh comments being “reminiscent of North Korea,” as noted by one of the hires from South Korea to a newly-established Netflix team in Singapore (Kosoff, 2018). Therefore, there is a problem with Netflix employees being disincentivized from trying to help each other or being empathetic.
Based on this issue, it is recommended for the HRM at Netflix to facilitate a culture in which employees can feel accepted and respected instead of being hyper-focused on making sure that they do not get harsh criticism. This may be easier said than done for an organization that has been quite ruthless in its talent management; however, a warmer climate means that employees will feel more confident in their powers and be inspired to show higher levels of performance.
Moreover, the highly-flexible setting should gain some structure in terms of rules and regulations. For example, there have been reports of employees being fired for abusing the expense policy, which required no approvals (Hastings and Meyer, 2020). Because there is no approval process for things such as personal travel and other employee costs, this creates additional issues when it comes to communicating to employees as to what they can and cannot do. The issue here is that freedom can be abused, and even though the instances are rare, the lack of guidelines can lead to adverse HR events that could have been prevented. Overall, being a highly creative environment that encourages innovation among employees, Netflix is not a setting for individuals who gravitate toward job security and prefer having a plan that they can follow to reach maximum performance.
To conclude, Netflix has been used as an example of a company that has a highly innovative approach to Human Resource Management. The organization has been focusing on hiring only the best professionals in their fields in order to ensure that the strategic goals are met, while those who do not reach the high standard are let go with substantial severance packages. Employee motivation, in Netflix’s perspective, is achieved by giving open feedback and clear communication of expectations. It is expected that workers know what makes a good performance; when they do not, they cannot be part of the Netflix team. Therefore, the approach that the company has implemented is revolutionary and goes against what the majority of rivals in the industry have been doing. However, the culture of freedom and openness does not fit everyone, which means that employees hired at Netflix must share the company’s vision in order to fit in and be successful at the organization.
Denning, S. (2018) ‘Incubating culture: how Netflix is winning the war for talent’, Forbes.
Glowacki, J. (2022) Amazon Prime Video subscription rate is 45% of U.S. internet households.
Hastings, R. and Meyer, E. (2020) No rules rules: Netflix and the culture of reinvention. New York: Penguin Press.
Hidayati, N (2022) ‘Human resources management review on Netflix’, Advances in Economics, Business and Management Research, 207, pp. 391-397.
Kosoff, M. (2018) ‘Working at Netflix sounds absolutely terrifying’, Vanity Fair.
Stoll, J. (2022) Quarterly Netflix subscribers count worldwide 2013-2022.