Human Resource Management
Case Study (Netflix case study pdf in Breo)
2,500 words
1. Critique and debate key and contemporary arguments about the theory and practice of HRM and how ethical expectations are met in practice whilst assessing its contribution to the organisation.
2. Evaluate and analyze workplace scenarios relating to relevant business strategies for professional, ethical, effective, and efficient HRM within current organizational contexts.
Introduction
Netflix is the world’s leading internet subscription service company. It offers TV series, documentaries, and feature films across a variety of genres and languages (“Netflix Inc.,” 2020). In 2019, Netflix was ranked fifth in Fortune’s list of 100 Fastest-Growing Companies (“100 Fastest-Growing Companies,” n.d.). In June 2016, Netflix decided to expand its international workforce, which by then consisted of only 150 employees (Fairchild, 2016). The company was known for its unique human resource (HR) practices.
There were no ping-pong tables on their campus in California, nor were there hordes of software engineers freshly graduated from college (Fairchild, 2016). The corporate culture of Netflix was one of a cutthroat mentality; it was believed to have worked only for the highest achievers (Fairchild, 2016). The company retained only high performers and let all others go at the earliest possible time with a considerable severance package (Fairchild, 2016).
Despite this hire and fire policy, it was ranked No. 11 on LinkedIn’s Top Attractors list in the U.S. in 2019 and was among one of the most sought-after places by job candidates (Fairchild, 2016).
Although such a “hire and fire” culture was widely practiced in the United States, it was unclear if these same practices that were generally acceptable in the United States will work in other countries, such as those in Asia. Netflix decided to continue with its standard HR policies as it expanded into international markets (Fairchild, 2016). Tawni Nazario-Cranz, Chief Talent Officer at Netflix from 2010 to 2017, was responsible for applying the Netflix HR policies to international offices (Fairchild, 2016). As mentioned above, Netflix did not hire fresh college graduates or those who wanted to work from remote locations (Fairchild, 2016).
According to Neil Hunt, product manager at Netflix until 2017, he wanted access to all employees working on his team within 90 seconds, and he believed that the company functioned better when the entire product management team worked from a centralized office in California (Fairchild, 2016). However, few employees criticized Netflix’s policy of not permitting employees to work from remote locations, especially when Netflix was expanding into global markets (Fairchild, 2016).
In 2018, Netflix also introduced a transparent pay policy according to which every employee could easily view compensation earned by other employees and even the top management. This left employee shocked after they determined how much more some of their peers were making than an average employee in the company (Hoffower, 2018). In 2019, Netflix further improved its HR policies by introducing weekly employee surveys rather than annual surveys (Zangs, 2019).
Should Hastings continue these HR practices as Netflix expands into global markets? Should he accord more importance to Netflix corporate culture or to the national culture of a country where Netflix operates? What advantages can standardization of HR practices provide to Hastings?
Background
Netflix was established in 1997 in Scotts Valley, California, by co-founders Marc Randolph and Reed Hastings (“A Background and History,” 2014). The idea of Netflix dawned on Hastings when he forgot to return a rental movie by its due date and had to pay a late fee of USD 40 (“A Background and History,” 2014). By 2007, Netflix delivered its one billionth DVD, and in the same year, it introduced a new business of streaming video online on-demand (“A Background and History,” 2014).
By 2010, the company started offering its streaming services in international markets like Canada. In 2011, Netflix expanded to Latin America and the Caribbean and, in 2012, to European countries (Netflix, n.d.). In 2012, the company also partnered with internet service providers so that its video library can be updated quickly (Lawler, 2012). From 2013, Netflix began offering in-house produced series such as House of Cards, The Confession Killer, La Casa de Papel (Money Heist), and Tiger King: Murder, Mayhem and Madness. By 2018, the company had more than 1,000 original content titles worldwide. In the United States, in 2018, the company offered 4,010 movie titles and 1,569 TV shows (Watson, 2020).
By 2019, Netflix global subscribers outnumbered U.S. subscribers (see Figure 1). Between 2016 and 2019, Netflix annual revenue increased by 128% (see Table 1). For Netflix, the average revenue per streaming customer increased from USD 21.8 in 2013 to USD 25.8 in 2017, while the average programming costs per streaming customer during the same period increased from USD 15 to USD 20.7 (Watson, 2020).
