How Netflix Reinvented HR

The case study “How Netflix Reinvented HR” by Patty McCord, former chief talent officer of
Netflix defined the way how Netflix attracts, retains, and manages stellar employees with five
key tenets. This 2014 article has given us a detailed picture of the viral and influential
PowerPoint deck “Netflix Culture: Freedom and Responsibility” written by the executives of
the company explaining the organization’s talent management strategies and how they shaped
the culture and motivated performance at Netflix.

Before describing the five tenets on talent management strategy and culture of the company,
McCord refers to two overarching principles that were shaped by the incidents that happened
in the company which ingrained in Netflix’s talent management philosophy. The first
principle presents the idea that you should only hire the best individuals to work alongside
your employees. The second principle highlights that there should be a willingness to let go
of the employees whose skills are no longer fit for the company, no matter how valuable their
contributions had been before. With these principles in mind, Netflix’s CEO and their HR
team shaped their approach to talent using the five key tenets.

The first tenet hire, reward, and tolerate only fully-formed adult states to hire only the right
people as the good employee will motivate other employees which increases workplace
performance. It also further asks employees to have adult-like behaviors and to rely on logic
and common sense instead of formal policies. The second tenet insists, to tell the truth about
employees' performance. The company found formal reviews too ritualistic and infrequent so
they scrapped the formal reviews and favored informal 360-degree reviews. A 360-degree
review of the employees allows peer review and self-review. McCord further says
performance improvement plans are fundamentally dishonest and detests it. This element also
suggested cutting off those employees whose skills no longer fitted the company’s needs. The
third element tells us that the important task of managers is building a great team. Managers
should be able to recruit people with the right skills and develop teams that could work
together without disruptions. The managers should not be measured or rated on whether they
were excellent coaches or mentors or on their paperwork rather the managers of Netflix value
the importance of creating a great team as a good team would work under the company’s
strategy and follow the goal of the company.
The fourth element asserts that leaders own the job of creating a business-oriented company
culture that will allow all of their employees to understand the mission, goals, and business
model of the company. The three issues when leaders tried molding their corporate culture
were also pointed out. The first issue is the lack of real agenda, another issue is around lack
of employees knowing the levers that drive business and the third issue is not knowing the
differences between the subcultures in the company which she terms as the spilt personality
startup. Netflix also believed in market-based pay and told its employees to have interviews
with their competitors to get to know their talent’s market rate. Unlike most tech companies
they didn’t hold their employees, the employees were allowed to leave if they saw better
opportunities elsewhere. The final tenet expounds talent managers to think like business
people and innovators initially and then think like HR people lastly. The talent managers
must not just acquire people but rather hire the right people and groom them in the right
manner. They should think from a strategic point to form new ideas, plans and contribute to
improving performances rather than just following the basic practices of the companies.

We can see that Netflix focused on their team building, performance reviews, and recruitment
which resulted in them being successful over the years and globally known just because they
reinvented their human resource policy.
Reference:

McCord, P. (2014) How Netflix Reinvented HR. Harvard Business Review [Online], 1
January. Available from: <https://hbr.org/2014/01/how-netflix-reinvented-hr> [Accessed 12
May 2020].

Herman, J. (n.d.) How Netflix Reinvented HR - 580 Words | Case Study Example [Online].
Free Essays. Available from: <https://ivypanda.com/essays/how-netflix-reinvented-hr/>
[Accessed 12 May 2020].

How Netflix Reinvented HR (n.d.) [Online]. Available from: <https://www.hcamag.com/au>

[Accessed 12 May 2020].