HRM Section A

Group 2

21PGHR003 - Aditya Mohapatra

HRSP: Netflix
21PGHR004 - Aishwarya Chaudhary
21PGHR019 - Arnav Goel
21PGHR020 - Arundhati Mukherjee
21PGHR023 - Ayush Bajpai
21PGHR024 - Ayush Chauhan
21PGHR043 - Lubna Memon
21PGHR044 - Kriti Raheja
The Netflix rethinking HR article has been criticised
in a number of blogs and reviews. The document,
written by Netflix CEO Reed Hastings and
colleagues, outlines the tactics used to develop
Netflix's culture and inspire high performance.

They acknowledge that their high-performance

culture isn't for everyone, therefore they're looking
for people who thrive on high-performance, candour,
and change. They are open about their desire to avoid
attracting employees who value job security and are
afraid of change.
The
Problem The first was with an engineer who had become a one-man department after a
large layoff, working long hours. But, contrary to McCord's expectations, the
engineer was in better spirits than ever. His former coworkers weren't exactly
stellar, and he'd spent the most of his time cleaning up after them. He just felt
more liberated now.

The second conversation was with a long-serving and well regarded employee.
Her work ethic was impeccable, but her abilities were no longer sufficient for
the organisation. Instead of refusing to let her continue at the company and
watching her fail the duties she was assigned, Netflix offered her a generous
severance payment in exchange for her outstanding service.
 The Solutions
From these two principles Netflix shaped the 5 tenets that since have proved extremely effective:

Hire, Reward, and Tolerate Managers Own the Job of Good Talent Managers Think
Only Fully Formed Adults Creating Great Teams Like Businesspeople and
Innovators First, and Like HR
People Last

Tell the Truth About Leaders Own the Job of

Performance Creating the Company Culture
 Hire, Reward, and Tolerate Only Fully Formed Adults

Adult like behaviour means recognising that HR policies are frequently skirted as managers work out what makes sense on a case-by-case basis.

Asking employees to rely on logic and common sense instead of formal policies fetches better results at lower cost.

Hiring people who put company’s interest first would omit the need for spending endless time and money for enforcing HR policies for a mere
3% who won’t comply.
 It’s Application At Netflix
• Salaried employees being told to take leave whatever time they felt was appropriate. Bosses and Employees were asked to work it out with one another.
• Hourly workers in call centers and warehouses being given a more structured policy.
• Employees working in accounting or finance, were not to plan to be out during the beginning or the end of a quarter, because those were busy times.
• If one wanted 30 days off in a row, he/she needed to meet with HR.
• Senior leaders were urged to take vacations and to let people know about them—they were role models for the policy.

• Netflix departed from a formal travel and expense policy. The company’s expense policy: Act in Netflix’s best interests.
• They expected employees to spend company money frugally, as if it were their own.
• Eliminating a formal policy and forgoing expense account police shifted responsibility to frontline managers.
• It reduced cost by taking out travel agents from the system.
• They found that expense accounts are another such area where setting clear expectations results in responsible behaviour.
 Examples from Other Companies In Flexible Leave Policy
LinkedIn
In 2015, LinkedIn shifted to offering unlimited holidays in a bid
to give their employees more flexibility and a sense of
empowerment – befitting of one of their organizational values of
‘Act like an owner’.
The initiative was termed ‘Discretionary Time Off’ (DTO) where
there is no set minimum or maximum amount of vacation days
an employee can take in a year. Just like in Netflix, staff work
with their manager to request time off when they need it.
Roku
TV streaming app Roku doesn’t track vacation days for their
salaried employees either. They don’t even have official holidays.
Instead, staff are encouraged to take as many vacation days as
they think are appropriate – so long as they can get their job done
and it doesn’t impact their wider team.
Great Glassdoor reviews from new and experienced staff
members, a 72% net promoter score and impressive marks given
for compensation and benefits – as well as a great work/life
balance.
Tell the truth about performance
 Examples of its applications

Adequate performance gets a generous severance package-If an employee has made valuable contributions to the culture and gave great performance it is
important to realize his efforts so rewarding him with best severance package serves well. Maria for example has been a valuable asset to Netflix but now
her skills are irrelevant so we give her a good severance package and let go.

Great Workplace is Stunning Colleagues-Whatever happens, the best performers would always contribute to the growth of the company but we focus on
that to have a great workplace with equal emphasis on company culture. Netflix imagines and strives to be a team of high performers and stars in their
field. They realize this by forming a team of the best in what they do.

Demolished the formal annual reviews, performance management and Performance improvement plans-This has worked in the best interests of the
organization. Only a 360 degree feedback and what do employees want to see in their colleagues helps them understand what is expected of someone and
how well they do it.
 Examples from other companies having innovative Performance Management Systems

Google
A performance review system that is continuous.
Google relies on data analytics to make all of its decisions which are backed by a
strategized plan.
Using Objectives and Key Result areas to determine what an employee needs to do and how
far he has achieved it.
At Google ‘buck stops with the manager’ — so if an initiative falls on its head, instead of an
individual employee being blamed, it's seen as a failure of management.
 Examples from other companies having innovative Performance Management Systems

Adobe
Adobe introduced “Check-in,” its performance management system, to enable seamless performance reviews
and to transform the employee experience within the company.
Following Adobe’s successful reintroduction of performance management, the company received confirmation
that regular check-ins and a culture of more continuous feedback was working. The company was able to cut
voluntary turnover of employees by over 30 percent. Additionally, ‘involuntary departures’ have risen since the
introduction of Adobe’s continuous feedback solution. 
 • Amazon has a solution for employees who no longer
want to work there — pay them to quit

Amazon's • Once a year, employees with one or more years’ service

are asked if they would like to leave in exchange for a

The Offer pay-out based on how long they have worked for the
company
• The company offers $2,000 to employees who have been
at the company one year, and the offer increases by
$1,000 per year of tenure, maxing out at $5,000
• There is one condition set for those who take up the offer
– once you leave, you can never come back
• Amazon sees this as a mutually beneficial arrangement as
they feel that employees who don’t really want to be there
aren’t as committed as those who choose to stay on
Managers Own the Job of Creating Great Teams

I disagree,I tell my managers to

approach the process in exactly the
opposite way.

McCord Former Chief Talent Officer at Netflix

 McCord's Way of Team Formation

• To imagine what their team is accomplishing six months from now.

• To envision what specific results do they see? How is the work different from what the team is
doing today?
• Next the skills needed to make it reality.
• Lastly analyzing how well their existing team matches what they need

Netflix Challenge
The shift from DVDs by mail to a streaming
service store massive vol- umes of files in the
cloud and figure out how huge numbers of
people could reliably access them
 What Was Required?
People deeply experienced with cloud services who worked for companies that operate on
a giant scale—companies like Amazon, eBay, Google, and Facebook, which aren’t the
easiest places to hire someone away from.

What helped Netflix to achieve this was their

compensation Philosophy

Be honest, and treat people like adults.

 Unique Compensation Policies Of Netflix

No Pay Performance Bonuses

They believed your employees are fully formed adults who put the company first, an annual
bonus won’t make them work harder or smarter.

Advantage Of This Policy

No Misalignment of goals
No threat of dissolving Profits
Promotes culture of "freedom and responsibility”
 Encourages Employees To Interview At Other Companies

• Netflix encourages employees to interview at other companies, and to talk with their managers
about what they learn.

Reasons For This Practice

• It helps you clarify your professional goals

• You start to learn how much you're worth
• You expand your network
• It can make you appreciate your current company more
 Compensation Strategy
Netflix
• No performance bonuses because Netflix believes that
bonuses are unnecessary if you hire the right people.
• They believe in market based pay and would tell employees
to interview with competitors to get an idea of the market
rate for their talent
• They provide employees with the option to choose how
much (if any) of their compensation would be in the form
of equity. If employees wanted stock options, their salaries
are reduced accordingly.
• Netflix has no vesting period – options can be cashed in
immediately. This is unlike many tech companies that have
a 4 year vesting schedule and try to use it as “golden
handcuffs” to aid retention
Google
• Google's compensation structure consists of three key
components: salary, bonus, equity
• Bonus is meant to reward exceptional performers
measured by their individual contributions for the past
cycle (either yearly or quarterly)
• Most Googlers are eligible for equity refresher grants.
Managers plan refresher grants at the end of each year
during compensation planning cycles. An algorithm
determines the recommended refresh amount, and
managers use their discretion to adjust that amount either
up or down
• Google typically follows a 4 year vesting schedule. An
employee must be at Google for atleast 12 months before
the first vesting date
 Leaders Own the Job of Creating the
Company Culture
Issues in modelling a company culture:
1) A mismatch between the values you’re talking up and
the behaviours you’re modelling and encouraging

• A trade-off between efficiency and finishing a game of pool ie casualness

• At start-ups, where there’s a premium on casualness that can run counter to the
high-performance ethos leaders want to create.
• If a leader is not fully prepared and relies on charm, IQ, and improvisation: it
affects subordinate performance
• It’s a waste of time to articulate ideas about values and culture if you don’t model
and reward behavior that aligns with those goals
 2) Making sure employees understand the levers
that drive the business

• Even if employees want to perform well, they need to

clearly understand how the business functions and
what drives actual results. For eg-
• At Netflix- employees used to focus too heavily on
subscriber growth, without much awareness that
expenses ran ahead of revenue
• Huge amounts were being spent buying DVDs, setting
up distribution centres, and ordering original
programming, all before collecting a cent from new
subscribers
• Employees needed to learn that even though revenue
was growing, managing expenses really mattered
 3) Split personality start-up

• You need to be aware of sub-cultures that

may require different management. For eg at
Netflix-
• There were big differences between the salaried professional staff at headquarters and the hourly workers

in the call centres

• At one point the finance team wanted to shift the whole company to direct-deposit paychecks

• It had to be pointed out to them that some of our hourly workers didn’t have bank accounts
Good Talent Managers Think Like Businesspeople and Innovators First,

and Like HR People Last

• Not limited by constraints of applying best practices of other
companies and developing their own strategies
• Treating employees like adults with freedom of choice
regarding their work schedules, telling them the truth about
their performance in order to motivate them and enabling INNOVATIVE
independent work
• Netflix’s expense policy is just five words long “Act in HR
Netflix’s best interests”.
• Generous severance packages PRACTICES
• Not curtailing freedom as company grows
• Minor players playing the game because they love it even if AT NETFLIX
they are not growing
• Self improvement over career planning, inculcating
responsibility towards the business
Other examples where HR managers think about business first

• Google: Deployed engineers for Project Oxygen

instead of HR managers, putting business first,
which is all about data. This resulted in
identification of behaviours of successful
managers, that in turn impacted HR.

• Cisco: Cisco developed its own HRM system that helps

in creation of most productive teams for specific
projects, putting business before people which in turn
helps in effectivity and output, simultaneously attracting
top talent

• Hilton Worldwide Holdings: Use of balanced scorecard

to align employee performance with corporate strategy
In CEO's own words...
Thank you!