Netflix HR Practices: Opportunities and Challenges

The study is based on Netflix HR practices where HR managing people in an effective manner so that minimum losses can be occurred. The report will present the various recruitment practices which are adopted by the Netflix in which both the positive and negative impact of these policies have been briefly discussed. Furthermore, study will also discuss the hire and fire policy of the Netflix in which smart work is given a high importance and the impact of this policy is been identified on the overall performances. Moreover, various challenges will be evaluated in the current business environment. At last the report will present the opportunities that the firm can avail and recommend the ways in which the organization can gain competitive advantage over the other competitors.

Human Resource

EXECUTIVE SUMMARY
The study is based on Netflix HR practices where HR managing people in an effective
manner so that minimum losses can be occurred. The HRM practices followed by the Netflix are
been made to increase the productivity of the employees. Also, it encourages employees for the
independent decision-making, shares information openly, avoid rules, hires only effective people
etc. These practices are linked to the various theories which are been practised by managers
according the situations. Moreover, the report will also analyse the opportunities and challenges
which are been faced by the Netflix and suggest ways to overcome those challenges and avail
those opportunities. The report will also critically evaluate the hire and fire policy of the Netflix
which is major practice followed by the organization to hire the source from external
environment and terminate those employees who are not performing well or are less efficient
than the other people working the organization.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
1. Presenting the human resource policy of the Netflix...............................................................4
2. Identifying the positive and negative impact of Netflix’s recruitment practices.....................6
3. Identifying the challenges and opportunities for developing efficient HRM system..............7
CONCLUSION................................................................................................................................8
Recommendations........................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Human resource management refers to managing people to maximize the employee
performance and to gain competitive advantage. HRM focuses on the various policies and
system present in the firm. Hence, creates a culture that is flexible, creative and successful that
keep the employees happy, productive and engaged with the other individuals. The present report
is based on Netflix which was founded in 1997 by American businessman and is the largest
media steaming company spread over 190 countries. It provides variety of TV shows, movies
and documentaries with no ads by just buying single subscription and is present in more than 30
languages.
The report will present the various recruitment practices which are adopted by the Netflix
in which both the positive and negative impact of these policies have been briefly discussed. By
using different theories like vroom expectancy theory, contingency theory, high performance
work system etc. is been linked to identify the impact of decisions. Hence, the firm takes such
decisions to increase the efficiency and productivity of the employees in a complex environment.
Furthermore, study will also discuss the hire and fire policy of the Netflix in which smart
work is given a high importance and the impact of this policy is been identified on the overall
performances. Moreover, various challenges will be evaluated in the current business
environment. At last the report will present the opportunities that the firm can avail and
recommend the ways in which the organization can gain competitive advantage over the other
competitors.
1. Presenting the human resource policy of the Netflix
Human resource practice refers to planned operations of HR which helps in managing the
employees and coordinate their activities to achieve the desired business objectives. Here, the
HR should focus on the well-being of both the employees and the organization. Effective HR
practices helps in building the brand image of the firm in regards with its competitors.
Netflix successful HR practices
 Terminating poor performance employees: Netflix does not hire those employees
whose goals are not linked with the organization and discontinues the work of those
employees who have poor performance. This policy is adopted so that the training and
supervision time can be saved as people who are hired are already expertise in their
respective fields (Netflix unique culture of termination that employees seem to like,2018).

Benefits of such HR practices is that the managers can build the morale of other
employees who are working on the same level, and they can be awarded for the smart
work and not the quantity work they do.
Hire and fire policy of Netflix
Regarding the Hire and fire policy of Netflix in USA, it is a successful as firm was
planning to expand its operations globally (Burroughs, 2019). Human capital is very important
asset for the organization as it recognizes that all labor is not equal and quality can be improved
by providing proper training and supervision. The company believed in retaining only high
performers and allowing all others to leave the organization as early as possible by providing
good amount of package. Although the Netflix allows the independent decision-making among
the employees but only retains those who are highly effective. They follow a culture where the
employees are evaluated critically so that the effectiveness can be achieved. It was ranked
number 11 on LinkedIn's and was considered as most widely practiced in the united states.
Also in USA, Netflix recruit only those individuals who are expertise in their respective
fields and importance is not given for qualification rather than the experience to solve the
problems in a quick manner with the least mistakes. It has adopted the review policy of 360
degree where, management has the option to review anyone anytime. It follows the practice of
keeper test which is method for the management to decide to whether to fire or retain staff. The
firm does not put efforts in keeping the employees which want to leave the organization when
better opportunities are been available to them.
On contrary, to expand a business globally Netflix followed standard policies to expand
its market internationally. The product executive does not allow the employees to work from
remote locations as it believed that the firm would work better when all the employees carried
out the tasks at the same place so that coordination and teamwork can be maintained (How
Netflix reinvented HR, 2014). Netflix also developed the transparent pay policy in which every
employee along with the top management could view the salary earned by the other employees.
Such policy helped in motivating the employees to do hard work to earn more than the average
employees.
The above analysis is based on high performance work system where values, norms
and HR practices of the organization create the environment so that high levels of performance
can be achieved in a specific time period (Miao and Cao, 2019). It can be applied where

employees are expected to be committed and achieve excellence in every tasks being performed.
Here the management believes in creating the organizational culture rather than establishing the
control. Such system helps in creating the competitive advantage and enhancing organizational
performances which leads to earn higher profits. Netflix also practice such style by identifying
the goals and implement the same by delegating the responsibilities so that outstanding results
can be achieved. Proper training is been provided to deliver quality outputs from all the levels of
the organization.
2. Identifying the positive and negative impact of Netflix’s recruitment practices
Recruitment policy of Netflix demands hiring of those employees who can easily fit into
the culture having proper technical knowledge of the work. Candidates are been interviewed by
the member of 8 panels which consists of senior members of the core team in which they
analyzed whether the candidate is technically capable or not. Approval of all members is taken
and if any member says that the person would not be hired than, individual is been rejected for
further rounds. Netflix also launched the manual referred to as culture deck so that candidates
can self-select and many new employees joined every year in which company culture was
ensured. Such practice may have a negative impact as the potential individual may lose the
opportunity to join the organization with less qualification and showcase its talents.
The impact of the using defined recruitment practice is such that the standard pay time
off policy in which employees got 10 vacation days, 10 holidays and little amount of sick day
leave. It was the duty of the employees to keep the track of days that work has not been done and
informed their respective manager for the same. Employees were asked to take leave whenever
they feel appropriate but with coordinating their managers (Jaworski, 2021). However, the
negative impact of this policy was that Netflix some leaders act as the role model for the leave
policy but some employees specially finance and HR employees were not allowed to take leave
at the end of financial year and as a result they were worried about the system inconsistency
where managers were strict and does not provide leave easily.
Recruitment practices consequence direct impact over employees such that by organizing
expensive lunches or any costly equipment is been brought for motivating employees. This has
created both positive and negative impact as Netflix asked the employees to apply common sense
rather than the formal policies so that company money can be spent wisely which was positive in
context for organization For e.g. travel expenditure policy does not exist and this way HR was

successful in reducing the costs paid to the travel agents for booking trips however in relation
with employees it has created negative impact for some as they may feel biased for they have to
provide justification for the expenditure . Therefore, all the employees follow the organization
norms and the one who does not follow left the company early. The above condition is in relation
with Vroom expectancy theory of motivation which believes that employees' performance is
based on the skills, experience, knowledge etc. It is based on three elements valence, expectancy
and instrumentality (Soyoung and Sungchan, 2017). In which valence refers to the value of any
reward in association with the action, expectancy refers to how many efforts will lead to
generation of good results and instrumentality refers to how better results will help in achieving
rewards. Although every individual may have different goals, but they can be motivated when
considerate amounts of rewards are been provided and these rewards satisfy the particular need
of the individuals. Netflix is based upon this policy as it provides various incentives and rewards
to the employees to keep them motivated at the workplace. It keeps only those employees in the
organization which are qualified and highly skilled so that maximum efficiency can be achieved.
Netflix also believed that harder the work better results can be achieved. Moreover, people make
contributions so that expected outcomes can be achieved.
3. Identifying the challenges and opportunities for developing efficient HRM system.
There are various challenges which are been identified in the HRM system of Netflix some of
them are been explained as follows:
 Disagree to work remotely: The firm has large amount of talent which are located in
distant location. As a result, there are lot of problems faced by employees with regard to
working in a team and improper communication channels (Milliman and Clair, 2017).
This in turn affect the entire working performance of a company in negative manner.
 Technology issues: Another issue faced by the quoted firm regards top technology issues
where effective training and supervision of the employees is done digitally that further
reduced the learning and knowledge process (Lobato and Lotz, 2020). Therefore, it
decreases the personal interaction among team members that indirectly affect the working
culture of a company.
 Review policy: The review policy of the firm is not effectively used by HR because 360-
degree review system has been adopted by company, where employees are monitored too
infrequent and irregular which created a feeling of job insecurity among the employees

As a result, decisions taken at immediate basis might create adverse impact upon other
employees.
 Termination policy: Another challenge faced by company is related to fire policy that
does not allow new resources to enter into the organization and showcase their talents as
it prefers to take only those candidates which have a prior experience are highly effective.
This challenge can be linked to the contingency theory which states that there is no best
way to arrange the organization activities and to make decisions (Csaszar and Ostler,
2020). A firm decision is based on the internal and external situations. Leaders need to
make decisions according to the strategies to change a situation in a particular period.
Netflix managers are efficient enough to keep the morale of the employees even in the
worst situation by providing the positive aspect of every bad situation. Leader considers
the variables that affect the particular situation and decide which technique is the best.
Opportunities of Netflix
 Act in Netflix best interest: It encourages employees to rely on the logic and common
sense rather than the formal policies. So that the organization money can be spent in
wiser manner and as such the saved money can be used on other valuable resources. This
way organization growth and competitive advantage can be gained.
 Consolidation of workplace: Emphasis were laid down to avoid the remote working of
the employees as Netflix was expanding its business abroad and wants the goals to be
achieved in effective manner. This can be linked to the organizational behavior theory
(Salas-Vallina, Alegre and Fernandez, 2017) where it helps to identify how the
individuals and groups act within the organization they work so that the effectiveness can
be improved. This theory also helps in defining how the work is performed by the
individuals independently and within the groups. If the individual is efficient and happy
with the organization, they will be productive. A lot of negative environment can create
toxicity within the employees. Individuals can affect a group and the group can affect the
whole company.
CONCLUSION
From the above, it has been concluded that HRM plays an important role in developing a
business culture that helps in increasing the employee productivity. From the above report it can

be summarized that Netflix has been extremely successful in adapting to the changing needs of
the individuals by significantly providing blockbuster content in comparison to its competitors.
Also, it has adopted various policies for recruiting the talents which are beneficial for the
organization. One of them is the hire and fire policy that recruits only the highly qualified
individuals and does not retain those individuals who technically not compatible as the
organization can incur huge amount of losses. Also, the study stated that proper recruitment
practices adopted by the firm helps in attracting the large number of candidates and ensures
proper working of the organization to meet the future obligations easily.
Moreover, from the report, it has been concluded different challenges faced by Netflix
such as its review policy, termination policy, technology issues etc. which can have been
overcome by developing the efficient system for managing the organization process and also
through financially managing the content cost as well as providing an innovative user interface.
This will help in building teamwork and increasing the morale of individuals. Further, it is
summarized that success can be achieved by upgrading its present method of working according
to the needs of the customer which will help to capture new customers by changing the prices for
the same content over various regions.
Recommendations
From the above report there are certain things that can be improved in the HRM policies of the
Netflix. Some of them can be briefly described as follows.
 One of the recommendations is that open discussion should be encouraged between
management and employees so that better policies can be formulated from various
sources. This will ensure better HR practices that can be continued over the years.
 Another suggestion to Netflix is that leave policy should be made easier for all the
employees so that it create sense of job satisfaction and increases the brand image of the
firm. Also, modification in this policy will help the firm to attract new employees
(Bratton and Gold, 2017).
 From the review policy used by the firm it is to be recommended that policy should be
changed in such a manner that proper and timely evaluation can be done so that
employees don't feel unsatisfied with their superiors and the business environment. Also,
with use of better review policy as well as flexible HRM system the firm can grow
immensely on global level as they will feel motivated to work harder than the others.

 Further it can be suggested that timely feedback must be collected from the employees to
see whether the organization system is working well or not. Feedback also helps in
implementing new changes while removing the old working methods which may help to
increase the productivity in the future.

REFERENCES
Books and journals
Bratton, J. and Gold, J., 2017. Human resource management: theory and practice. Palgrave.
Burroughs, B., 2019. House of Netflix: Streaming media and digital lore. Popular
Communication.17(1). pp.1-17.
Csaszar, F. A. and Ostler, J., 2020. A contingency theory of representational complexity in
organizations. Organization Science. 31(5). pp.1198-1219.
Jaworski, B. J., 2021. Netflix: Reinvention across multiple time periods. AMS Review.pp.1-14.
Lobato, R. and Lotz, A. D., 2020. Imagining global video: The challenge of Netflix. JCMS:
Journal of Cinema and Media Studies. 59(3). pp.132-136.
Miao, R. and Cao, Y., 2019. High-performance work system, work well-being, and employee
creativity: Cross-level moderating role of transformational leadership. International
journal of environmental research and public health. 16(9). p.1640.
Milliman, J. and Clair, J., 2017. Best environmental HRM practices in the US. In Greening
People (pp. 49-73). Routledge.
Salas-Vallina, A., Alegre, J. and Fernandez, R., 2017. Happiness at work and organisational
citizenship behaviour: is organisational learning a missing link?.International Journal of
Manpower.
Soyoung, P. A. R. K. and Sungchan, K. I. M., 2017. The linkage between work unit performance
perceptions of US federal employees and their job satisfaction: An expectancy
theory.Transylvanian Review of Administrative Sciences.13(52). pp.77-93.
Subramanian, K. R., 2017. The generation gap and employee relationship.International Journal
of Engineering and Management Research (IJEMR).7(6).pp.59-67.
Online
How Netflix reinvented HR. 2014. [online]. Available through: <https://hbr.org/2014/01/how-
netflix-reinvented-hr>.
Netflix unique culture of termination that employees seem to like. 2018.[Online]. Available
through: <https://insights.dice.com/2018/10/29/netflix-company-culture-termination/>.