Case Study: Netflix's Hire and Fire Policy and HRM System Analysis

This case study examines Netflix's unique HR practices, particularly its 'hire and fire' policy, and its impact on the company's global expansion. It discusses the reasons for the policy's success in the US and global markets, focusing on the benefits of experienced staff and quick adaptability. The report also explores Netflix's recruitment practices, highlighting the focus on experience over educational qualifications and the emphasis on cultural fit. Furthermore, it identifies challenges and opportunities in developing a sustainable HRM system, including data security, legal compliance, and employee training. The analysis concludes with recommendations for improving HRM practices to support Netflix's continued growth and success.

NETFLIX CASE STUDY
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Executive summary
Netflix is an American company who deals in providing subscription based series of Over the
top services. The company provides range of TV series, films, documentaries etc. in a number of
languages and styles. It uses unique HR practices such as hire and fire policies for recruitment
and discharging employees. It does not hire employees who did not had any experience or were
from remote locations. Company's recruitment policies are very unique and are working quite
successfully for the company. Company also recruits those employees who can match with its
work cultures nor does not consider educational qualifications of the employees. However, the
company have identified various issues in its practices such as lack of innovations and creativity.
Various opportunities for development of sustainable HRM practices which focus primarily on
performance and ethical issues have also been identified which company can use for attaining
success in its global expansion.
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Table of Contents.
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................4
Analysis...........................................................................................................................................5
Hire and fire policy of Netflix:....................................................................................................5
Recruitment practices of Netflix..................................................................................................7
Challenges and opportunities of effectively developing sustainable HRM system....................8
CONCLUSION..............................................................................................................................10
Recommendation...........................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
Human resource practices refers to the strategic operations of HR which form guidance
and foundation for managing employees of a company with the executive plans of the company.
Some practices may include providing security to the employees, selective hiring, training and
development for specific skills and fair compensation, etc. (Mahmood and et.al., 2019). The case
discusses the HRM policies used in Netflix. Reed Hastings, the CEO of the company fired
employees as their performances were below the standards even when they were paid higher
salaries. Then the company introduced new policy which is still followed in the Asian countries
as well.
Netflix INC. is an Over The Top (OTT) content platform and production company whose
business is to provide subscription based streaming service. It offers online streaming of film,
series of television and its own in-house. The company was found in 1997 by two founders Marc
Randolph and Reed Hastings. The basic idea of company was based upon a personal incident of
Hastings when he had to pay USD 40 because he forgot to return a rental film by its due date
(Netflix Culture, 2021).
The purpose of the report is to identify the effectiveness of Hire and Fire policy of Netflix
and its relevance when they are applied to Global markets. Case study also aims to study the
advantages of standardization of HR practices. The report will discuss the hire and fire policy of
Netflix and its impact on global market. The Various HR practices such as recruitment and HRM
systems, their challenges ad opportunities as well as their benefits will also be discussed in the
report.
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Analysis
Hire and fire policy of Netflix:
Hire and fire policy refers to the practice of HR in which a company hires an employee
internally and externally and then fire them within some time period. The companies do this to
fulfil their annual turnover objectives (Coleman, Dossett and Dimick, 2021). In Netflix, the work
culture is not formed as a family but as a professional sports team. This policy creates a culture
where every employee is vulnerable to discharged despite being hard-working or good track
records. The company hires people who are experienced and does not recruit fresh talent. It hires
candidates which fits its culture and are available when called within 90 seconds.
Reasons for success of Hire and fire policy of Netflix
Success in the United States:
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Illustration 1: Hire and fire policy
Source: Netflix’s Unique Culture of Termination… That Employees Seem to Like, 2021.

Hire and fire policy is a common approach in US where the employees are hired for a
specific purpose, and then they are fired within months. Netflix has been using this approach and
other HR practices such as cultural deck and hiring only experienced employees who are not
from remote areas. The policy has very successful in US because of the following reasons: Fresh ideas and experiences: In hire and fire policy, new staff is constantly searched who
have better qualifications and skills to perform a specific task (Füllemann and et.al.,
2020). When the company adopted this policy, it increased the pool of talent for
company. New people come with fresh ideas and experiences which can be valuable to
company. Cost and time effective approach: Company has argued that hiring new staff is much
more effective than providing training and development to current employees. The
company believes that hiring staff for performing a specific task is cost effective as the
employee will perform their work and raise productivity, and then they will be fired.
They don not have to provide any training or retention strategies to invest in the
employees. It can save the time and costs of the company.
 Quick adapting changes: The hire and fire policy has provided huge flexibility to the
company for reacting and adapting constant changes in the market. This is major reason
for success of the approach. It has provided the company the ability to adapt changes
related to supply and demand of employment processes in the market.
Success in global market:
Even though it was unclear if the Policies practised in the US such as hire and fire will be
successful in Global market or not, Netflix chose to continue their policy while expanding
globally. Soon after this policy was successful for the company. The reasons for success of this
policy in global market are as following: Experienced staff: The company chose the hire and fire policy and hired the staff who
had some experience in the field and avoided recruiting fresh talents. The company
believed that hiring employees who have no experience will require providing them
training (Agnihotri and Bhattacharya, 2021). It takes huge time and resources invested in
them so that they contribute towards productivity. However, experienced staff will need
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no training and fulfil their specific tasks on time which increases its productivity. Thus,
this practice leads the company towards success.
 Quick availability of staff: The company believed that the staff who can be present within
few minutes when called, can help the better functioning of the company. When the staff
is available quickly then the company can access workers within a centralized office.
Better availability of staff also reduced the possibilities of delay in works for the
company (Ahir, 2018).
Recruitment practices of Netflix
In every organisation recruitment practices are applied so that employees can be recruited
by following proper process. It is important to apply some recruitment practices so that best
candidate can be selected for company. In Netflix company, only experienced candidates are
hired and purposely did not hire newly graduated college students. Company demand for high
self- sufficiency from employees and they are not recruiting fresh talent. For accomplishing
goals and objectives, it is important to recruit best candidates who are having experience and
knowledge. Netflix is not focusing on educational qualification of candidates who are
experienced. They want talented candidates having knowledge and experience (Zenone, Cezar
and de Hoyos Guevara, 2021). Employees of Netflix company are saying that they have not
heard a single person discussing about their education or degree. Education does not matter when
a person is having experience because when is having practical knowledge then there is no use of
qualification.
When working with people having experience of 5, 10 or more years then education does
not matter. In Netflix company, employees are recruited according to their experience or ability
to solve problem. It is important to apply some recruitment practices so that candidates did not
feel that partiality is done or any kind of discrimination is done. Every employee should have
equal chance to participate in recruitment process. Netflix company is focusing on people who fit
their culture and having technical knowledge. Their aim is to select best candidate for their
organisation and make sure that personality of a person is compatible with culture of company or
not. Interviews are conducted to checking technical capability and there are different ways to
check capability. Generally, a panel of eight members including, HR representative, senior
management and members of core team. Final decision is in the hands of core team but if any
single member says ‘no’ then person is not recruited (NGOMA, 2018).
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Recruitment process which is used by Netflix has some positive as well as negative
impacts. Positive points of this recruitment practice is that it saves time because it is clearly
mentioned at the time of recruitment that only experience people should apply. So, managers
have to select best candidate out of people who are having experience. A panel of eight members
are taking interview and they are asking question related to technical knowledge to check the
capability of candidate. This helps in selecting best candidate for company. It is the
responsibility of managers to recruit appropriate candidate for organisation who is having
required skills and knowledge (Saviour and et.al., 2017). Recruitment practice of Netflix
company has some negative impact also like, all candidates are not getting opportunity because
fresh candidates are not allowed. Netflix is hiring only experienced people and they did not focus
on education of a person. In Netflix all employees are talented and having experience of 5, 10 or
more years. It may be possible that fresh candidates have better knowledge and complete work
efficiently. So, recruitment practice which is used by Netflix which has positive and negative
impact.
Two recruitment practices which can be applied by Netflix company are, they can conduct
practical assessment and recruitment can be done through referrals. At the time of interview,
managers can give some practical task to candidates and recruit candidate who perform well.
This is recruitment practice which can be applied by Netflix for recruiting appropriate candidate
for organization. Candidates can be recruited with reference like, if employees who are working
in company can suggest people or their friends if they want to work with the organization. So, in
many companies, new employees are recruited through reference.
Challenges and opportunities of effectively developing sustainable HRM system
HRM system refers to designing human resource business process, payroll of employees,
transactions, compliance, making rules and regulations, performance management of employees.
It is the responsibility of managers to make rules and regulation, apply laws, identify methods
which can be used for evaluation of performance and deciding payroll of workers. In Netflix,
managers apply rules because they are governed by law. In Netflix, proper rules are not made
and laws are not applied properly. Policies and procedures of Netflix are not made clearly and
this creates issue because employees are not able to understand. Managers should make policies
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properly so that there will be no confusion and workers can work efficiently (Abdullah and et.al.,
2020).
Challenges face by manager while developing HRM system are ensuring data security,
complying with legal requirements, employee and manager training, assessing quality and
accuracy of information. These are some challenges which manager has to face and they have to
find solution so that they can grab opportunities. For accomplishing targets, it is important to
apply some new techniques and face problems. When developing sustainable HRM system
managers has to provide training to employees for how to work. When new system is applied
then managers has to make plans regarding data security. Nowadays, competition is increasing
and it is important to apply new system so that company can grab opportunities in market.
Netflix product development strategy is different from other tech companies. In Netflix,
there is effective communication and all members are working as a team for accomplishing goals
and objectives. Managers distribute work according to specialization of a person and in
organisational chart, roles and responsibilities of every person is mentioned. in Netflix all work
is centralized and employees are working together to accomplish goals and objectives. It is
important to divide work properly so that there will be no confusion and it helps in
accomplishing targets. It is important to solve issues which is faced by employees and managers
should try to solve it. They are responsible for handling all issues and evaluating performance of
employees.
In an organisation, it is important to measure performance of employees so that better plans
can be made and it help in achieving goals and objectives. In traditional corporate performance
reviews, low performers are placed on Performance improvement plans (PIP) so that employees
can improve their performance and work effectively (Sato, Kobayashi and Shirasaka, 2019). In
Netflix 360 – degree reviews theory is applied for evaluating performance of employees. In this
employees identify tasks, action that their colleagues should start or stop or continue doing.
Netflix did not take much time to remove employees who are not performing well and they are
not giving chance to employees to improve their performance. There are many issues which is
faced by Netflix like, rules and regulations are not followed by employees and they should apply
some ethical practices so that employees can work efficiently. There are some challenges which
is faced by company at the time of developing HRM system like, engaging workforce, managing
relationships, diversity in the workplace, employee health and well- being. It is important to
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make rules and regulations properly and it should be followed by every employee so that work
can be completed on time. This helps in increasing efficiency and overall productivity of
company is improved.
It is the responsibility of managers to evaluate performance of employees and they can know
who is performing well and which employee is not performing well. In Netflix games are played
and with help of game it is identified that which employee is not performing well. Netflix is not
giving second chance to employees and they are not providing development programs. Managers
are removing workers who are not doing well and recruiting another candidate who have
technical knowledge and work efficiently to achieve targets of company (Budhwar and et.al.,
2019). Managers are responsible for handling all the issues and make plans for accomplishing
targets of organisation.
CONCLUSION
From the above discussion it can be concluded that, Netflix is world’s leading internet
company and it has unique human resource management. Netflix was successful in its human
resource practices, regarding its hire and fire policy. The way of recruiting employees in Netflix
is different from other as they are hiring candidates who have experience and did not hire fresh
college graduates or those who wanted to work from remote locations. In Netflix, employees are
not getting chance to improve their performance and they are fire from company. Netflix want to
expand their business in global markets so that they can earn revenue and good image can be
built in minds of customers.
Hire and fire process of Netflix has been discussed. Further, recruitment practice of Netflix
like, they did not focus on education or qualification of candidate, they want candidate who is
having experience has been described. Managers are not hiring fresh candidates; they focus on
selecting candidate who is having experience. Further, challenges and opportunities of
effectively and efficiently developing sustainable HRM system focusing on performance and
ethical practice has been discussed. Performance is evaluated by using tools and techniques,
employees are not getting chance to improve their performance. There are many issues which is
faced by organisation and managers have to find solution so that work can be done efficiently.
HR system focus on performance of employees and apply rules and regulations which is
beneficial for growth of company.
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Recommendation
There are some recommendation which can be applied by Netflix so that they can perform
better and accomplish goals and objectives of company. Managers should make rules and
policies properly so that employees can work efficiently and effectively. Work should be divided
in systematic way and make sure that employees are focusing on accomplishing targets.
Managers should make structure in which roles and responsibilities of every employee should be
clearly mentioned to avoid confusion and work can be completed on time. For evaluating
performance of employees tools should be applied by managers and second chance must be
given to workers so that they can improve their performance and goals can be achieved. It is
important to give a chance to employees to prove themselves and it is possible that they can
perform well next time. So, managers should not fire employees who are not performing well,
provide them development programs so that they can learn how to work. Managers should make
some changes in policies because it helps in motivating employees and boost their confidence to
work efficiently.
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REFERENCES
Books and journals:
Mahmood, A. and et.al., 2019. Specific HR practices and employee commitment: the mediating
role of job satisfaction. Employee Relations: The International Journal.
Coleman, D.M., Dossett, L.A. and Dimick, J.B., 2021. Building high performing teams:
Opportunities and challenges of inclusive recruitment practices. Journal of Vascular Surgery.
74(2). pp.86S-92S.
Füllemann, Y. and et.al., 2020. Hire fast, fire slow: the employment benefits of energy
transitions. Economic Systems Research. 32(2). pp.202-220.
Agnihotri, A. and Bhattacharya, S., 2021. Netflix: The Firing Machine?. SAGE Publications:
SAGE Business Cases Originals.
Ahir, U., 2018. To hire and fire: the president has the final say. Without Prejudice. 18(3). pp.42-
43.
Zenone, A.C., Cezar, B. B. and de Hoyos Guevara, A., 2021. INTEGRATING CULTURAL
DIVERSITY IN ORGANIZATIONS: RECRUITMENT AND SELECTION. Journal
on Innovation and Sustainability RISUS. 12(2). pp.83-90.
NGOMA, P. S., 2018. Effect of strategic human resource management practices on organization
performance of International Non-Governmental Organizations (INGO’s): A case study
of save the children international (Doctoral dissertation, MUA).
Saviour, A.W., and et.al., 2017. The impact of effective recruitment and selection practice on
organisational performance (a case study at University of Ghana). Global Journal of
Management and Business Research.
Abdullah, P. Y., and et.al., 2020. HRM system using cloud computing for Small and Medium
Enterprises (SMEs). Technology Reports of Kansai University. 62(04). p.04.
Sato, Y., Kobayashi, N. and Shirasaka, S., 2019. Deriving Challenges through Clarification of
Areas to Strengthen the HR System Using A Matrix with the Three Axes of Target
Employee, Life Cycle Stage, and HRM Policy Choices. International Journal of Japan
Association for Management Systems. 11(1). pp.91-101.
Budhwar, P., and et.al., 2019. The state of HRM in the Middle East: Challenges and future
research agenda. Asia Pacific Journal of Management. 36(4). pp.905-933.
Online references:
Netflix’s Unique Culture of Termination… That Employees Seem to Like. 2021. [Online].
Available through: <https://insights.dice.com/2018/10/29/netflix-company-culture-termination/>.
[Accessed on 10 September 2021]
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Netflix Culture. 2021. [Online]. Available through: <https://jobs.netflix.com/culture>.[Accessed
on 10 September 2021]
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