Human resource strategies and practices
|Topics:||👩💼 Human Resources, International Business, Netflix, 🧮 SWOT analysis|
Table of Contents
Netflix Competitive Strategy
Netflix has evolved to become a key player in the DVD rentals and video streaming industry. The success of the firm in a market that was traditionally dominated by Blockbuster is attributed to its innovative business models. Over time, the company has developed new product lines which have enabled it to expand its market share and increase revenue generation (Chen, 2018). In addition, the company has significantly expanded its market share by diversifying its product lines. For instance, it has introduced premium services hence enabling loyal customers to access services at relatively affordable rates. The other key approach that the company has adopted to outcompete its rivals is internationalization of its services. Currently, Netflix has a customer base of more than 109 million persons in over 190 countries globally. This indicates the strides that the company has made in its efforts to reach the traditionally under-exploited markets.
The other key competitive advantage of the company is that it is the pioneer in the video streaming market (Muzumdar, 2014). As such, the firm has developed a strong brand that has enabled it to penetrate into different markets. The firm continues to invest in the analysis of its clients to determine their tastes and preferences. As a result, Netflix has invested in Big Data to enable the firm to identify market trends and remodel their products and services in line with the preferences of the customers (Chen, 2018). The innovativeness of the company is anchored in its positive work environment. The firm not only invests in attracting top talents, it also gives them the elaborate space to thrive. This strategy has enabled Netflix to remain on top of the video streaming industry in spite of the growing threats posed by the new entrants.
Human Resource Strategies for Netflix
There are different HR practices that Netflix has adopted to maintain a motivated and productive workforce as well as satisfy the needs of the firm’s clients. One of the key strategies used by the company is its value system. Netflix has a defined value system that all employees are expected to observe (McCord, 2016). The value system is applicable to both the workers and the management. The firm believes in the principle of “do as I do, not as I say”. Based on this principle, the leaders are expected to act as examples to be emulated by the other employees. For instance, the culture of high performance is exhibited right from the top leadership level downwards.
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The hands-on approach adopted by the management helps to motivate other employees of Netflix to work equally hard towards the firm’s mission and objectives. Some of the core values that dictate the activities of the employees at Netflix include teamwork, grit, rigor, and curiosity (Allen, 2014). The firm believes that observing its values at all times is key to success. As such, it exclusively employs workers who are ready to fit into the organization’s culture of high performance and teamworking. The success of the company and its rise to the top of the video streaming industry can be attributed to its core set of values.
The culture of high performance is the key element that the company has focused on in spite of the challenges that exist in the firm’s environment. Generally, the company observes its culture of high performance by hiring the right personnel. The company identifies top talents that subscribe to its values and hires them. It subsequently integrates the top talents into its teams where they are expected to evolve into high performers. The firm believes that having more top performers in the organization is essential to achieving many critical milestones. A review of its successes indicates that the high performance of the employees has enabled it to remain on top of the game, innovating new products and services that enable it to expand its market (Marr, 2016).
Moreover, the HR culture of team working is an instrumental pillar of high performance. The company is guided by the principle that its employees should always be ready to work with each other to accomplish critical tasks. At Netflix, it is not about for how long the employee works, rather, it is about how effective they are in accomplishing assigned tasks. Besides, the company’s payment model is such that the most effective employees are remunerated equitably. The effective employees are given generous severance pays in appreciation of their contributions to the company. Also, the company has established a platform for helping top performers who have become ineffective. However, its structures do not accommodate high performers who are not team players since such employees are considered detrimental to the company’s value systems and a hindrance to the achievement of the long-term goals.
The other approach that has formed part of the company’s HR strategy is the concept of freedom and responsibility. Unlike other corporations that have stringent rules and codes that employees are required to follow, Netflix has relaxed its rules significantly to give its employees significant freedom in making decisions that influence their work and social lives. The company promotes the culture of its employees taking ownership of their actions. It also believes that employees are better positioned to innovate when they are given private space to make decisions and program their activities. Since the company heavily relies on innovation, it believes that employees need the freedom to make the critical decisions (Tryon, 2015).
According to the company, it has put in place elaborate measures that enable it to identify the right people to employ. Ideally, the company relies on employing individuals who are better positioned to put the interests of the company first. As such, it is difficult for such individuals to abuse the freedom that they are given at Netflix. The firm believes that over 95% of the employees it hires are likely to do things right when given freedom. The remaining proportion of employees might require supervision and guidance to do things right as well. According to the company, it hires adults who must thus exhibit adult-like behaviors. This means that they must be honest and open with their colleagues. Consequently, the openness in the company makes it easier to identify employee issues and solve them in real-time. Each emerging issue is solved on a case-by-case basis to prevent escalation of problems to crisis levels.
Further, the HR models used by Netflix involve the “context not control” approach. This means that the staff of the company are not controlled. Instead, they are given the contexts of the expected results. In addition, the employees are well informed on the goals and objectives of the company. By understanding the contexts of their activities, they are better positioned to deliver and promote the competitiveness of Netflix. Besides, the highly aligned, loosely coupled model is used by Netflix (McCord, 2016). This model entails establishing goals and allowing the members to pursue the set objectives without being controlled by the management. The various teams in the company generally work towards the same goals but use different strategies to meet the set goals. This aspect of freedom is also an element of the company’s innovativeness which is fundamental to its competitiveness (McCord, 2016). The company not only trusts its employees, it considers them as its top brand ambassadors and primary strength in the competitive industry.
Employees of Netflix are also given opportunities for development. The company encourages development at both individual and team levels. It believes that people shape their own future hence the need to provide the employees with appropriate space to shape their futures. For instance, the company scrapped off the yearly reviews that it had as part of its initial HR strategy. The company argued that such reviews were ritualistic and inhibited the development of the employees. Instead, the company encouraged the managers and employees to interact freely and share their experiences and challenges. This made it easier for the managers to identify the appropriate ways of helping various employees achieve their goals. The regular conversations between the various factions, according to Netflix, enables all parties to achieve their core objectives while also helping the company to maintain a motivated and productive workforce.
In summary, Netflix has been successful largely due to its impeccable human resource practices. The firm has established a culture that is embraced by all employees. As a result, the employees are able to work more freely and innovate new products and services for the firm. Also, the analysis of the strategic human resource approaches adopted by the company indicates that Netflix has considerably invested in teamworking. This is an important approach that enables the employees to develop rapport hence their team activities are more successful. Some of the measures that the company has put in place include the gaming sessions and paid vacations meant to encourage work-life balance. On the other hand, Netflix has been instrumental in living by its values. Unlike other corporations that expect employees to act in defined ways, Netflix encourages independent thinking among its employees. It also promotes the culture of “do as I do not as I say” (McCord, 2016).
The relationship between the employees and the management at the company is relatively positive due to the freedom and the proper remuneration. Unlike in most companies, Netflix’s employees play a critical role in determining their salaries. The firm is renowned for its top of the market payment model which enables it to expect impeccable results from its employees. Therefore, it is arguable that Netflix has been largely successful due to the focus on the employees on innovation and success. The other key approach that is evident from the analysis is that the company is always ready to terminate its relationship with any employee.
- Allen, G. (2014). The Rise and Fall of Netflix: What Happened and Where Will It Go from Here? Journal of the International Academy for Case Studies, 2014.
- Chen, Y. (2018). “Data Is Everything’: Netflix Is Pouring Money into Marketing – and That Should Benefit Programmatic. Digiday.
- Marr, B. (2016). Netflix: How Netflix Used Big Data to Give Us the Programmes We Want. Big Data in Practice, 2016(1), 17–23.
- McCord, Patty. “How Netflix Reinvented HR.” Harvard Business Review, 27 June 2016.
- Muzumdar, P. (2014). From Streaming Vendor to Production House: Netflix SWOT Analysis. SSRN Electronic Journal.
- Tryon, C. (2015). TV Got Better: Netflix’s Original Programming Strategies and the On-Demand Television Transition. Media Industries Journal, 2(2), 1-7.