human selection & recruitment Case Analysis Paper

Question: Read and analyse the Nexflix case study. Write a 2-3 page paper on the Nexflix case study while incorporating the lessons learned from the selection and recruitment process. You should briefly summarize the facts featured in the case le. who, what how why. Recognize the symptom. figure out the underlying problems and identify the goals of the business and/or individuals in the case, make the diagnosis and propose your action plan based on your analyses of the case and the knowledge in the related course.

9:43 Search How Netflix Reinvented HR - Case S... ... 1 of 13 HUMAN RESOURCE MAN How Netflix Reinvented HR S heryl Sandberg has called it one of the most important documents ce to come out of Silicon Valley It's been viewed more than on times on the web. But when Red Hasting and Calong with some colleaguesa PowerPoint deck explaining how we shaped the culture and motivated performance at Netflix, where Hastings is CEO chiel talent officer from 1998 to 2012, had no idea it would go viral. We wand that some of the talent management ideas we'd pioneered, such as the concept that workers should be allowed to take whatever vacation time they feel is appropriate and berasalile crary at leaster companies started adopting the But we were surprised that an unadermed set of 127 slidesno music, no animation would become so influential Netflix Culture: Freedom & Responsibility People find the Netflix approach to talent and culture compelling for a few. The most obvious one is that Netflix has been really successful: During 2013 aos stock more than tripled, it won three Emmy awards, and its U.S. subscriber base grew to me 29 million. All that aside, the approach is compelling because it derives from sense. In this article to Five ideas that have defined 9:43 Search How Netflix Reinvented HR - Case S... ... 2 of 13 Netflix Culture: Freedom & Responsibility View People find the Netflix approach to talent and culture compelling for a few seasons. The most obvious one is that Netflix has been really successful: During 2013 alone is stock more than tripled. It won three Emmy awards, and its US subscriber has grown to early 29 million. All that aside, the approach is compelling because it derives from.com sense. In this article 11 go beyond the bullet points to describe five ideas that have defined the way Netflix attracts, Tetains, and manages talent. But first I'll share we comensation I had with early employees, both of which helped shape our overall philosophes. Crafting a Culture of Excellence Netto founder and CEO Red Hati des the company's unconventional The first took place in late 2001. Ne had been growing quickly: We'd reached about 120 employees and had been planning an IPO, But after the dot-com bubbles and the 9/11 attacks occurred things changed. It became clear that we needed to put the IPO on hold and lay off a third of our employee It was brutal. Then, a bit nepecedy, DVD players became the hot gift that Christmas Hy early 2002 or DVD-by-mail scription HBR: Why did you write the Netflix culture deck? Hastings in our version of Lato Young Poet forbudding entrepreneur is what we wish we had understood when we started. More than 200 people business was growing like crary Sully we had far more work to do, with fewer employees Neemade major contribution to the deck, and we are Improvements coming Many of the ideas in it seem like common sense, but they go against traditional HR practices. Why aren't companies more innovative when it comes to talent management? As a society, we've had hundreds of years to work on managing industrial a lot of accepted HR practices centered in the experience beginning to temowo un creative tiemswhich is quite different industrial firms the on reducing ortion manufacturing crostom thrive on increasing variation innovation One day I was talking with our best engineers, an employee call. Before the layotts, he'd managed three engineen, but now he was a one-man department working very long hours. The to hire some help for him soon. His response surprised me "There's no rushwa happies now," he said. It turned out that the engineers we'd laid off weren't spectacular they were merely adequate. John that he'd spent too much time riding benden them and fixing their mistakes. The armed that I'd rather work by myself than with he said. His whe 9:44 Search How Netflix Reinvented HR - Case S... ... 4 of 13 merce spre public company, we needed Pleader fully credentialed, deeply experienced statement of our hunger for excellence accounting professionals and Lead Have any of your talent only an associate's degree from management Innovations been college. Despite her work ethic, her track total flops? record, and the fact that we all mayd her, her die were no longer adequate Patty talks about how leaders Some of us talked about juryringa should model appropriate role for her, but we decided that wouldn't be behaviors to help people adapt to an environment with fewer formal controls. With that in mind, how So I sat down with Laura and pained the many days off did you take in 20137 static and said that in light of her Days off is a very industrial concept spectacular service, we would give her a like being on the office finden spectacular severance package. Ind braced to think about to there are probablyne myself for tears orhistrionick, but a 24-hour periode when I never think about reacted well: She was sad to be learning but work. But I did to the sout recognised that the generous everance weekong family lower the past would let her regroup, retrain, and find a which were both smalting and maing w career path. This incident helped create the other vital element of our talent management philosophy: If we wanted only A players on our team, we had to be willing to let go of people whose skills no longer fit, no matter how valuable their contribution had once been. Out of faire to watch people and, frankly, to help us overcome discomfort with discharging them we learned to offer rich serance package With these two overarching principles in mind, we shaped our approach to talent uning the five tenets below Hire, Reward, and Tolerate Only Fully Formed Adults Over the years we learned that if we asked people to rely on logic and common instead of on formal policies, most of the time we would get better results, and at low cost. If you're careful to hire people who will put the company's interests first whe understand and support the desire for a high performance workplace. 97% of you employees will do the right thing. Most companies spend endless time and one ting and enforcing HR policies to deal with problems the other might now. Instead, we tried really hard to not hire those people, and we let them go if it turned out widmadea hiring mistake. Adultlike behavior means talling openly about issues with your bout your collages, and your subordinates. It means recognizing that even in companies with reams of HR policies, those policies are frequently skirted as managers and their reports work out what makes sense on a case-by-case basis Let me offer two examples. 9:44 Search How Netflix Reinvented HR - Case S... *** 5 of 13 karned that if we asked people to rely on logic and commes instead et on formal policies, most of the time we would get better results, and are cost. If you're careful to hire people who will put the company's interests fiest, whe understand and support the desire for a high-performance workplace. 97of your employees will do the right thing. Most companiessend endless time and money writing and enforcing HR policies to deal with problems the other 3 might cause. Instead, tried really hard to not hire those people, and we let them go if it turned out we'd madea hiring mistake Adultlike behavior means talking openly about sues with your best your colleagues and your subordinates. It means recogniring that even in companies with reams of HR policies, those policies are frequently skirted as managers and their reports work out what makes sense on a case-by-case basis Let me offer two examples When Netflix launched, we had a standard paid-time-off policy People get 10 vacation days, 10 holidays, and a few sick days. We used an honor system-employees kese track of the days they took off and let their managers know when they'd be out. Aher we went public, our auditoes freaked. They said Sarbanes-Ordey mandated that we account for time off. We considered instituting a formal tracking system. But then Reed asked. Are companies required to give time or not, can't we just handle it informally and skip the accounting rigmaroler" I did some research and found that, indeed, no California governed vacation time. So instead of shifting to a formal system, we went in the opposite direction: Salaried employees were told to take whatever time they felt was appropriate. Bend employees were asked to work it out with one another. (Hourly works in all cat warehouses were given a more structured policy.) We did provide some guidance. If you worked in accounting or finance, you shouldn't plan to be out during the beginning the end of a quarter, because those were busy times. If you wanted 30 days off in a row you 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. (Most were happy to go Some people worried about whether the system would be inconsistent-whether one bosses would allow tons of time off while others would be sting. In general word more about fairness than consistency, because the reality is that in any organisation, the highest performing and most valuable employees get more leeway. The company's expense policy is five words long: "Act in Netflix's best interests." We also departed from a formal travel and expense policy and decided to simply require adultlike behavior there, too. The company's expense policy in five words long tin Netflix's best interests." In talking that through with employees, we said we expected them 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, whi belongs. It also reduced coste Many large companies still use travel agents and pay their fees) to book trips, as a way sve money by letting 9:44 Search How Netflix Reinvented HR - Case S... ... 6 of 13 they were role models for the policy. (Most wete happy to comi) ied about whether the system would be inconsistent-whether some bosses would allow tons of time off while others would be stingy. In gmeral. I worried more about faimess than consistency, because the reality is that in any organisation, the highest performing and most valuable employees get more leeway The company's expense policy is five words long: "Act in Netflix's best interests." We also departed from a formal travel and expense policy and decided to simply require adultlike behavior there, too. The company's expense policy in five words legais Netflix's best interests." In talking that through with employees, we said we expected the 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, where it belongs. It also reduced costs: Many large companies still use travel agents and pay their fees) to book trips, as a way to enforce travel policies. They could save money by letting employees book their own trips online. Like most Netflix managers, I had to be conversations periodically with employees who ate at lavish restaurants (meals that would have been fine for sales or recruiting, but not for eating alone or with a Nedis college We kept an eye on our IT guys, who were prone to buying a lot of gadgets. But overall found that expense accounts are another area where if you create a clear expectation of responsible behavior, most employees will comply. Tell the Truth About Performance Many years ago we eliminated formal review. We had held them for a while became to realize they didn't make sense they were too ritualistic and to infrequent. So we asked managers and employees to have conversations about performance as an ganic part of their work. In many functions-sales, copineering, product development-it's fairly obvious how well people are doing. As companies develop better analytics to measure performance, this becomes even truer) Bilding a bureaucracy and elaborates around measuring performance wally doesn't improve it. Traditional corporate performance reviews are driven largely by fear of litigation. The theory is that if you want to get rid of someone, you need a paper trail documentinga history of poor achievement. At many companies, low performers are placed on "Performance Improvement Plans." I detest. I think they're fundamentally disboot They never accomplish what their name imples ANOTHER TAKE One Netflix manager requested a PIP fora It's time to quality assurance engineer named Maria who had been hired to help developer streaming service. The technology was. and it was evolving very quickly Maria's was to find bage. She was fast, intuitive and hardworking, But in time we figured out how to automate the QA tests. Maria didn't like automation and wasn't particularly good at it. Her new boss brought in to create a world-class automation tools team told me he wanted to start a PIP with her 9:44 Search How Netflix Reinvented HR - Case S... ... Traditional corporate performance reviews are driven largely by fear of litigation. The 7 of 13 want to get rid of someone, you need a paper trail detinga hievement. At many companies, low performers are placed on "Performance Improvement Plans." I detest PIPx. I think they're fundamental dishonest They never accomplish what their name implies ANOTHER TARE One Netflix manager requested a PP for a It's Time to Srl quality assurance engineer named Maria. WARE WANNA who had been hired to help developer streaming service. The technology and it was evolving very quickly Maria was to find bugs. She was fast, intuitive and hardworking. But in time we figured out how to automate the QA tests. Maria didn't like automation and was particularly good att. Her new bow (brought in to create a world-class automation tools team) told me he wanted to start a PIP with her I replied, "Why bother? We know how this will play out. You'll write up objectives and deliverables for her to achieve, which she can't because she laces the skills. Every Wednesday you'll take time away from your real work to discuss and document) het shortcomings. You won't sleep on Tuesday nights, because you'll know it will be an awful meeting, and the same will be true for her. After a few weeks there will be tes This will go on for three months. The entire team will know. And at the end you'll ficher. None of this will make any sense to her, because for five years she's been consistently rewarded for being great at her job a job that basically doesn't exist anymore. Tell me again how Netflix benefits? "Instead, let's just tell the truth: Technology has changed, the company has changed and Maria's skills no longer apply. This won't be a surprise to her. She's been in the teaches, watching the work around her skift. Give her a great severance package which, when the signs the documents, will dramatically reduce (if not eliminate the chance of all my experience, people can handle anything as long as they're told the truth and this proved to be the case with Maria When we stopped doing formal performance reviews, we instituted in informal 360-degree reviews. We kept them fairly simples People were asked to identify things that colleagues should stop, start, or continue. In the beginning we used as anymous wares but over time we shifted to signed feedback, and many teams held their 36 face-to-face HR people can't believe that a company the size of Netflix doesn't hold anal reviews "Are you making this apjost to upsetust they ask. I'm not. If you talk simply and honestly about performance on a regular basis, you can get good results-probably better ones than a company that grades everyone on a five-point scale. Managers Own the Job of Creating Great Teams Discussing the military's performance during the Iraq War, Donald Rumsfeld, the former defense secretary, once famously said. "You go to war with the army you have not the army you might want or wish to have at a Interim Wamtak to mana 9:44 Search How Netflix Reinvented HR - Case S... . its, will dramatically reduce (if not eliminate the chance of a lawsuits 8 of 13 wple can handle anything as long as they're told the truth and this proved to be the case with Maria When we stopped doing formal performance reviews, we Instituted informal 360-degree reviews. We kept them fairly simple: People were asked to identify things that can should stop. start, or continue. In the beginning we used anymous software system but over time we shifted to signed feedback, and many teams held their os face-to-face HR people can't believe that a company the size of Netflix doesn't hold anal views "Are you making this up just to upsets they ask. I'm not. If you talk simply and honestly about performance on a regular basis, you can get good results-probably better ones than a company that grades everyone on a five-point scale Managers Own the Job of Creating Great Teams Discussing the military's performance during the Iraq War, Donald Rumsfield, the former defense secretary, once famously said, "You go to war with the army you have not the army you might want or wish to have at a later time. When I talk to manages about creating great team, I tell them to approach the procesin eactly the opposite In my consulting work, I ask managers to imagine a documentary about what their trami accomplishing six months from now. What specific results do they see? How is the work different from what the team is doing today? Nestlask them to think about the skills needed to make the images in the movie become reality. Nowhere in the early stages of the process do 1 advise them to think about the team they actually hawe. Only after they've done the work of envisioning the ideal outcome and the skills Besary to achieve should they analyze how well their existing team mutches what they need. If you're in a fast-changing business environment, you're probably looking at a lot of mismatches. In that case, you need to have honest conversations about letting met members find a place where their skills are a better fit. You also need to recruit people with the right skills. We faced the latter challenge at Netflix in a fairly dramatic way as we began to shit from DVDs by mail to a streaming service. We had to store massive volume of files in the dead and figure out how huge numbers of people could reliably access them by some estimates, up to a third of peak residential internet traffic in the US.comes from customers streaming Netflix movies.) So we needed to find 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 Our compensation philosophy helped a lot. Most of its principles stem from ideals described earlier: Be honest, and treat people like adults. For instance, during your Netflix didn't pay performance bonuses, because we believed that they're necessary at you hire the right people. If your employees are fully formed adults who put the company first, an annual bonus won't make them work harder er munter. We also believe in market-based pay and would tell employees that it was smart to interview with competitors when they had the chance, in order to get a good sense of the rate for their talent. Many HR peopl recruiters, but I always told 9:44 Search How Netflix Reinvented HR - Case S... ... 9 of 13 r challenge at Netflix in a fairly dramatic way as we began to from streaming service. We had to store massive volumes of Siles in the dood and figure out how huge numbers of people could reliably access them (By estimates, up to a third of peak residential internet traffic in the US.comes from customers streaming Netflix movies.) So we needed to find 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 hires.com away from Our compensation philosophy helped a lot. Most of its principles stem from ideals described earlier: Be honest, and treat people like adults. For instance, during my teure Netflix didn't pay performance bonuses, because we believed that they're necessary you hire the right people. If your employees are fully formed adults who put the company first, an annual bonus won't make them work harder or smarter. We also believed in market-based pay and would tell employees that it was smart to interview with competitors when they had the chance, in order to get a good sense of the market rate for their talent. Mamy HR people dislike it when employees talk to recruitm. but also employees to take the call ask how much, and send me the number-it's valuable information In addition, we used equity compensation mach differently from the way mest companies do. Instead of landing stock options on top of a competitive salary, we let employees choose how much (if any) of their compensation would be in the form of guilty employees wanted stock options, we reduced their laties accordingly. We believed that they were sophisticated enough to understand the trade-offs, judge their personal tolerance for risk, and decide what was best for them and their families. We distributed options every month, at a slight discount from the market price. We had to resting period - the options could be cashed in immediately. Most tech companies have a few year vesting schedule and try to use options as "goldenlundcuffs to aid retention, but we never thought that made sense. If you see a better opportunity elsewhere you should be allowed to take what you've earned and leave. If you no longer want to work with a we don't want to hold you hostage We continually told managers that building a great team was their most important task We didn't measure them on whether they were excellent coaches or mentes or got the paperwork done on time. Great teams accomplish great work, and recruiting the right team was the top priority Leaders Own the Job of Creating the Company Culture After I left Netflix and began consulting. I visited a hot start-up in San Francisco. It a 60 employees in an openloft-style office with a foosball table, two pool tables, and a kitches where a chef cooked lunch for the entire staff. As the CEO showed me around, he talked about creating a fun atmosphere. At one point asked him what the most importante for his company was. He replied. "Efficiency OK." I said. "Imagine that I work bere, and it's 2:58 PM. I'm playing an intense pero pool, and I'm winning. I estimate that I can finish the game in five minutes. We have a meeting at 3:00. Should I stay and win the game or cut it short for the meeting You should finish the minst Iwan mamy 9:44 Search How Netflix Reinvented HR - Case S... ... 10 of 13 id managers that building a great team was their most important task e them on whether they were excellent coaches or mentors or get the paperwork done on time. Great teams accomplish great work, and recruiting the right team was the top priority, Leaders Own the Job of Creating the Company Culture After I left Netflix and began consulting. I visited a hot start-up in San Francisco. It had to employees in an open Soft-style office with a foosball table. Two pool tables, and a kitchen, where a chef cooked lunch for the entire staff. As the CEO showed me around, he taland about creating a fun atmosphere. At one point I asked him what the most important value for his company was. He replied, "Efficiency. "OK" I said. "Imagine that I work here, and it's 2:58 PM. I'm playing an intensame pool, and I'm winning. I estimate that I can finish the game in five minutes. We have meeting at 3:00. Should I stay and win the game or cut it short for the meeting "You should finish the game," he insisted. I wasn't surprised; like many tech sangat was a casual place, where employees wore hoodies and brought pets to work, and that kind of casualiness often extends to punctuality,"Wait a second said. "You told me that efficiency is your most important cultural value. It's not efficient to delay a mecting and keep coworkers waiting because of a pool game. Isn't there a mismatch between the values you're talking up and the behaviors you're modeling and encouraging When I advise leaders about molding a corporate culture, I tend to see the mos that need attention. This type of mismatch is one. It's a particular problema sans where there's a premium on casualness that can run counter to the high-performance the leaders want to create. I often sit in on company meetings to get anse of how people operate. I frequently see CEOs who are clearly winging it. They lack areal agenda. They're working from slides that were obviously put together an hour before or were recycled from the previous round of VC meetings. Workers notice these things, and the sea leader who's not fully prepared and who relies on charm. 10. and improvisation, Raffects how they perform, too. It's a waste of time to articulate ideas about values and calle you don't model and reward behavior that aligns with those goals The second issue has to do with making sure employees understand the leves that drive the business. I recently visited a Tewas start-up whose employees were mostly engineers in their twenties. "I bet half the people in this room have never read a PL" said to the CFO. He replied, it's true-they're not financially savvy or business savvy, and our biggest challenge is teaching them how the business works. Even if you've bired people who want to perform well, you need to clearly communicate how the company money and what behaviors will drive its access. At Netis, for instance, comployees ned to focus too heavily on subscriber growth, without much wareness that our expenses often ran ahead of it: We were spending huge amounts buying DVDs, witting up distribution centers, and ordering original programming, all before we'd collected acest from our new subscribers. Our employees needed to learn that even though eve growing, managing experienced 9:44 Search How Netflix Reinvented HR - Case S... ... operate. I frequently see CEOs who are clearly winging it. They lack areal agents. They're Yes that were obviously put together an hour before or were recycled 11 of 13 round of VC meetings. Workers notice these things, and if they see a leader who's not fully prepared and who relies on charm. 10. and improvisation, it affects how they perform, too. It's a waste of time to articulate ideas about values and culture you don't model and reward behavior that aligns with those goals. The second ise has to do with making sure employees understand the leves that drive the business. I recently visited a Texas start-up whose employees were mostly englesin their twenties. "I bet half the people in this room have never read a P&L"I said to the CFO. He replied, "It's truie-they're not financially savvy or business savvy and our biggest challenge is teaching them how the business works. Even if you've hired people who want to perform well, you need to clearly communicate how the company makes money and what behaviors will drive its success At Nedit, for instance, employees wed to focus too heavily on subscriber growth, without much aware that our espere often ran ahead of it. We were spending huge amounts buying DVDs, setting distribution centers, and ordering original programming, all before we'd collected at from our new subscribers. Our employees needed to learn that even though eve was growing, managing expenses really mattered The third issue is something I call the split personality start-up. At tech companies usually manifests itself as a schium between the engineers and the sales team, but it can take other forms. At Netflix, for instance, I sometimes had to remind people that there were big differences between the salaried professional staff at headquarters and the hourly workers in the call centers. At one point our finance team wanted to shift the whole company to direct deposit paychecks, and I had to point out that some of our hourly workers didn't have bank accounts. That's a small example, but it speaks to a larger point As leaders build a company culture, they need to be aware of subcultures that mig require different management. THIS ARTICLE ALSO APPEARS IN HORY 10 Must Reads 2015 $94.95 View Detail Good Talent Managers Think Like Businesspeople and Innovators First, and Like HR People Last Throughout most of my career The belonged to professional associations of them resources executive Although I like the people in these groups personally, to find myself disagreeing with the Team devote time to morale improvement 2015 initiatives. At some places to came focus en getting their firm onto listest Places to Work" (which, when you dig in the methodologies are really based perks and benefits) At a recent conference I met someone from a company that had appointed a "chief happiness officer-a concept that makes me slightly sick. During 30 years in business improved HR 9:44 Search How Netflix Reinvented HR - Case S... . people in these groups personally, to 12 of 13 find myself disagreeing with them. Toen devote time to morate improvement 2015 initiatives. At some places entire teams foc on getting their firm on to lists of "lest Places to Work" (which, when you dig in the methodologies are really based on perks and benefits). At a recent conference I met someone from a company that had appointed a "chief happiness officer-a concept that makes me slightly sick During 30 years in business I've never seen an HR initiative that improved sole. departments might throw parties and hand out T-shirts, but if the stock price is falling the company's products aren't perceived as successful, the people at those parties wat quietly complain-and they'll use the T-shirts to wash their can. Instead of cheerleading, people in my profession should think of themelves as businesspeople. What's good for the company? How do we communicate that to employees? How can we help every worker understand what we mean by high performance! Here's a simple test: If your company has a performance bons plan. go up to a random employee and ask. "Do you know specifically what you should be doing right now to increase your bonus" he or she can't answer, the HR team is making this det as they need to be At Netflix I worked with colleagues who were changing the way people comme led entertainment, which is an incredibly innovative pursuit-yet when I started there, the expectation was that I would default to mimicking other companies' best practices of them antiquated), which is bow almost everyone seems to approach Rejected these constraints. There's no reason the HR team can't be innovative to Avertised in the way. Fry 2014 over home Patty McCorder for 190 2001 This articles about HUMAN RESOURCE MANAGEMENT Comments 21