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Case Study- HR management at Netflix

Online movie rental subscription service Netflix utilizes a very nontraditional approach to human resource (HR) management. During the early years of its launch, senior management at Netflix realized that the talent they sought had a multitude of employment opportunities and that Netflix had to offer something distinctive to its recruits and employees if the company were to prosper. Hence, they sought to develop a company culture that attracted individuals who identified with and understood the business, sought a flexible working environment, and wanted to work with other high-performing peers. Netflix headquarters, unlike that of other technology companies, requires no employee identification badges, has no security checkpoints, and encourages employees to come and go as they please. Participation in meetings is often virtual, at the discretion of the employee, from employee homes, coffee shops, or even employee cars. The CEO himself has no office at headquarters. Netflix has no policy regarding vacation or means by which vacation is counted; rather, employees decide how much vacation or other leave to take and when it will be taken. This is a reflection of the company philosophy of focusing on what people get done rather than the amount of time spent working and that creativity, which benefits the employer, is often stimulated outside of the workplace and regular work hours. Similarly, employees have no limits on expense accounts related to travel or entertainment but rather use their own judgment as part of acting in Netflixs best interests. The type of creative employee Netflix seeks thrives on freedom and is guided by Netflixs definition of success: continued growth in revenue, profits, and reputation. Netflix provides no formal training to employees and encourages employees to self-manage their own career development. Similarly, the company provides no annual bonuses or long-term incentives but pays highly competitive salaries, which are adjusted annually on an individual basis. Salary may be taken in cash or a combination of cash and company stock options, which vest immediately. Evidence of whether or not this approach works for Netflix is reflected in the fact that from 2009 to 2011 both subscriptions and revenues doubled to 26 million and $3.2 billion, respectively.

Case Question: How does Netflix using its human capital for value addition? Which competitive challenge is influencing Netflix's HR management process? Identify differences between Netflix's HR practices and traditional HR practices.