Management Essay: How Netflix Reinvented HR: Q & A

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How Netflix Reinvented HR: Q & A
The People First principle is pioneered by a few visionary companies. In lieu of a conventional management of people – and, for that matter, corporate resources in general – innovation should be front and center. At Netflix, profitability comes not from pure glossing of financial statements and churning out annual performance reviews. Instead, efficacy and flexibility go hand in hand to ensure responsible, skilled and experienced staff are enabled to deliver (McCord). In effect, Netflix did not come up at once with a magical formula to manage people, grow and achieve wide global commercial success. Instead, Netflix had to learn, piecemeal, adjusting to emerging challenges innovative ways. For instance, instead of using formalized performance reviews Netflix opened up a space for managers to discuss openly with employees more effective ways to improve performance and, if needed, correct inconsistencies. Similarly, Netflix adopted a completely different compensation system. In contrast to stock option payments hold by companies to retain employees, Netflix opted to pay employees immediately and, in so doing, offered much more freedom to employees to decide. This compensation strategy is, moreover, well aligned to Netflix's corporate culture emphasizing employee independence. That is, by hiring high skilled and responsible employees Netflix managed to retain employees not so much by force but by making staying at Netflix a choice. In so doing, Netflix managed to create a self-sustaining culture whereby talented employees are retained willingly. Moreover, giving employees a choice in performance and compensation does not only minimize retention risks most HR departments are wary of but, perhaps more importantly, delivers a very
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persuasive message to each and...