Netflix and HRM
A close reading of the article on HBR reveals that Netflix’s main competitive advantage is its unique corporate approach to human resource management. The company bases its management strategy on common sense and the recognition of employees as responsible, mature human beings. Thus, many managers often delve into formalism in an attempt to develop strategies for dealing with a minority of employees. Instead, Netflix emphasizes the benefits of the majority while the ineffective minority can be replaced. This helps not only to save the company money and spend it on more substantive areas but also to increase trust from employees who feel valued and involved.
Netflix’s HRM strategy is built on the principles of respecting employees’ personal boundaries and encouraging autonomy. For example, company executives encourage employees to look at corporate resources as if they were the employee’s personal property – usually protecting against excessive spending in the absence of a supervisory accounting layer. In addition, rather than creating ongoing initiatives to improve the company’s HR agenda, Netflix invests in systematic communication with employees to address problems proactively, without setting precedents for conflicts and litigation.
Given all of the above and reading, the human resources strategy at Netflix is strictly planned, though not entirely formal. It is definitely not an emergent strategy, as Netflix does not respond to external changes with human resource policy dynamics but uses an inherently embedded philosophy to address emerging issues. The form of this strategy can be described by the seminal document that (McCord, 2014) wrote about. It is a 127-slide presentation that describes the basic corporate rules and techniques used to manage human resources at Netflix.
Strategic HR management at the company seems to be based on resources, as it is the focus on internal resources (employees) that is HRM’s priority. At Netflix, they are chasing better results and profit growth while cutting costs, but this would not be possible without focusing on employees as the essential resources in the system. These resources bring intellectual and creative assets to the company that allow the company to leverage all other components to increase productivity. This is especially evident in the words of McCord (2014), who takes pride in the uniqueness of the HR system at Netflix and often compares it to industry competitors. Nevertheless, it is especially emphasized that human resources in a company are not irreplaceable. Just as with technical equipment, if a resource is no longer valuable to the business and no longer useful, it is replaced. Only unlike the liquidation of a machine, the former employee is compensated generously, emphasizing his contribution to the development of the company.
All of the above together creates a unique environment in which job seekers want to be employees of Netflix, in part because of the established corporate philosophy. The opportunity to enjoy guarantees and benefits not available at other employers qualitatively increases engagement. Nevertheless, the most significant predictor of Netflix’s growing competitiveness is positioning employees as autonomous, mature individuals who can use common sense to solve work problems independently. They are not pressured by all the controlling HR people or line managers but are actually seen as partners with less power. If the company is struggling with employees, they avoid the paperwork and unnecessary bureaucracy of the process but negotiate with the employee, encouraging them to leave. This creates the image of an adequate employer, for whose well-being employees want to try, which affects Netflix’s overall market success.
Sustainable Development Goals
One of the significant achievements of the increased globalization of communities has been the emergence of the concept of the Sustainable Development Goals. These include seventeen goals that, when achieved at the governmental, societal, and cultural levels, will achieve an environment of well-being for all people and radically improve their quality of life (SDG, 2022). These goals not only have global relevance for citizens of all countries but can also be applied to the human resource management industry. Thus, of the seventeen Sustainable Development Goals, as many as five concepts are relevant to the corporate environment.
The first and most important of these are related to notions of equity and fairness. Goal 5, for example, prescribes the need for gender equality for the workforce, provided there is social discrimination and injustice against girls. For HR, this goal means the need for equitable hiring, with a focus on talent and competence, but not on gender. In addition, it is HR’s responsibility to create a gender balance in the number of employees on the team in order to avoid discrimination against either side. A related goal #10 calls for reducing inequalities that create an unfair distribution of benefits. With respect to organizational practices, this goal is necessary to accommodate all employee perspectives and roles, regardless of hierarchy. Low-skilled workers should not feel inauthentic or insignificant in comparison to their more educated colleagues. While encouraging talent is necessary, HR must achieve full attention for all employees.
The third goal #4, which indirectly relates to HRM strategies, is to improve the quality of education among people. Employees with a better educational background are able to qualitatively increase the overall intellectualization of the company environment, be more critical and make fewer mistakes. Among others, with the development of education, an employer does not spend extra money on retraining and requalification but has consistently working professionals, after whom there is almost no need to correct mistakes. Moreover, it does not matter what kind of education is being improved — technical, liberal arts, or economic — as employers benefit in any case by hiring more educated people with developed critical thinking.
The fourth goal is Goal 8, which postulates the need to promote inclusion, sustained economic growth, and decent work for all people. This goal is directly related to the practice of HRM because it gives companies an obligation to hire applicants fairly. In addition, if there is an attempt on the part of the government to reduce unemployment, this will also affect companies because they will have to hire more employees and therefore expand. HR professionals could modify this goal a bit by saying that everyone should get a decent job based on their talents, education, and general competencies. It is clear that a more educated and skilled person will always be higher in the work hierarchy, but each level of this pyramid must provide decent working conditions.
Goal #9 is also partly related to human resource management: this goal calls for industrialization and the promotion of innovation. Many companies have already become innovative, and further development of technology only strengthens their position. Innovation in the workplace will almost always be associated with computerization and digitalization, and so employees must have sufficient competence and computer literacy. HR specialists can conduct training sessions to improve these skills or engage in hiring new workers to replace old ones whose knowledge proves more beneficial to the company at the new stage of market development.
Psychological Contract
Indeed, the philosophy of human resource management is based on the assumption that employees will perform at their best, which will have an impact on improving the company’s financial performance. This makes sense as long as employees are motivated enough to give the organization the best of what they have to offer. However, if the environment creates conditions that prevent this maximization, employees may cease to be motivated and lose motivation to perform their work tasks to the best of their ability. On the surface, this may not be noticeable at first, as the employee continues to do their job; however, these employees no longer want to develop professionally, see no further prospects, and try not to stand out from the rest. Reasons for the transition to “production deviants” may be a change in the organizational environment, a change in leadership, a reduction in wages or other compensation, or personal problems of the employee. Regardless of the specific cause, this phenomenon poses a threat to the productivity of the company, and therefore the employer must take urgent action to eliminate the problem.
In this context, it is essential to discuss the significance of the psychological contract, a potentially dissuasive mechanism for inhibiting deviancy in the organizational environment. More specifically, the psychological contract is not a tangible, legal document that has an actual appearance; instead, the psychological contract is some tacit set of beliefs, communication patterns, and obligations that govern the relationship between peers and, most importantly, between the employee and the leader (CIPD, 2021). Thus, when an employee, due to sufficient experience with the leader, knows precisely how the supervisor will behave in a particular situation, this is the manifestation of the psychological contract.
Meanwhile, the psychological contract includes the entire set of expectations and ambitions that the employee receives (or expects to receive) from the employer. This includes not only the requirements of a safe and non-discriminatory environment but also open opportunities for career advancement, support from supervisors, social benefits, compliance with professional ethics, and fairness. In other words, it is proper to think of the psychological contract as an internal pivot that summarizes the employee’s entire perception of the employer. This is why it seems that a psychological contract can be useful in preventing the development of deviant behavior among employees. As long as they are held together by tacit assumptions and beliefs that have assurances from the employer, it will work. Consequently, the psychological contract is stable enough to persist for a long time, especially if there is regular reinforcement.
Nevertheless, it is not uncommon for the psychological contract to be broken. As a rule, it is connected with the destructive action of external factors on this system: changes in the economic agenda of the market, crisis, pandemic, personal problems of the employee — all these become predictors of the destruction of the psychological contract. When the employee sees and becomes convinced that the supervisor can no longer be guaranteed to keep his part of the psychological contract, this leads to a decrease in motivation and a refusal to maximize his efforts: “Why should I keep trying if I will not be promoted anyway?” Undoubtedly, the psychological contract as a change-sensitive system can be restored, but not all employees want to continue working with leaders who have already once lost their trust. Thus, to summarize the answer to this question, the psychological contract can indeed be useful in addressing the problem of workplace deviance. However, it is also true that the violation of this psychological contract leads to the catalyzing of deviance.
Remote Work
In the COVID-19 era, the need for telecommuting grew especially large, and it became an almost natural practice for work collectives. Driven by the need for sanitation, the phenomenon of remote work quickly spread among communities (Espitia et al., 2021). Meanwhile, these effects should definitely have quite measurable effects on teamwork, as standard team building, communication, and brainstorming practices are modified under remote working conditions. It is essential to critically analyze these changes and answer the question of whether the phenomenon of teamwork can remain as relevant and effective in the heyday of remote work.
The main predictor for why this discussion makes sense at all is the lack of physical contact between work team members. Formal meetings to decide corporate decisions are being moved to a virtual environment; workers are no longer in the office but working from home, which can have an impact on motivation and productivity. Moreover, there are actual technical features in this Zoom or Skype environment, due to which the quality of online conferences is reduced, and the execution of work on schedule can be hampered by these problems. All these factors determine the reality of remote work and certainly affect the phenomenon of teamwork. In addition, it should also be understood that in today’s teams, some employees may be relegated to a remote format — for example, due to outsourcing to a market in another country — while others are physically present in the office. This also poses a threat to effective teamwork since not all employees find themselves on equal footing during meetings.
It must be said that the impact of the remote work format on teamwork is quite ambiguous. It would be easy to say that since all employees have switched to virtual work, team building will be disrupted, but this may only be partially true. In fact, research conducted by Microsoft shows that because of remote working, workgroups meet more often, and the time spent on conferences is reduced: in other words, team productivity has increased (Miltimore, 2020). In addition, the remote work format tied employees to a computer on an almost round-the-clock basis, as opposed to offices with regimented work schedules. This was a predictor for increased employee engagement in the task at hand, which in turn may have positively impacted teamwork. This also applies to improving the capabilities of such meetings. For example, the remote format allows for more accessible communication between team members, which means no more need for the right time and place to hold a conference.
Meanwhile, it is true that remote work has also brought some problems for teamwork. In particular, the most important component, communication, can be disrupted by internet speed issues and technical errors. During videoconferences, it is technically impossible to provide a multilateral dialogue, which means that while one speaker talks, the rest have to listen and wait: such discipline is not always beneficial. Ineffective communication can affect the sense of team ownership and morale, which negatively affects teamwork. For example, if an employee systematically fails to speak up during sessions, it leads to decreased motivation to participate in the team. Loss of a sense of unity due to a lack of shared physical presence can also affect the sense of teamwork. Specifically, isolated employees can lose camaraderie and become detached: solving only their own problems, not being supportive or helpful. All of these become problems for teamwork, and it is the job of an experienced leader to retain the team and encourage engagement, even when working remotely.
HR Analytics
The economy in businesses is becoming increasingly complex, and endless external challenges are creating the need to examine the internal agenda in the company critically. This is what HR analytics does, literally analyzing employees, their contributions to the company, and their KPIs in order to make judgments about their future careers. Hence, if it is evident that the employee copes with his tasks extremely effectively and brings a great value to the company, the specialists of the HR department can initiate his encouragement through additional compensations, bonus payments, and advancement on the career ladder. For example, an employee may receive an increased salary if his or her contributions to the company systematically lead to the development of the organizational environment. Alternatively, if an employee has become a production deviant, does not demonstrate the effectiveness, and performs poorly, he or she can be sent for retraining or fired altogether. To minimize the subjectivity of decisions, it is necessary to use HR analytics that is based on facts and real accomplishments.
The only goal that HR analytics has is to increase productivity and profits in the company at the expense of personnel. Any rearrangements and changes initiated with the help of HR analytics are thus aimed precisely at the realization of this goal. It conducts regular monitoring of working capacity and productivity of employees and internal mechanisms of human resource management in order to draw conclusions based on facts, not on the personal judgment of the manager. Specifically, time on task, office attendance, conflicts, employee needs, salary dynamics, number of vacation and sick days, and any other elements that might be useful for analytical judgments are recorded. Consequently, using this trend helps inhibit cases in which an employee might be fired or promoted just because a supervisor wants to, which is a definite plus in HR analytics.
Such analytics can be performed by people who keep strict records of all the accomplishments and work patterns associated with specific employees. However, the most effective, but also the most cost-effective, use of integrated computer programs to automatically manage analytics and track employee KPIs independently, unbiased, and systematically (Best HR analytics software, 2021). The use of such programs can meaningfully reduce the burden on HR professionals and effectively manage large databases autonomously. In addition, it creates an atmosphere of transparency and intuitive understanding for employees, who are promoted not only on the basis of personal qualities but also on real, professional achievements.
Consequently, the use of HR analytics is critical in today’s company aimed at quality performance improvement. This is indeed a comparable new trend, catalyzed especially by the development of digital corporate technology. However, because of the clear benefits and opportunities for virtually unlimited use, HR analytics is proving to be an extremely useful practice for organizational environments. That is why enterprise leaders need to start investing in this same environment as early as possible in order to increase employee engagement, use systematic and understandable metrics, track momentum, and make informed decisions that will actually benefit the company. All of this combined will result in the company significantly reducing the burden and responsibility for subjective thinking from HR professionals and managers, but instead investing in a working methodology for calculating KPIs that is understood by all stakeholders in the company.
The practice of forced ranking can be perceived differently by people because its very nature is associated with uncertainty and ambiguity. Whereas the result of ranking — to fire an employee, keep an employee in place, or promote an employee — is quite measurable and logically understandable, the way the vertical distribution of employees is implemented can raise questions. On the employer’s side, it turns out to be an extremely effective practice that meets organizational needs: ranking allows to structure personnel, identify weak “players,” and identify strong ones in order to make the right decisions afterward. However, from the perspective of employees and the corporate environment, such decisions can be associated with risks and a lack of transparency, which creates problems for ranking. In addition, it is not entirely clear what exactly is the criterion for comparing different employees in terms of their performance.
As an outstanding employee, I would definitely enjoy being at the top of the forced rankings and receiving the bonuses owed for my work. This is not surprising since positive reinforcement — through words, through material compensation, and through recognition — is a psychologically sound practice. I would enjoy being rewarded and recognized for work that I do well. At the same time, if I knew that the employees at the bottom of the rankings were actually deserving of being there, it would seem fair and just to me since everyone ultimately gets what they are capable of. On the other hand, if the ranking mechanisms are opaque and the positioning in a particular place is unclear, it creates reasons to doubt the integrity of the employer and general skepticism of the corporate environment.
Nevertheless, upon deeper examination, one cannot help but see the underlying conflict hidden in the practice of forced ranking. When athletes are lined up on the podium in the order they rank, it is not surprising because the criterion by which they are so lined up is intuitively clear. The champion took the least time or scored the most goals are measurable results by which to really rank people. However, extrapolating these metrics to employees seems inappropriate because work and sports are not the same. If employee A took less time to complete a task than employee B, it does not mean that employee B turns out to be less efficient and should be fired. Subjective work practice is mediated by many internal and external factors, which means that employee B may be twice as productive as employee A in a month. Then forced ranking by time to complete a task could lead to false results, ultimately affecting overall productivity in the company.
Nevertheless, the practice of such ranking can exist but if absolute transparency of the criteria used for comparison is achieved. These should not be the only metrics but a set equally applicable to all employees. For example, the total number of absences from work (for non-remote employees), the amount of profit brought in over the reporting period, and other quantitative measures that are understandable to employees can be added to the time to complete a task. Only in the case of using weighted averages for comparison it is possible to solve the ethical side of the forced ranking and cover the interests of not only the employer but also the staff.
References
Best HR analytics software. (2021). G2. Web.
CIPD. (2021). The psychological contract. Chartered Institute of Personnel and Development. Web.
Espitia, A., Mattoo, A., Rocha, N., Ruta, M., & Winkler, D. (2021). Pandemic trade: COVID‐19, remote work and global value chains. The World Economy, 1-29.
Miltimore, C. (2020). How working remotely affects teamwork. Shopkeepers Insight. Web.
McCord, P. (2014). How Netflix reinvented HR. HBR. Web.
SDG. (2022). 17 goals to transform our world. UN. Web.