Netflix`s Organizational Culture
| Case Code: HROB244
Case Length: 20 Pages
Pub Date: 2023
Teaching Note: Available
| Price: Rs.400
Industry: Leisure & Entertainment
Countries: United States
Themes: Organizational Culture, HR Policy, Performance Management,Recruitment & Selection
Abstract Case Intro 1 Case Intro 2 Excerpts
A culture where ‘no rules rules’
Hastings’s prior experience at Pure Software made him realize that he needed to promote employee freedom and flexibility rather than focusing on adherence to rules and error prevention as inhibiting freedom led to less innovation at the workplace. At the same time, he understood that the company also had to be managed through policies or control processes so that it did not end up in chaos..
In 2010, when Netflix began international expansion, Hastings had doubts about whether the culture could be adapted to other countries and whether it could achieve the same kind of success the company had tasted in the US. Over the years, the company’s methods of management had developed tremendously and had produced amazing results, leaving Hastings unwilling to make any significant change in its culture in the countries Netflix was entering. He was, however, uncertain whether the candid feedback, keeper test techniques, and low rule ethos would be effective in other countries..
Appreciation for Netflix
Jessica Neal (Neal), former Chief Talent Officer of Netflix, appreciated the company for preserving its culture even during its period of accelerated growth. According to Neal, Netflix recruited highly talented people and empowered them and valued them as if they were the owners of the company. She added that the company did not implement rules, processes, and policies as it grew unlike other organizations which introduced control processes as they scaled..
Though Netflix received appreciation for its culture from several quarters, it also faced its share of criticism. In 2018, American international daily newspaper The Wall Street Journal (WSJ) conducted an interview of nearly 70 former and current employees at Netflix. They described the environment at Netflix..
A shift in netflix’s culture?
Even as Netflix was criticized for its organizational culture practices, the company’s updated its culture memo, adding to the troubles of its employees. In May 2022, Netflix updated its culture memo for the first time after it had been released in 2017..
When Netflix faced a huge backlash from its employees for Chappelle’s show, a spokesperson from Netflix said, “We value our trans colleagues and allies, and understand the deep hurt that’s been caused. We respect the decision of any employee who chooses to walk out, and recognize we have much more work to do both within Netflix and in our content.” ..
In April 2022, Netflix reported that for first quarter of 2022, the company had lost more than 200,000 subscribers and was expecting to lose another 2 million in the April 2022 to June 2022 quarter. The decline in the number of subscribers was attributed to Netflix’s decision of moving out of Russia over the Ukraine war. To arrest this decline, Netflix planned to take a few steps such as asking customers to pay for sharing passwords; putting up better films, games, and shows; and exploring a low-cost, advertisement supported version of Netflix – something which Hastings had always resisted..
Exhibit I: Netflix’s Consolidated Statements of Operations
Exhibit II: Netflix’s Sources of Revenues
Exhibit III: Number of Subscribers of Netflix’s Competitors
Exhibit IV: Netflix’s 4A Feedback Guidelines
Exhibit V: The Netflix Innovation Cycle
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