Netflix case study Môn Organizational behavior | Đại học Kinh Tế Quốc Dân

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NATIONAL ECONOMICS UNIVERSITY
SCHOOL OF ADVANCED EDUCATION PROGRAMS
GROUP ASSIGNMENT ORGANIZATIONAL BEHAVIOR NETFLIX CASE STUDY Group: 9 Class: Marketing 63D Team Members 1. Đinh Thuỳ An 2. Lê Nguyễn Hiền Anh 3. Nguyễn Hiền Anh 4. Đỗ Thị Hà Phương 5. Phạm Vũ Xuân Nhi 6. Trịnh Minh Hiếu
Instructor: Assoc. Prof. Dr. Pham Thi Bich Ngoc Hanoi, November 2022 lOMoAR cPSD| 58675420 TABLE OF CONTENTS I. Introduction 2 1. About Netflix: 2
2. About Reed Hastings and Marc Randolph: 3 3. About case: 3
II. Answer the questions 3
Question 1: To what extent do employees look to their CEOs for motivational
signals? Do you think Netflix employees grow to be motivated by the same things that engage Hastings? 3
Question 2: Which theories seem relevant to customers’ motivations (to pick certain
titles), not just employees’ motivations (to perform their tasks well)? 5 1. The expectancy theory 5 2. Goal-setting Theory 6 3. Two - factor Theory 7
Question 3: When it comes to complex work - like Netflix engineers analyzing data
on customer viewing habits - will intrinsic or extrinsic motivators prove more effective? Why? 8 1. Definition and Overview 8
2. The principals of intrinsic and extrinsic motivation 9 3. Status quo and solution 10 III. Conclusion 11 REFERENCES 13 I. Introduction 1. About Netflix:
- Netflix, Inc. is an American production business and subscription-based overthe-
top streaming service with headquarters in Los Gatos, California. Reed Hastings
and Marc Randolph established Netflix in Scotts Valley, California, in 1997. It
offers a collection of movies and TV shows through distribution agreements as
well as its own works, dubbed Netflix Originals. As one of the top entertainment lOMoAR cPSD| 58675420
services in the world, Netflix has 223 million paying subscribers in more than
190 countries who enjoy TV shows, documentaries, feature films, and mobile
games in a range of genres and languages. Members have unlimited access to
play, pause, and resume watching whenever and wherever they like, and they are
always free to alter their plans.
2. About Reed Hastings and Marc Randolph:
- Reed Hastings: American billionaire businessman Wilmot Reed Hastings Jr. He
serves as co-founder, chairman, and co-CEO of the company.(CEO) of Netflix,
and sits on a number of boards and non-profit organizations.
- Marc Randolp: Marc Bernays Randolph is an American IT entrepreneur, lecturer,
and advisor. He was Netflix's co-founder and first CEO. 3. About case:
- According to an online study done by the app Blind, Netflix is among the top firms
with the happiest employees. In 2019, 86% of participants reported feeling
satisfied and inspired. The major indicator for happiness employed in the
research was whether respondents reported "substantial growth," "moderate
growth," or "no growth." 73% of respondents said they would recommend
Netflix to friends and family, and 90% said they supported the CEO, which is
consistent with Glassdoor reviews. Compared to the average CEO approval
rating of 69% provided by Glassdoor, this rating is noticeably higher. What, then,
made the workforce appreciate Netflix and the CEO? One of these is Netflix's
distinctive culture, notably the way that staff members are encouraged.
II. Answer the questions
Question 1: To what extent do employees look to their CEOs for motivational
signals? Do you think Netflix employees grow to be motivated by the same things that engage Hastings?
Since they manage the company, the CEO is viewed as the superior individual. He has
full responsibility for all business choices made by the company, including those
pertaining to marketing, operations, accounting, human resources, and so forth. Without
a doubt, executive roles in businesses are some of the hardest occupations on the planet, lOMoAR cPSD| 58675420
if not the worst.In actuality, what takes place is that the CEO is expected by both the
company and the employees to provide perks as compensation.
The process that explains an individual's intensity, direction, and persistence of efforts
toward obtaining a goal is known as motivation. Motivating and inspiring staff is one
of a CEO's most crucial responsibilities. Only motivated employees will give their best
work and be most productive. Praise is the first and simplest strategy. People are curious
as to whether their work is up to par. Positive feedback may be a fantastic motivator for
productivity. A safe workplace must be provided. Making sure there is a good work-life
balance is preferable. Only in a workplace that values the need to balance work and
leisure can employees be joyful and productive. Therefore, allow your staff to take time
off each week to unwind. Additionally, money is the best motivator of all. People work
for the money they are paid in exchange. It's not only about getting paid; an employee's
wage also serves as proof and acknowledgement of their efforts. When employees feel
valued by their employers, they are more motivated to work.
The CEOs are frequently looked to by employees for encouragement and direction. In
this instance, Hastings' customers are both his inspiration and his passion. Every time,
Netflix makes an effort to comprehend the decisions its millions of users make. Teams
of designers, mathematicians, and programmers are employed by Netflix to investigate
why viewers gravitate toward certain films while avoiding others. In a similar vein,
Hastings thinks that if the staff members are happy, they will be inspired to help Netflix
create many great customer experiences.
Employees who are happy with the demands of their jobs, their pay, and their cultural
fit will be more productive, it has been demonstrated. Researchers at the University of
Warwick found that happiness increased staff productivity by 12% in a series of trials.
In the case of Netflix, I believe that when Hastings addresses any issues that can annoy
employees, such as pay, benefits, time off, and the freedom to work only when they feel
up to the task, the workers will be guaranteed to provide quality work. This might be
viewed as a sign that he had successfully structured things so that staff' motivation
would be driven by the needs of the consumers. Despite their tiny size, these elements
still contribute to the work's increased competitiveness and speed up its development. lOMoAR cPSD| 58675420
Additionally, workers do well just because they can receive the incentive or award that
their employer announced. They may also be able to raise the bar for their personnel in
order to reach that goal.The management' initiatives are always eagerly anticipated by
the staff. Of course, the reality motivates Netflix staff members. Otherwise, how does
Nexflix spread its hegemony over the world? Additionally, it is true that innovation
never stops moving forward. Consequently, people have a propensity to solve
difficulties by thinking outside the box. All other requirements for motivation are
already satisfied. According to some, an employee is motivated when they have the
following three beliefs: that their effort will lead to performance (Expectancy), that their
performance will lead to results
(Instrumentality), and that their outcomes will be worthwhile (Valence).
Question 2: Which theories seem relevant to customers’ motivations (to pick
certain titles), not just employees’ motivations (to perform their tasks well)?
1. The expectancy theory
A theory says a person's propensity to act in a particular way is influenced by how
strongly they anticipate that action will result in a particular outcome and how appealing
that consequence is to them. The theory emphasizes three relationship:
● Effort-performance relationship
● Performance-reward relationship
● Rewards-personal goals relationship
The expectation motivates people to exert the effort necessary for performance. For the
customers, if a consumer is making an effort to find your brand, performance would be
doing so. It is the responsibility of the brand to make joining its rewards program as
simple as feasible for customers. Brands who are aware of this are able to direct
consumer effort in a way that will produce results and increase motivation to participate
in the program. Programs for rewards are made to entice clients with incentives. Netflix
would advertise films or television episodes based on the customer's interests, as was
mentioned in the case. As a result, Netflix has created motivation for its users to keep
watching content on its website. This is accomplished by allowing users to select from
a variety of options. The decision is taken in consideration of what the person finds lOMoAR cPSD| 58675420
enjoyable. If the person is consistently presented with options that do not make them
pleasant, demotivation will occur. Netflix prevents demotivation by providing a variety of options.
For the employees, they demonstrate to staff that they are capable of coming up with
new ideas and act as a link in the chain by demonstrating innovation success to workers
rather than leadership. Netflix’s core value is “independent decision-making by
employees”. Netflix recognized that they could often achieve better results at a lower
cost by just asking personnel to rely on logic and common sense rather than tight
regulations. Managers at Netflix are supposed to create the environment or context
rather than take charge or direct others. Additionally, they developed an office setting
that rewarded excellence and barred those who misused or violated their liberties.
"Personal Top of Market" is how Netflix ensures that its employees receive competitive
pay. Working more intelligently is superior to working harder. The business doesn’t run
on a regular 8-hour workday. Efficiency is the main objective, much as what half-day
Fridays or a 4-day work week aim to accomplish. Employees are allowed more free
time instead of being required to work lengthy hours with the idea that they can return
to the workspace and perform better, increasing productivity. Their values link tightly
to innovation: “You care intensely about our members and Netflix‘s success”. Netflix
makes a culture of freedom and accountability. On Comparably, the employee
satisfaction at Netflix is ranked in the top 5% of businesses with comparable sizes.
Employee happiness has a lot to do with compensation, and at Netflix, 84% of workers
believe their pay is fair, 88% are happy with their perks, and 78% are satisfied with
their stock or ownership. Netflix is a happy place to work because 87% of Netflix
employees say their workplace is favorable. 2. Goal-setting Theory
According to a thesis, setting clear, challenging goals and receiving feedback increases
performance. The difficult goals when accepted, result in higher performance than do
easy goals, and that feedback leads to higher performance than does non feedback.
In this case, the goal-setting theory of providing customers with what they want even
before they are aware of what they want. It is encouraged by the customer's sense of
significance in the services they are receiving and by their own self-determination to lOMoAR cPSD| 58675420
keep using those services. The customer's quality of life will be impacted by our capacity to do this.
For the employees, they need to be able to offer engaging content to their subscribers.
In fact, the goals set by Netflix are specific enough that they focus on improving
customer satisfaction. Netflix has identified its target customer groups as well as their
needs and the Netflix team would also figure out what customers find most enjoyable
through the scientific process. They would develop hypotheses using existing
quantitative data, qualitative information, and survey results, and then A/B test these
hypotheses to determine which ones are most effective. With A-level, employees will
get more responsibility and high compensation.
Netflix is also inspirational in that it instills in people a desire for growth and progress.
Managers are advised not to retain team members with whom they are not entirely
satisfied with using a general criterion known as the "Keeper test." Moreover, at Netflix,
positive/constructive feedback is a part of everyday - not just an annual event. Through
teaching and exemplifying the behaviors we want to see throughout the firm, this
teaches individuals how to offer and receive criticism. Netflix also opts for a 360 degree
review process. Employees are advised by their colleagues on what they should stop
doing, start doing, or continue doing under this new structure. Cultural excellence of
Netflix increases member satisfaction. This is how they build an extraordinarily
successful company in the world.
The MBO process is used by managers at Netflix to give staff members the context they
need to make decisions that align with the company's objectives and strategy. The
hierarchy at Netflix is arranged like a tree: The roots are Hastings, the trunk is senior
leadership, the branches are descending levels of management, and the uppermost
branches are employees (making decisions as captains). This is perfect framework for the MBO process. 3. Two - factor Theory
A hypothesis that links intrinsic (advancement, recognition, responsibility,
achievement) and extrinsic aspects (supervision, pay, company policies, work
condition) to job satisfaction and unhappiness, respectively. lOMoAR cPSD| 58675420
In service encounters, there are numerous hygiene-related motivators and influences
that take the form of client expectations.
- Motivators : free trial, give feedbacks, discount…
- Hygiene factors : some movies/TV shows/series are restricted to some countries
On the other hand, Netflix employs motivation through work design, promoting
autonomy, feedback (JCM), and the desire to gain . - Motivators:
+ Stock Option Program: Each year, employees decide how much of their pay they
want to be made up of salary and stock options.
+ Personal Top Market: pay employees at the top of their personal market
+ Providing 360 degree review process - Hygiene factors:
+ Netflix’s policy for travel/entertainment/presents and other charges is 5 words
long: “act in Netflix’s best interest.” They do not have a travel policy.
+ When it comes to work schedule, rush hour can be stressful for the employee
Question 3: When it comes to complex work - like Netflix engineers analyzing
data on customer viewing habits - will intrinsic or extrinsic motivators prove more effective? Why?
1. Definition and Overview
Intrinsic motivation is defined as doing something for your own spiritual satisfaction
rather than external interests. You do it because the task is interesting, useful or
practical, in place of visible rewards or the avoidance of punishment.
Intrinsic motivation is evident in young children, who are constantly trying to grasp,
throw, bite, crush or scream at new objects they encounter. Even if less important as
they get older, adults still have intrinsic motivation when they're doing crossword
puzzles, painting, gardening, or just reading novels or watching movies. lOMoAR cPSD| 58675420
By engaging in activities that give you inherent satisfaction, you are contributing to a
sense of well-being, which is an important part of the psychological needs of humans.
In this way, intrinsic motivation is very important to a person's overall sense of motivation.
Extrinsic motivation, on the other hand, encourages our will to complete tasks and
perform a behavior in order to get a reward or avoid punishment. When you are
externally motivated, your behavior is motivated by an external factor that motivates
you to do something in the hope of earning a reward -- or avoiding a less positive outcome.
An example of extrinsic motivation would be getting paid to do a job. You may enjoy
spending your days doing things other than work, but you're motivated to go to work
because you need a paycheck to pay the bills. In this example, you are externally
motivated by your ability to cover daily expenses. In return, you work a certain number of hours a week for pay.
2. The principals of intrinsic and extrinsic motivation
In the case description, we know that Hastling created the Netflix Prize – 1 million
dollar reward for person or team that can revolutionize a company's “predictions”
engine .This is a good example of using extrinsic motivation as a reward provided in
the form of financial benefits. And to evaluate Hastings' work, we need to consider the
principles of internal and external dynamics.
A study has been carried out in MIT for a few years, they took a whole group of students
and gave them a set of challenges such as memorizing strings of digits, solving world
puzzles and even physical tasks like throwing a ball through a hoop. To incentivise their
performance, they gave them 3 levels of reward and the winner won a lot of money.
Finally, they found out that as long as the task involved only mechanical skill, bonuses
worked as expected: “ The higher the pay, the better the performance”. But once the
task called for even rudimentary cognitive skill, the larger reward led to poorer performance. lOMoAR cPSD| 58675420
The case study gives us an overview of how motivation works. For jobs that require a
lot of labor, extrinsic motivation promotes employee performance effectively. However,
when it comes to more complex tasks, often with more than one right answer, creative
and requires more self-skills, extrinsic motivation produces the opposite effect.
This shows that external motivation makes us more passive. It prevents us from getting
out of our “comfort zone” and creating creative ideas to upgrade our skills. It forms a
habit and makes us stagnate, working like machines, unable to get out of our shadows or think outside of the box.
For complex jobs like data analytics engineer for Netflix, it is better for intrinsically
motivated programmers. Because when you want to do it, you will spend a lot of effort
and ideas with the aim of getting recognition and trust from customers, making them
satisfied to enhance your value and ability. When we put our mind into the work, the
results will be well worth it. Therefore, work efficiency will make us stand out from
the competition and attract as many potential customers as we deserve. We can identify
the answer as an intrinsic motivation thanks to the aforementioned detailed examination and examples.
3. Status quo and solution
Why did Hastings invent extrinsic incentive in the first place if it is not the solution to
the problem? Didn't he realize that he was the CEO? Yes, Hastings has skill, and yes,
the award might not be the best idea. However, this is typical in all industries. Managers
typically offered a reward or a threat of punishment to obtain specified outcomes. This
dates back to the industrialization era, when all factory workers received the same
treatment. Because the labor tasks back then are simple and repetitious, it produces a
superior output. Given the volume and complexity of the work we face today, our
previous methods of management are no longer appropriate. Compliance can be
generated through extrinsic motivation, but intrinsic motivation that makes employees
actively engaged in the company. Workers nowadays need to feel as though their work
is making a difference and advancing society. They desire a sense of autonomy and self-
control. Additionally, they strive to excel at their jobs. Given the requirements, a
business may provide a greater performance level without using up additional incentives or vacation days. lOMoAR cPSD| 58675420 III. Conclusion ● Critical point:
We have come to a conclusion after looking at how Netflix is set up.
- In place of several highly regarded television programs, Netflix has established
a solid brand reputation and become a household name. The business has recently
experienced exponential expansion.
- The original TV episodes and movies on Netflix provide plenty of options for
aspiring filmmakers. The platform's presentation style of its original material is appealing to the public.
- Netflix is fond of saying it hires only “fully formed adults,” and the company
treats them as such -- bestowing on them great amounts of freedom so they can
take risks and innovate without being bogged down by process.“Freedom and
Responsibility” is a phrase that is emphasized throughout Netflix's corporate
culture suite. Netflix considers its employees "adults". They provide employees
with a high degree of autonomy in their work, and also require a high sense of
responsibility. Specifically, Netflix employees are not limited to the number of
days off and they get unlimited vacation. They can expense without getting
approval from their managers, as long as they’re acting in Netflix’s best interest
and are not constrained by cumbersome payment processes for travel and travel
expenses. Netflix also emphasizes that it values people over process.
In addition to its innovative organizational structure, Netflix maintains high
standards and, by continuously looking to the future, has positioned itself for long-term success. ● Suggestions:
- Netflix's solid reputation and the current market's high demand for OTT
platforms may make it possible for the brand to grow.
- Since Netflix is signing up for exclusive Netflix-only content, they can bring in
other product lines, including video games, comic books, and more.
- Globally, Netflix is already well-known. By forming a strategic alliance with
nearby businesses, they can increase the number of subscribers they have and so
better compete in the neighborhood. lOMoAR cPSD| 58675420
- The company has the opportunity to create original concepts that outperform
current OTT platforms. Netflix now has the ability to provide top-notch customer
support after already rejecting the traditional advertising-based economic model. lOMoAR cPSD| 58675420 REFERENCES
1. Netflix Happiness Score
https://www.comparably.com/companies/netflix/happiness
2. Work Life Philosophy
https://jobs.netflix.com/work-life-philosophy?
fbclid=IwAR20m4y3HBhSOPodjzHRXVI1wq0sj4YN_fqAwMWyzsKAAiT_ YhIfu3byBvU
3. Netflix Culture — Seeking Excellence
https://jobs.netflix.com/culture?fbclid=IwAR3WMBWxii-
0q_YK69a4k3Q66DMOh6cwTZmHKbnYaerWr-rCT-25cCh52tU
4. Organizational Behavior Slide uploaded on LMS