MGT2110-900-FA16: Organizational Behavior

Case Study Netflix

Netflix Case Study-

5.1 From a motivation perspective, what are the benefits of tying salaries to job market

levels rather than to performance evaluations? What are the drawbacks?

Tying salaries to job market instead of performance is how we have our wage progression set up

at my current employer. The employees know they cannot get to the next level of the wage scale

unless they are there for a certain amount of time. This does motivate the employees to stay to

reach the next level, and has helped some in decreasing our turnover since this has been put in

place two years ago. Nexflix expects to employ only the outstanding and to give severance

packages to the adequate, so they pay on job market levels to motivate candidates to want to

work for them. This set up has been a good thing in motivating our employees to get to a certain

pay rate, but there are a lot of other things that are true drawbacks for this type of structure. One

very good way to motivate employees is to dangle a carrot in front of them per say. Motivation

is defined as a set of energetic forces that originates both within and outside an employee,

initiates work-related effort, and determines its direction, intensity, and persistence according to

our textbook (pg97). Money is the most motivating thing to most employees, this structure does

not allow a company to use a raise structure to push job performance. I think that is most

definitely the biggest drawback to tying salaries to job market levels and not performance.

5.2 Although the unlimited vacations policy is a popular perk might it create some

challenges for Netflix managers in terms of motivating employees? How would you handle

those challenges?

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Yes, I do think the unlimited vacation policy might create challenges for the managers in

motivating the employees. The employee’s, first, need to be at work for you to be able to

motivate them, as the manager. When an employee may take more time than another, the one left

may feel like they are carrying the load and this would be very demotivating and cause equity

distress. I think the best way to battle these issues is to have things in place that do encourage

the employees to be at work. Set goals for the employees individually to reach along with team

goals. I think this lets the employees that are at work and putting in the time to shine. When

talking about expectancy in our textbook, it states it represents the belief that exerting a high

level of effort will result in the successful performance of some task (pg98). I think the

employees that abuse the unlimited vacation policy will not be able to show high level of effort,

compared to those that will be in the office. As the manager, you would not be able to dictate the

vacation, but to have a schedule and make sure the employees all put in for the vacation so all

areas can always be covered.

5.3 If Netflix profits begin to drop as a result of competition from Blockbuster, Apple,

or Amazon, should Netflix revisit these sorts of management practices, or should it remain

steadfast in its commitment to them? Why?

In all the companies that we have looked at in this textbook, they are successful because they

stand out in some way on how they treat and incentivize their employees. The management style

that Netflix has makes them attractive as a company, to a candidate. I can’t say that I agree with

their style, I actually think it is contradicting and probably causes issues within the team

structure, but it is what makes it stand out. They motivate their employees in a unique way and

it has gotten them where they are today. Yes, they should remain steadfast in the commitment

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they have made to their management practices. It seems a little brash, but they don’t keep the

adequate employees, they keep the outstanding ones. This should motivate the employees to

think out of the box and come up with the next biggest and greatest thing in movie and TV

delivery. They are very open to the fact they only want to employ the best of the best, so if the

profits begin to drop due to competition, they should rely on the management practices to help

get them back on track.

References
Colquin, LePine, and Wesson (2010). Organizational Behavior: Essentials for improving
Performances and Commitment: McGraw-Hill/Irwin .