Introduction

Corporate Social Responsibility is a management concept and business approach in which

companies integrate social, environmental, and economic concerns into their values, culture,
and decision-making processes. CSR involves employing actions that go beyond the baseline
of required laws, regulations and trade rules to majorly improve local and global
communities.

The Netflix corporate social responsibility and code of ethics implied, helps in ensuring that
whether it is making a substantial profit in an honourable and a transparent manner or not.
Teamwork in Netflix is considered the foundation for a positive working environment which
is highly encouraged to maintain a peaceful and a calm workplace.

Stakeholders can be defined as such groups and individuals with which, the organisations are
required to interact at every level and are affected by organisational actions at a large level. These
stakeholders are highly capable to provide support or damage to any business. The stakeholders'
theory can be defined as a model of ethical management within an organisation. This theory has a
direct link with Netflix CSR and ethical implications within an organisation either working at a
root or a mass level. Netflix is mainly required to consider the beliefs and attitudes of
customers as they are the main stakeholders of the organisation. It should try to show such
type of web content which may not be against their beliefs and cultural values.

Organizational Governance

The hallmark of good corporate governance is an independent minded board of directors to

oversee management and represent the interests of shareholders. Its primary responsibilities
are to hire and replace the CEO as needed, monitor performance, review and approve
strategy, and assess financial reporting and risk management. In a typical corporation, the
vast majority of this work is carried out through board meetings and specialized board
committees.
However, it is not clear that directors receive the information they need to make fully
informed decisions on all key matters. Partly, this is due to an “information gap” that exists
between management and the board: Directors have a less-complete understanding of the
company and the market than executives because of their limited exposure to day-to-day
activities and their independence from the business. Directors only meet 4 to 8 times per year
in full board meetings, and 2 to 8 times in committee meetings. The information they review
generally consists of dense PowerPoint presentations with extensive tables and graphs that
span, in a typical large corporation, hundreds of pages. Some directors find these
presentations heavy on data but light on the analysis and insights needed to fully understand
the quality of management, decision making, and performance.

Netflix Board Practices

Netflix takes a radically different approach to information sharing with the goal of
significantly and efficiently increasing transparency among the CEO, executive team, and
board of directors.

The Netflix approach incorporates two highly unique practices:

(1) board members periodically attend (in an observing capacity only) monthly and quarterly
senior management meetings, and
(2) board communications are structured as approximately 30-page online memos in narrative
form that not only include links to supporting analysis but also allow open access to all data
and information on the company’s internal shared systems including the ability to ask
clarifying questions of the subject authors. This quarterly memo is written by and shared with
the top 90 executives as well as the board.

Founder and CEO Reed Hastings believes that these two practices improve the ability of the
board to provide what he calls an “extreme duty of care” to the corporation: “The board isn’t
going to have the confidence to make hard decisions unless they really understand the market
and the company.”

The first element of the Netflix approach to governance is board attendance at executive and
senior executive meetings. Netflix holds three regularly scheduled executive meetings:

 Reed’s Staff meetings (R-Staff) are monthly meetings of the top 7 executives to
discuss the most important strategic and organizational issues facing the company.
 Executive Staff meetings (E-Staff) are quarterly meetings of the top 90 executives
consisting of presentations and breakout sessions to review strategic issues,
competitive threats, workplace issues, and policies.
 Quarterly Business Reviews (QBR) are 2-day gatherings of the top 500 employees of
the company that include a quarterly review of the business, presentations, crowd-
sourced discussion topics, and group dinners.
One board member attends R-Staff meetings, 1 to 2 attend E-Staff meetings, and 2 to 4 attend
Quarterly Business Reviews.2 Directors who attend these meetings are expected to observe
but
not influence or participate in the discussion. According to Hastings, “I don’t want the
management meeting to be any different because they’re there.” Directors can follow up with
the CEO or other executives after the meetings with questions. They are also free to share
what they have learned with fellow board members in subsequent board meetings.

The purpose of director attendance is primarily educational: By directly observing

management, directors will have a greater understanding of the range of issues facing the
company, the analytical approach that underpins managerial decisions, and the full scope of
the tradeoffs involved. Ultimately, the aspiration is that this will translate to significantly
more confidence in management and its choices.

The second element of the Netflix approach to governance is a board memo with links to
supporting analysis and open access to all shared files on the company’s secured intranet. The
board memo itself consists of 20 to 40 pages of written text that highlights business
performance, industry trends, competitive developments, and other strategic and
organizational issues. High-level data is summarized in charts and graphs, but the memo’s
emphasis is primarily the written discussion and analysis of issues. Embedded links within
each section of the memo connect the reader to supplemental analysis, data, and details that
support and expand the written discussion.

Board members receive the memo a few days prior to board meetings and are self-directed in
reviewing the material and clicking through to review supplemental analysis on topics or
issues they believe are most important, interesting, or require the most attention from a
fiduciary standpoint. Directors estimate they spend 4 to 6 hours in preparation, which is more
than they spend preparing for their other directorships but also claim it is more interesting.
They have the ability to pose questions or ask for clarification directly within the digital
memo, to which senior management responds prior to the meeting. Directors take active
advantage of this capability.

Human Rights
People find the Netflix approach to talent and culture compelling for a few reasons. The most
obvious one is that Netflix has been really successful: During 2013 alone its stock more than
tripled, it won three Emmy awards, and its U.S. subscriber base grew to nearly 29 million. All
that aside, the approach is compelling because it derives from common sense.

When Netflix launched, they had a standard paid-time-off policy: People got 10 vacation
days, 10 holidays, and a few sick days. They used an honour system—employees kept track
of the days they took off and let their managers know when they’d be out.
So instead of shifting to a formal system, they went in the opposite direction: Salaried
employees were told to take whatever time they felt was appropriate. Bosses and employees
were asked to work it out with one another. They did provide some guidance. If employees
worked in accounting or finance, they shouldn’t plan to be out during the beginning or the
end of a quarter, because those were busy times. If employees wanted 30 days off in a row,
they needed to meet with HR.

Senior leaders were urged to take vacations and to let people know about them—they were
role models for the policy. (Most were happy to comply.) Some people worried about
whether the system would be inconsistent—whether some bosses would allow tons of time
off while others would be stingy. In general, I worried more about fairness than consistency,
because the reality is that in any organization, the highest-performing and most valuable
employees get more leeway.

Netflix Labour Practices

Just like amongst other Indians toiling away at a huge corporation, we are probably familiar
with these terms: tracking vacation days, getting expenses approved and sitting through
yearly performance reviews.
When working with Netflix, Salaried employees do not have to worry about such things.
Their employees get unlimited vacation. They can make expenses without getting prior
approval from their managers, as long as they are acting/behaving in Netflix’s best interest.
They don’t even have traditional yearly performance reviews which is a normal occurrence in
Indian corporate and they’re also paid well. Netflix is very fond of saying that it hires only
“fully formed adults,” and the company treats them like one. Netflix bestows on them great
amounts of freedom so they can take risks and innovate without being pressured down by
process.
The other side of all this power and freedom is that people are expected to work at a super-
high level or they are quickly shown the door.
This culture of “freedom and responsibility” outlined in the “Netflix culture deck,” is a key
factor in Netflix's success. In recent years, Netflix has reinvented its business entirely, from
missteps and took on TV production and distribution with its original series — including
“House of Cards, Narcos and many others. Despite the status of the Netflix culture deck,
there is little evidence of its mass adoption in corporate, even though some companies have
started to put its principles to use. Giving the employees a greater level of freedom and also
holding them to a higher level standards, while not penalising on tiny details, are common-
sense approaches that seem to help many companies beyond Netflix.

Netflix’s culture deck has been viewed for more than 11 million times since the founder and
CEO Reed Hastings first posted it online. While the outlined culture may show a lot of perks,
parts of it are off-putting to a lot of people. In one extreme example of Netflix managers use a
“keeper test” to evaluate the employees. If one of your employees is leaving for a job at a
peer company, they would fight hard to keep that employee at Netflix. If the answer is “no,”
Netflix will put that person in a substantial severance package, with respect.
Although it may seem harsh, former Netflix managers say it is an effective way to build a
winning team at Netflix, if you can’t find one, then why should they be.
Netflix has themselves acknowledged that the high-performance culture at Netflix is not for
everyone especially for those who are looking for job security and stability over the
performance. It should also be stated that just because this particular type of approach works
for Netflix, that does not mean it will work or can be applied everywhere.
In recent years some companies have started to look to Netflix when tweaking their own
cultures. Richard Branson’s from the Virgin Group and the Boston-based sales and marketing
company HubSpot, they have validated the Netflix approach in adopting unlimited vacation
policies.

Consumer Issue

Netflix has a problem and no one seems to be talking about, yet. A huge public relations
nightmare for a company that could very well harm how consumers look at the entire OTT
structure. Netflix’s stock NFLX is down 15% and all that is to blame when this giant
corporation missed subscriber expectations for Q2. Netflix now since quite a long time has
been facing issues from their regular subscribers.

One of the issues that the company is facing is spending more and more in acquiring new
subscribers. When House of Cards was released, that one show that put Netflix on the world
map and started an OTT wave, subscriber marketing and streaming content rate was
$308/subscriber and today it stands at whooping $508/subscriber. Rising customer acquisition
costs make it hard for the company to reverse its trend of cynical cash flow.

Netflix does not release their user data, but from what could be gathered from sources, the data
(analytics and number), suggests that Netflix’s licensed content accounted for 63% of the
total viewing hours on the platform by their subscribers. Loss of licensed content is an
underrated consumer facing crisis that Netflix is currently facing.
When Netflix was launched in India, one of the major problems the company faced from the
consumer end was pricing. In terms of platform businesses, this is a classic chicken and egg
problem. On one end, consumers were waiting for Netflix to be launched in India but at the
same time people were hesitant to pay one month subscription value. Indian consumers by
that time were already used to paying ₹1000/yearly for Amazon Prime and Disney+HostStar.
Pricing power started to slowly evaporate in Netflix’s Business Model since it has long been
one of the major bull cases for the stock. Hence the company is continuously keeping its
price low and even started with a mobile only plan in India to beat PrimeVideo and
Disney+HotStar. OTT platforms have a major churn rate with 18% subscriber base dropping
YoY.

Like mentioned above, competition is ramping up every year with major competition from
Prime, D+H, HBO Now and Hulu. With so many cheaper options available out there, Netflix
is finding it hard day by day to convince consumers that their streaming service is probably
the best service out there. That's a problem, potentially a major one if marketing costs per
new customer continue to rise, or if churn rate increases.

The only silver lining for the company is that overseas business is running smoothly, with no
sign that customer acquisition is getting any easier. An acquisition bailout has been long
discussed for Netflix and save the company from the horrors of the churn.

Netflix is committed to personalize customer expectations. For Netflix to make money on a

customer, that particular customer needs to stick with the service long enough to pay back the
acquisition cost.

Fair Operating Practices

Netflix is a huge name in the field of Online Curated Content Platforms (OCCP’s) and it has
recently signed the self-regulatory Code of Best Practices under the supervision of the
Internet and Mobile Association of India.
This Self-Regulation Code creates a framework that signatories have voluntarily adopted, to
abate concerns about a regulatory vacuum in the Online Curated Content Platforms sector.
The aim here is to strike a balance between concerns of the viewer (consumer) and the
creative freedom of content creators. This has been a differentiating factor that has
contributed significantly to the sector’s success. The Self-Regulation Code requires all
members/parties to implement age ratings, content descriptors, encourages the adoption of
technical controls such as parental locks and passwords to access adult content. The agenda
behind implementation of these measures is to optimize the ability of a viewer to make
informed choices about the content they consume. The Self-Regulation Code also enables one
to express their grievances if any with this sort of framework.
Netflix as a platform offers creators the potential to reach audiences all around the world.
Netflix offers a varied catalogue that differs from one country to another and this is primarily
because of the rights reason. Not everything can be showed in every country and hence
obtaining the rights for every country Netflix operates in is tedious. In some cases, Netflix
has also been asked to remove specific titles or episodes in certain countries due to
government takedown orders and rights issue.
To maintain an anti-competitive atmosphere and a corruption free functioning Netflix offers a
subscription-based service and does not allow any third-party advertising on Netflix. When
members sign up for the service, they are asked for very minimal information like email,
name, and method of payment. No Socio-Demographic Data is collected to enhance viewing
recommendations. Netflix strives to protect sensitive information through various means,
such as technical safeguards, procedural requirements and policies, a program of monitoring
to detect and address unauthorized misuse.

The Environment

Netflix, for the last few years, has been looking for ways to reduce their environmental
impact, particularly in the area of electricity use which is their major source of energy and
since it is the largest contributor to carbon footprint in their segment. Netflix is aware about
the fact that sustainability is a process and one that’s never done but could only be strived to
achieve each day. Their strategy around sustainability follows:

 Using as little electricity as possible

 Using renewables for the electricity we directly consume in our owned facilities
 Encouraging renewables or offset non-renewable energy in facilities Netflix does not
control

At Netflix, they are continually tuning the performance of their servers, both to reduce energy
use and increase speed, efficiency, output and other performance metrics. In 2015, they were
able to share impressive metrics about the increase in server efficiency and have continued to
make strides in this area. In the present day, their servers are able to support 200 percent of
the
bandwidth per watt than they were two years ago. Said another way, it takes them half as
much energy now to provide the same output. With servers being the largest part of their
footprint, Netflix devotes the majority of its efficiency efforts there. Netflix also runs a few
other efficiency projects that reduce energy use in their office buildings, and also focus on
encouraging and enabling their employees to be green-minded and more conscious regarding
environmental concerns.

Netflix strives to make their energy consumption as green as they possibly can and to do this,
it first needs to understand and quantify overall electricity consumption.

First, there is the energy that Netflix uses directly to run its operations. This includes energy
use in the offices and other owned or leased facilities, and includes the Open Connect content
delivery network. In the year 2016, annual energy use for this type of footprint was
somewhere between 40,000 megawatt hours (MWhs).

But the larger part of their energy use is indirect - it’s the energy used by their partners
including cloud services like Amazon Web Services and the Google Cloud Platform along
with servers hosted in their partner ISP networks. While Netflix does not directly control this
energy use, it believes it is an important component in delivering its services and so include it
in their energy use calculations. Netflix’s total electricity footprint is 140,000 MWhs when
combined with partners’ energy use of 100,000 MWhs in 2016.

Unfortunately, electricity purchased from the grid is not 100% renewable. However, that
doesn't stop Netflix from matching non-renewable energy with renewable energy products
that they have nearby. They purchase renewable energy certificates to match their non-
renewable energy use and fund renewable energy production from other renewable sources
like wind and solar. All the projects supported by Netflix generate renewable energy in
specific locations
where a direct electricity footprint or a pre existing footprint through partners is present. For
2016, Netflix purchased renewable energy in seven distinct regions in the U.S. alongside
Canada, Western Europe and Brazil. Netflix understands that not everywhere there’s a well-
established and developed market for renewable energy. In such cases, they contribute to
emission reduction by purchasing carbon offsets, which are sourced from projects that
reduce, absorb or prevent carbon and other emissions from entering the atmosphere.

Community Involvement and Development

At this point in time Hastings isn’t just a CEO of Netflix but also the founder of Hastings
Fund, a philanthropic fund for education and to support American minorities in the best way
possible by donating millions of dollars. Netflix is no longer just an OTT platform but it has
been doing so much work beyond just streaming online content for consumers. Ever since the
BLM Movement started, Netflix has been playing at its forefront.

Reed Hastings has made a commitment to donate $100M for the black communities in the
U.S to support in any way they can. Netflix would start putting in 2% of financial holdings
(in cash) in the organisations and institutions to directly support the black communities. One
of the aftermath of George Floyd’s death, Netflix created a different section for “Black
Movies” which made people aware of the Black Culture. Netflix has announced that it’ll
focus on being inclusive in the work environment and would focus on increasing the diversity
within the work space. One of the ways that they’re doing it in creating a more nuanced
access to black students within the technology world. A 16-week program especially
designed to bring forward the minority college students to learn UI-UX Design, Java and
Data Science. Creating a voice for
everybody only makes it stronger. By doing and taking these initiatives, Netflix hopes that
they can encourage more companies and take a step forward and engage people into Black
Lives Matter Movement.

Conclusion

Netflix as an organisation is working really hard towards establishing an inclusive work

environment. Being one of the highest rated OTT Platform companies, Netflix as a whole
tries to bring in the corporate governing culture and tries to be the first mover when it comes
to being compared to their peers. Netflix's whole idea of being more than just a streaming
platform has paved a way for a lot of companies to be more than just service providers. As a
multi billion dollar company, Netflix cannot be ignored for what it has achieved, is currently
achieving and what it has sought out to achieve in the future. Based on the above analysis, it
is clear that business ethics and Netflix corporate social responsibility, both work as an
integral part of a business organisation. The main Netflix corporate social responsibility and
ethical practices adopted by the company are defined in this report along with defining the
main issues in relation to stakeholder theory. The findings indicate that Netflix is working
well and adhering to its Corporate, social and ethical responsibility. However, it needs to
focus on the above- identified issues to deal to avoid any type of Netflix corporate social
responsibility allegations from stakeholders.