How Netflix’s severance package changed human resource policies

Within every industry, there are commonly known ways to do (or not do) certain tasks. In the world of human resources for example, Microsoft paved the way to implement performance reviews, while Netflix is one of the growing number of organizations doing away with them.

“Adult-like behavior means talking openly about issues with your boss, your colleagues, and your subordinates,” former chief talent officer Patty McCord wrote in the Harvard Business Review. “It means recognizing that even in companies with reams of HR policies, those policies are frequently skirted as managers and their reports work out what makes sense on a case-by-case basis.”

Netflix’s philosophy of hiring “A” employees has led to the development of human resources practices that have some recruiters scratching their heads, while others are applauding these ideas. It may have taken Netflix time to develop the right mix of policies, but any of these ideas could become a part of a business’ HR software at any time — enabling employers to work with a more efficient staff.

Netflix has gone a long way since its initial public offering in 2002. In 2013, the movie delivery and online streaming service received three Emmy awards and had over 29 million subscribers. However, over the years, the company has had to let some staff members go, even if they played a key role in the business’ development during its earlier years.

“Out of fairness to such people—and, frankly, to help us overcome our discomfort with discharging them—we learned to offer rich severance packages,” McCord explained.

This method seems unorthodox, but it has proven to make letting workers go easier for management.

Severance packages are just one of the tools human resources departments can use to get the most of their workforce. For best results, companies should provide details about their policies within their HR software solutions.

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