{"id":58297,"date":"2022-01-21T09:47:18","date_gmt":"2022-01-21T13:47:18","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=58297"},"modified":"2022-01-24T09:10:49","modified_gmt":"2022-01-24T13:10:49","slug":"netflix-management-strategy","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/","title":{"rendered":"Netflix&#8217;s Management Strategy Explained"},"content":{"rendered":"\n<p>What is Netflix&#8217;s management strategy? How can such a huge company remain successful with so few policies?<\/p>\n\n\n\n<p>Netflix&#8217;s CEO Reed Hastings believes that employees should have as much autonomy as possible. That&#8217;s why he aims to eliminate controls so employees have the power to act in the company&#8217;s best interest without a long and complicated approval process.<\/p>\n\n\n\n<p>Here are the three benefits of Netflix&#8217;s lenient management strategy.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-eliminating-controls-improves-workflow\"><strong>Eliminating Controls Improves Workflow<\/strong><\/h2>\n\n\n\n<p>When managers entrust employees with making their own travel and expense decisions\u2014even when this freedom is reined in by relevant information, safeguards, and transparency\u2014the company\u2019s costs are typically a little higher than they would be if the company had an approvals process. However, Netflix CEO Reed Hastings contends that those costs are outweighed by the benefits of creating a low-rule environment. These benefits of Netflix&#8217;s management strategy include:&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-flexibility\"><strong>1) Flexibility<\/strong><\/h3>\n\n\n\n<p><strong>Without a restrictive approval process, Hastings says that employees have the flexibility to react, problem-solve, and make decisions under any circumstances. <\/strong>For example, when 4K resolution technology was new, Netflix partnered with Samsung to promote it. A tech product reviewer for <em>The<\/em> <em>Washington Post<\/em> agreed to test the new Samsung TV by watching <em>House of Cards<\/em>\u2014which could give both companies a big publicity boost\u2014but the night before, a junior Netflix employee discovered the TV was missing from the Netflix offices. As it was after hours, he couldn\u2019t reach his boss for approval to purchase a $2,500 TV.&nbsp;<\/p>\n\n\n\n<p>Empowered with the mandate to act in the best interest of the company, the employee bought the TV and averted a crisis\u2014and the positive review in the <em>Post<\/em> was worth far more for Netflix than the cost of the last-minute purchase.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Stop Asking Employees to Front Money for the Company<\/strong><br><br>Hastings says that the absence of an approval process gives employees more flexibility. But this idea can feel unrelatable to many: While Netflix employees are paid handsomely enough to be able to spend $2,500 on a TV, this isn\u2019t the reality for the average employee at other companies. <a href=\"https:\/\/www.forbes.com\/sites\/forbesfinancecouncil\/2020\/03\/12\/why-expense-reimbursements-are-hurting-your-employees-and-your-business\/?sh=7842e8d470c6\">Fronting cash for company expenses puts an unfair burden on employees<\/a> who don\u2019t have access to corporate cards or who may not have ready cash for urgent expenses. Employees might also be frustrated and stressed by the paperwork and time-consuming process to get their money back, while finance personnel may <a href=\"https:\/\/www.shortform.com\/blog\/be-uncomfortable\/\">be uncomfortable<\/a> if they\u2019re forced to deny some expense claims.&nbsp;To take the burden away from employees, replace your reimbursement system with a proactive expense policy: Implement a pre-approval process so that employees can spend company money without stress.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-speed\"><strong>2) Speed&nbsp;<\/strong><\/h3>\n\n\n\n<p>Hastings says that the previous example illustrates the need to act quickly in order for employees to perform their jobs well. Approvals processes slow down the workflow, and sometimes the window of opportunity for an important purchase closes by the time the company has signed off on it.&nbsp;<\/p>\n\n\n\n<p>(Shortform note: Employees must have <a href=\"https:\/\/www.shortform.com\/blog\/sound-judgment\/\">good judgment<\/a> to make sound decisions\u2014like making big, urgent purchases\u2014on the fly, so it\u2019s important to <a href=\"https:\/\/www.forbes.com\/sites\/forbescoachescouncil\/2018\/11\/29\/a-simple-way-to-teach-your-team-to-make-better-decisions\/?sh=23af2b822d97\">improve your employees\u2019 decision-making skills<\/a> through training. One way to do this is to hold regular meetings to discuss complicated situations and ask the group to describe how they would handle each case.)&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-frugality\"><strong>3) Frugality<\/strong><\/h3>\n\n\n\n<p><strong>The authors write that, paradoxically, employees often spend <\/strong><strong><em>less<\/em><\/strong><strong> when they\u2019re told to use their judgment than when they\u2019re given concrete spending limits. <\/strong>For example, if a company has a specific limit for how much employees can spend when they take clients out to dinner, the employees will be more likely to spend up to the limit because they know they\u2019re in the clear as long as they don\u2019t go over the limit. By contrast, if employees are told to use their judgment, they\u2019re likely to spend more conservatively, because they know they have to answer for their spending choices.&nbsp;<\/p>\n\n\n\n<p>(Shortform note: Additionally, being <em>too<\/em> detailed when it comes to allowable amounts in various scenarios can backfire because employees might be overwhelmed by all the information and may need to constantly ask for guidance. Experts say that <a href=\"https:\/\/blog.spendesk.com\/en\/control-employee-expenses\">expense policies are most effective when they\u2019re simple<\/a> and easy to remember.)<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>How to Get Employees to Spend Less<\/strong><br><br>Netflix doesn\u2019t make use of a bonus system, but <a href=\"https:\/\/financialpost.com\/executive\/trick-your-employees-into-happily-spending-less-on-business-travel\">other companies have attached bonuses and rewards <\/a>to employees\u2019 low spending. This serves to encourage employees to be frugal. For example, one financial services company gives employees 50 cents for every dollar they save when they choose cheaper options for business travel. Employees are thus rewarded for choosing coach over business class for their flights or an Airbnb instead of a pricey hotel for accommodations.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is Netflix&#8217;s management strategy? How can such a huge company remain successful with so few policies? Netflix&#8217;s CEO Reed Hastings believes that employees should have as much autonomy as possible. That&#8217;s why he aims to eliminate controls so employees have the power to act in the company&#8217;s best interest without a long and complicated approval process. Here are the three benefits of Netflix&#8217;s lenient management strategy.<\/p>\n","protected":false},"author":8,"featured_media":25574,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,14],"tags":[200],"class_list":["post-58297","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-management","tag-no-rules-rules","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Netflix&#039;s Management Strategy Explained - Shortform Books<\/title>\n<meta name=\"description\" content=\"Netflix&#039;s management strategy is to be as hands-off as possible. This gives employees the power to make decisions to improve the company.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Netflix&#039;s Management Strategy Explained\" \/>\n<meta property=\"og:description\" content=\"Netflix&#039;s management strategy is to be as hands-off as possible. This gives employees the power to make decisions to improve the company.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2022-01-21T13:47:18+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-01-24T13:10:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2021\/01\/netflix-cube-block-dark-n-symbol-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1920\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Hannah Aster\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Hannah Aster\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/\"},\"author\":{\"name\":\"Hannah Aster\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/f39f52830e4f7039a16e45d12354542f\"},\"headline\":\"Netflix&#8217;s Management Strategy Explained\",\"datePublished\":\"2022-01-21T13:47:18+00:00\",\"dateModified\":\"2022-01-24T13:10:49+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/\"},\"wordCount\":794,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2021\/01\/netflix-cube-block-dark-n-symbol-scaled.jpg\",\"keywords\":[\"No Rules Rules\"],\"articleSection\":[\"Business\",\"Management\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/\",\"name\":\"Netflix's Management Strategy Explained - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/netflix-management-strategy\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2021\/01\/netflix-cube-block-dark-n-symbol-scaled.jpg\",\"datePublished\":\"2022-01-21T13:47:18+00:00\",\"dateModified\":\"2022-01-24T13:10:49+00:00\",\"description\":\"Netflix's management strategy is to be as hands-off as possible. 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