ORGANIZATIONAL BEHAVIOR
(Group 7 report)
MOTIVATING EMPLOYEES AT NETFLIX
Tạ Lê Linh (11213422) 1,2 , Trịnh Xuân Hiểu Minh (11213966) 1,2 , Bùi Lê Ngân (11214184) 1,2
Nguyễn Tú Quỳnh (11215109) 1,2 , Dương Phương Ánh Hồng (11212389) 1,2
1 report writer
2 information finder
Article info
Submission date: 29th
November 2022
Word count: 8743
Page count: 25
Keyword
Netflix
Reed Hastings
Motivation
Employee
Theory
Abstract
Netflix Inc. is a leading light in entertainment distribution with a strong
domestic presence. With its Cinematic algorithm, the company adds a
delicate touch by offering individualized packages that appeal to the
preferences of a specific customer. At an affordable price, Netflix has a lot
to offer, with tons of award-winning content alongside old classics and
popular TV shows.
In addition to having a great system, great marketing tactics, and great
customer service, Netflix's success is also influenced by its employees'
performance. As a result, managers try to determine the most vital aspects
of employee motivation.
This report aims to provide information in response to three
questions:
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?
2. Which theories seem relevant to customers’ motivations (to pick
certain titles), not just employees’ motivations (to perform their
tasks well)?
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?
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Table of Contents
I.
Introduction .................................................................................................................................... 3
1.
About Netflix ................................................................................................................................... 3
2.
About Reed Hastings ..................................................................................................................... 3
3.
About the case ................................................................................................................................. 3
II.
Discussion .................................................................................................................................... 4
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? ................... 4
2. Which theories seem relevant to customers’ motivations (to pick certain titles), not just
employees’ motivations (to perform their tasks well)? ................................................................... 13
a.
Expectancy theory ................................................................................................................... 13
b.
Goal-setting theory .................................................................................................................. 14
c.
Two-factor theory.................................................................................................................... 15
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? .................. 16
III.
Conclusion ................................................................................................................................. 22
APPENDIX: TABLE OF FIGURES ................................................................................................. 23
APPENDIX: REFERENCES ............................................................................................................. 23
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I.
Introduction
1. About Netflix
Reed Hastings and Marc Randolph started Netflix, Inc. in 1997 as a video-rental and mediastreaming firm. The headquarters of the corporation are in Los Gatos, California. It provides a
selection of films and television shows through license agreements, as well as original projects
dubbed Netflix Originals.
Netflixfhasf222fmillionfmembersfworldwidefasfoffSeptemberf2022, includingf73.3fmillion in
thefUnitedfStatesfandfCanada,f73.0fmillionfinfEurope,fthefMiddlefEast,fandfAfrica, about 39.6
millionfinfLatinfAmerica, andf34.8 million in Asia-Pacific. It is available globally, apart from
Mainland China, Syria, North Korea, and Russia. Netflix is a member of the Motion Picture
Association of America and a major distributor of independent films.
2. About Reed Hastings
Netflix CEO full name is Wilmot Reed Hastings. He was born on October 8, 1960. He first
launched Pure Software in 1991 and that was the foundation that until 1997, he and businessman
Marc Randolph together founded Netflix. The company provided fixed-price movie rentals to
customers in the United States using the latest technology at the time. He also did a great job in
establishing Netflix's own culture by meeting with employees and interviewing them about their
wishes. And the things he has done have made employees very satisfied with the company.
3. About the case
Netflix has impressive numbers: According to Netflix's financial report, which was announced on
October 18, the number of members in the third quarter of 2022 was 223.09 million accounts in
190 countries, with 125 million hours of television and film viewed per day.
Netflix's culture is distinct from that of other firms, which contributes to its success. Other firms'
personnel are knee-deep in an important project when another high-priority project is assigned
to them.
Netflix builds a unique business culture and a fantastic workplace by promoting quality over
quantity and putting people first, both the clients and the staff of the company. According to
research, humans are only productive for four hours out of an eight-hour day. Netflix evaluates
success based on high-level concepts rather than the number of hours done. If you work long
hours at Netflix doing mediocre work, you may be fired. Furthermore, by avoiding
micromanagement and investing in employees' development through innovative HR systems,
Netflix emphasizes the freedom and responsibility of its employees, which sets it apart from other
employers. Customers are the external aspect that has a significant impact on how Netflix
operates because the firm has consistently worked to promote the most marketplace by being
inspired by their insights and being eager to learn them properly. These principles govern Netflix's
workplace culture, which has helped the company become the world's largest subscriptionstreaming video provider, with over two hundred million paid members.
Under such privileges received from Netflix, the happiness index of employees working for Netflix
is always high. The following are figures compiled from seven hundred people working here.
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Figure 1: Netflix’s Happiness Trendline
The Happiness score describes employees' well-being in terms of topics such as workplace
positivity, opportunities for professional growth, and satisfaction with compensation and benefits.
And through the data table above, we can easily see that Netflix's Happiness score ranks in first
place when compared to competitors Meta, Google, Amazon, Apple, and Hulu. The company is
also in the Top 15 percent of other companies in San Francisco and the Top 5 percent of other
companies.
So, what factors contributed to the staff's positive attitude toward Netflix and its CEO? One of
them is Netflix's distinct culture, particularly how workers are driven.
II.
Discussion
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?
Employees frequently look to CEOs for their perspectives and skill sets, which are frequently
demonstrated through the employers' leadership style. The CEO is the company's key decisionmaker, which is why they have such a strong impact on the workforce in most areas, including
motivation.
There are many factors that directly and indirectly affect the motivation of employees to
contribute their efforts to the company. And Maslow's Hierarchy of Needs has fully outlined the
factors that affect employee motivation at work.
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Figure 2: Maslow's Hierarchy of Needs
The talents of the CEO
An indispensable thing when Netflix wants to improve employee motivation is that they have
selected talented managers and an outstanding CEO.
A chief executive officer (CEO) is the person with the highest authority in running a company.
The job of a CEO is to make important company decisions, manage the overall operations and
resources of the company. In addition, the CEO also acts as the contact point for other
competent people in the company. There are many studies that have shown that recruiting and
training good bosses has a great influence on employee performance.
Netflix’s culture and its environment
The shared ethos of a firm can be more accurately described as company culture. The way
individuals feel about the work they do, the values they uphold, the direction they see the
organization takes, and the steps they are doing to get there are all factors involved in culture.
These characteristics collectively define an organization's character, and the health of the working
environment, which impactfully affect one employee's motivation to prolong the position.
Therefore, CEOs must take care of the company's culture and run it responsibly. Yet Netflix has
managed to create a single system that most of their staff find satisfactory. For example, in terms
of Physiological needs, Netflix always pays their employees a good salary, as well as gives them
vacations to balance their personal and work lives. In addition, the factors of Self-esteem and Selfactualization are also put on top by Netflix when they encourage decision-making by employees,
and share information openly, broadly, and deliberately. All those cultures are geared towards a
single goal, which is to bring satisfaction and motivation to Netflix employees when working at
the company.
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They are required to labor after hours and on weekends. They are exhausted because they do not
have a work-life balance. But with no choice, they must continue. Otherwise, according to Netflix,
there is a better way to work. Allowing their ideal team, the freedom they deserve is all it takes.
Furthermore, they frequently offer employees unlimited vacation time without approval, no
typical performance assessments, and a significantly higher income.
Many Netflix workers are delighted with the company's culture of "freedom and responsibility,"
such as the company's zero-expense policy or their ability to sign contracts. "People have a lot of
leeway in making judgments." Every employee has a credit card and has control over how the
money is spent. Most businesses, even those with a few hundred employees, have an expenditure
policy, yet Netflix still does not have one and has not had to implement one. Of course, a few
people have abused it, but they have worked out who those people are and can count on one hand
how many times it has happened - it is not many. Netflix executives believe that when they
completely trust their staff and rely on them to make sound decisions, they will.
Moreover, Netflix always wants to be able to give employees the best working environment so that
they can perform their best and bring the most benefits to the company. They feel Netflix is a
close-knit family-like environment! They take care of their employees and communicate
effectively.
Challenging environment for excellence
The main factor that increases employee motivation at Netflix is that the company offers
challenges and high workloads to stimulate higher ability and innovation. In a recent interview
with McCord, the former Chief Talent Officer of Netflix, she revealed how Netflix motivated
employees. One of those is at Netflix, employee motivation is about "talent density and appealing
challenges." According to McCord, great colleagues and tough challenges to tackle are the
strongest draws to work and stay working. This is extremely true for the younger generations,
with 65% of GenZ responding that the people they work with would enable them to do their best
job. Furthermore, 75% of GenZ (and 70% of Millennials) want their work to provide purpose,
which may be done by tackling difficult challenges.
This method of employee motivation truly resonates with Millennials and Generation Z
employees since the Netflix culture that McCord developed lends itself to managing younger
people much more than the previous top-to-bottom style.
"Companies do not exist to create satisfied workers. Employees should be happy, but it's ideal for
both them and their company if the reason they're happy is that they're doing excellent work with
amazing colleagues." - McCord adds.
"Gourmet lunches, sleeping pods, and foosball tables do not make people happy at work. True and
lasting enjoyment at work comes from being fully involved in solving a problem with brilliant
people you know are equally deeply involved in solving it and knowing that the consumer likes
the product or service you all worked so hard to create." - McCord writes.
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Employees are the decision-makers
A common perspective of people about doing leadership: Leaders always must make decisions.
Two fundamental leadership responsibilities are making judgments and managing people who
make decisions beneath authority. A well-thought-out decision guiding the organization's
progress and systematizing the process of making these decisions can guarantee that the decisions
made are the best for the group. Thus, leaders frequently participate in all processes, taking care
of every detail, and reaching the most recent conclusions. However, at Netflix, it is a different
story, as employees are the main collaborators.
Making decisions is an essential part of every manager's daily tasks. The decisions that managers
make daily directly affect the success of their organization, whether it be shifting the department's
budget, assigning duties, or implementing a new strategy. However, that everyday process is
admitted being not always an easy path. Only 28% of executives responded to a McKinsey survey
praising the quality of their company's strategic decisions, while 60% said that poor judgments
happen about as often as excellent ones (Lovallo & Sibony, 2018). Thus, it is strongly advised that
the likelihood of an organization succeeding will enhance if the entire team participates in the
decision-making process.
Some benefits of team decision-making
Diversity enhances a group’s performance
Diversity increases our limitations; this much is beyond doubt. It is observed that studies using
large data sets adopted barriers that can only demonstrate that diversity is associated with better
performance, not that it contributes to improved performance. However, certain causal inferences
may be made based on further innovative research, which proves the results are unmistakable:
diversity is beneficial for organizations that value creativity and novel ideas. Numerous study
teams have evaluated how distinct groups of people - such as those with different racial
backgrounds or worldviews - perform compared to those who are more alike. The established
finding is that diverse groups perform better than those consisting entirely of similar people
(Phillips, 2014).
Increasing employee engagement
The respect and trust of the CEO for employees are demonstrated through the action of allowing
employees to participate in decision-making process, which is essential for increasing employee
engagement.
According to analytics and advisory firm Gallup, more qualified outcomes are noticeably
generated by highly engaged workers, who have the tendency to stay committed to their company
and endure burnout less. The survey document drew the evaluation on factors interpreting
employee engagement, such as having opportunities to develop and devote at work. However, for
employees to achieve that level, their work must become the motivation, which provide chances
to enhance their skills, and appear as an evident fact show their contribution to the success of the
organization (Harter, 2022).
Encouraging Collaboration and Communication
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The context of lacking engagement in working space has been reported in numerous reports yearby-year. A Queens University of Charlotte survey found that while 39% of employees express their
high belief that their firms’ collaboration is low, over 75% of employers have their perspective on
cooperation, as well as collaboration as "extremely vital”. A separate study found that 86% of
participants blamed poor collaboration or communication for workplace failures (Cite). Thus,
opportunities for employees should be provided by the manager, including the freedom to share
ideas, learn from each other, and strongly strive for the same objective by involving them in the
decision-making process. In turn, teamwork is fostered, and dismantling organizational silos is
aided. Nevertheless, overlapping efforts are identified within the company, which could spare
both resources and labor costs by preventing duplication in work (Communicating in The
Workplace: Queens University Online, 2022).
Overcoming consensus
To avoid conflict and promote the harmonization of the group’s atmosphere, managers are
frequently swayed the majority opinion or the consensus. Nonetheless, according to researchers,
the choice creates barriers to the organization’s performance.
The consensus tends to adopt a less critical evaluation of the issue and a less distinctive solution,
as is widely known. Additionally, hearing opposition from someone who differs from them causes
individuals to look more passionately than when it comes from someone who adopts a similar
viewpoint. Thus, this encourages individuals to be more creative and fosters themselves harder to
reach an agreement on ideas or to successfully persuade others.
Researchers advise setting up a process of pretending to be against ideas, which is often called
devil's democracy, and enabling individuals to uncover flaws in claims and approaches to
problems. Hence, the organization will conduct a more thorough critical examination, which
might produce more potential solutions (Phillips, 2014), (Landry, 2020).
The result of conducting the system
The findings support the Netflix culture, which encourages direct employee participation in
decision-making. According to a TED interview, Hastings mentioned that the leader's minimal
involvement is the secret to Netflix's success, which includes creating a workplace that is so wellregarded by its staff and is recognized as the finest company with the best employee experience.
Internally, materials are disseminated widely and consistently so that everyone can read,
comment on, assess, and add their ideas. Each leader's responsibility is to mentor, provide context,
offer advice and critique, and be extremely knowledgeable about the work being done by their
team. Leaders can examine the specifics of various projects instead of micromanaging minute
decisions. Therefore, more solid actions may be made by their teams because of improved context
being provided by this information. As a result, Innovation in performance is conducted
considerably and employees will feel more accountable, which will motivate them to work, to do
the best for the company.
Their experiment in radical openness appears to be successful thus far. Blind - a website that
surveys employees anonymously about their work experiences, conducted a study surveying
employees’ attitude toward their salaries and benefits which recognized Netflix as ranked first for
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employee satisfaction. Netflix's growth has been extreme, with millions of subscribers worldwide,
which partially demonstrates how effective the company's system is.
The reward policies for employees
The core philosophy of Netflix is that “people over process,” which demonstrates the purpose of
benefits at Netflix is to support our employees' needs during critical times by providing treatments
that boost productivity while focusing on inclusiveness, allowing employees to concentrate on
entertaining the world.
Figure 3: The reward policies for employees
Netflix's compensation practices are comparable to the Total Rewards Model developed by World
at Work, a global association for HR professionals. The model combined with factors related to
employee motivation, including compensation, well-being, benefits, development, and
recognition. The whole condition of an employee, including their emotional, physical, and
environmental well-being, is referred to as their well-being. According to World at Work, benefits
are compensations focusing on provide employees the access to work privileges such as retirement,
vacation time and healthcare. In terms of development, it is concerned with the chances that
employees must enhance their careers and develop their skills. In contrast, recognition is a formal
or informal way of appreciating and validating an employee's efforts on behalf of the firm and
their job.
Why are perks and compensation important? The most crucial component of a corporation is its
human resources. The higher salaries one company offers, the larger the talented workforce it can
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attract. To a significant extent, a company’s openness to wages and benefits enhances its tendency
to gain and retain a healthy and motivated workforce.
The best talent in the field can be attracted, and enthusiastic employees may be kept, thanks to a
competitive pay and benefits package. Any resolute, intelligent people are always aware of their
personal values and would strive to perform to earn the best rewards. The motivation for a worker
to leave their company is their belief of being underpaid or a rival company is proposing better
offers in benefits and salaries. To recruit and attract the best personnel prolong. HR professionals
should be noticing the difference between their compensation packages and those of their rivals.
When employees perceive themselves are paid fairly, they are more motivated to appear at work.
Their levels of job satisfaction rise, and their morale stays strong. Strongly morale employees tend
to who up at work on a daily basis and perform to their best capabilities. Thus, highly engaged
employees are also less swayed by new chances, which prolongs the time they stay at their
employer.
Netflix concentrates on three areas for their employees: personal life, finances, and convenience
related. Supporting parental lives and health care are the key priorities in personal life, which
contribute to the enhancement of the work-life balance feature. In terms of financing, Netflix pays
its employees at the top of their respective markets to assist the company recruit and keeping
great coworkers. The estimated median compensation at Netflix is $142,504, or $68 per hour,
while the average estimated annual salary, including base pay and bonuses, is $145,828, or $70
per hour. According to the report of Netflix salaries, 84% of employees feel that they are paid fairly,
and 88% of employees express satisfaction with their rewards (Netflix Salaries, 2022). Besides
personal life and financing, Netflix provides opportunities to their employees to gain a certain
level of work convenience and flexibility, such as relocation benefits.
Figure 4: Statistics of Netflix employees' satisfaction score towards their salaries and benefits
Most leadership interpretations drawn by Hastings are his impressive mindset in conducting HR
strategies and the treatment of employees, which prove the ownership of two main requirements:
skills and perspectives. Hasting's leadership perspective is employee-centric, emphasizing the
freedom, self-development, and motivation of employees, which shows how much he cares about
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them. Additionally, the implemented remuneration demonstrates how much the CEO values his
or her team members' ability to work hard and contribute while maintaining a healthy lifestyle.
Hastings' methods for running Netflix have produced a variety of cultures within the workplace,
which has a significant impact on employees’ motivation and how they behave and perform.
Do you think Netflix employees grow to be motivated by the same things that engage
Hastings?
Regardless of the motivation, every member of the company, including the CEO and employees,
is aiming for the company's success and personal success. Personal success mostly focuses on
"self," such as self-development or self-achieving, while company success is all about enabling the
business to surpass the competition or accomplish a degree of achievement in the marketplace.
In the end, both motivations are objective to fundamentally create personal satisfaction and
working environment satisfaction, which all the involved desire.
Company success
The success of the business is what drives the CEO the most. The CEO is frequently driven by the
company's overall performance. He is either condemned or praised for the company's
performance as he serves as the company spokesperson and the chief decision-maker.
Responsible managers also understand that their actions have an impact on other individuals, not
just restricted to the nature of work, but also their motivation. These encourage them to exercise
the best judgment feasible for the organization to operate well. The CEO may find inspiration in
the acclaim he receives when the firm does well, or simply in knowing that his actions lead to the
company's success.
Since success offers chances and rewards, it is crucial to consider how employees value the firm
success. It might say the recognition of the firm's success is the recognition of employees' devotion.
When employees work, they constantly want to bring the company's successes to everyone's
attention so that everyone may appreciate their ability. According to a data report uploaded by
Quantum workplace, companies with recognition programs have 28.6% lower levels of irritation
than those without them (Wickham, 2022). Hence, it is concluded that outcomes and recognition
are fundamentally emphasized in ensuring the workforce’s motivation. This is known as
achievement motivation, which is defined as motivation that involves conducting tasks to
accomplish goals. If you are motivated by achievement, you care more about committing to a
vision and achieving a goal than winning prizes.
Thus, company success does matter to both employers and employees, since it fosters the
empowerment, and motivation that leads to a greater extent of achievement, to reach a higher
level of workplace quality and satisfaction.
What determines a company's success? Customers' satisfaction. Yes, Hastings' clients are his top
priority and motivation. Hence, Netflix is constantly working to better understand the demands
of its customers by utilizing the vast amount of data available. In addition, to improve the data
exploitation process, the company also runs rewarding and development programs that can
enrich and encourage staff’s abilities. Customer satisfaction is an incentive that extends beyond
employers to include employees. A former Netflix employee once shared with Inc. Paper that their
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true and lasting enjoyment at work stems from the appreciation and satisfaction of customers
towards the product that they have all strived so hard to promote. Customer-centricity has become
a common driving force and a working culture at Netflix for every individual, encouraging both
employees and employers to work hard, use their creativity, and operate their products.
The investment in customers’ experience yields a particular result. Netflix placed in the top two
of viewers' most pleasant streaming apps, and the percentage of respondents said they would
maintain it if they could only have one streaming service is 41%, according to a Business Insider
analysis (Clark, 2021).
Personal success
Personal success is when a person achieves their goal or purpose, and those who are successful
have realized their greatest aspirations in daily lives as the role in personal lives and
professionalism. There is no one method for determining someone's success, although many
people associate it with wealth or notoriety. What matters is that someone is actively pursuing
their definition of success. Nevertheless, regardless of the viewpoint an individual takes, the
definition of personal success is frequently cultivated in their minds with the main idea: Selfactualization, the highest level of satisfaction in Maslow's Hierarchy of Needs Model.
It is said that a self-actualized person represents an individual taking ownership of the most
admirable characteristics, including a great personality, talent, and a sense of courage for the
challenge. Undoubtedly, Hastings has always set ambitious standards for himself as a measure of
his success and job satisfaction, but he also cares about the success of his staff members personally.
Hastings and his staff are motivated by the same motivation, which is self-actualization, because
of the CEO's efforts to advocate for cultures and policies among employees that place a strong
emphasis on motivating workers and himself to develop their excellence. The treatment is wellperceived by the employees, supported, and spread out among the company’s community.
Nevertheless, there are factors explaining why both employers and employees are so driven by
personal success. Primarily, they will receive recognition from other people. Employee
recognition is encompassed by businesses in order to demonstrate gratitude towards their
employees' accomplishments. It can take numerous forms and may or may not be monetary.
Companies also honor employees for things like accomplishments, demonstrating desirable
behaviors, going beyond expectations, and achieving milestones like tenure.
Secondly, what determines the mindset of employees and CEOs about success is that they receive
opportunities from the company. When individuals work at a big corporation such as Netflix, they
are provided with a larger extent of career prospects. For starters, they will have access to a
broader network, which will pay off eventually. Their job path may also become apparent. Most
corporations promote a set of requirements and standards for evaluating, rewarding, and
promoting employees. As large corporations tend to have more turnover, it is a benefit for their
employees to perceive career enhancement.
The third factor that people often think of as their success is the fact that they expand more
relationships within the company. When they are recognized by the company as well as receive
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many benefits and incentives from the company, they also could interact with more people and
work with better people. It is also a form of achievement in one's work.
2. Which theories seem relevant to customers’ motivations (to pick
certain titles), not just employees’ motivations (to perform their
tasks well)?
We can see from the Netflix case that Reed Hastings has used various motivating principles to
push not only employees but also customers to perform well. Among the motivational theories,
we have analyzed the following ones:
a. Expectancy theory
“According to expectation theory, the strength of our tendency to act in a certain way is
determined by the expectation that the act will be followed by a specific outcome and the
attractiveness of that outcome to the individual.” (Expectancy Theory of Motivation, 2018)
Although this theory appears to be highly intricate, it is easy to understand. The willingness to
work at any given time is determined by the precise goals and one's judgment of the relative value
of the action as a path to achieve these objectives.
Based on the following diagram, the Expectancy theory focuses on three main relationships:
Figure 5: Expectancy theory's relationship diagram
•
•
•
Effort-performance relationship
Performance-rewards relationship
Rewards-personal goals relationship
Customers' motivation is based on their goals and what they could achieve after taking certain
actions, following the theory. Expectancy is fundamentally about creating a clear relationship
between effort and performance.
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So, what exactly is customer effort? It should be understood by any attempts that customers make
in the process of interacting with the brand, such as trying to register their membership or trying
to find a title that they desire. Once the customers have goals in mind, the rest of the brand's
mission is to make the customer's relationship with the firm straightforward. For example, when
a customer decides to watch movies on Phimmoi.net, they will feel like the procedure from finding
to watching the movie is time-consuming, and that the website is occasionally interrupting its
process with multiple advertisements that are not suitable for them.
Netflix, on the other hand, is attempting to avoid customer demotivation by using data to filter
out titles that match the tastes of specific audiences, along with unique features such as shuffle,
continuing from previous attempts, no advertising, and so on. Individuals could experience
demotivation when being continuously offered multiple titles that do not match their preferences.
Therefore, Netflix wants to motivate customers by promoting titles, movies, or series based on
their interests or watching habits. The Netflix app prioritizes its customers' experiences by letting
them choose the best option that fits them the best among the selected ones that have been filtered
based on their data. When compared to Phimmoi.net, Netflix's interaction process saves
customers a lot of time by providing relevant titles and avoiding things that bother them, such as
irrelevant advertisements, inappropriate titles, and so on.
When it comes to employee motivation, according to expectancy theory, it needs to be linked to
job performance and outcomes. Their motivation will be visible enough when they see the impact
of the things they do, and the purpose of their tasks. More specifically, the fact that they are
directly involved in creating an innovative movie-watching application that has certain unique
selling points (USPs) and saves customers time and effort will boost employees' motivation like
never before. That is why "independent decision-making by employees" is ranked as Netflix's top
core value by this 24-year-old startup, which generated $29.69 billion in revenue in 2021 (Netflix
Revenue 2010-2022: NFLX, 2022). That core value of Netflix links tightly to innovation. They
encourage the effort to perform by allocating the success of ideas to employees rather than
leadership, demonstrating to employees that they are capable of innovating. Netflix Co-founder
and CEO, Reed Hastings, once said on stage in Vancouver: "I find out about big decisions that
have been made all the time, and I had never even heard about them—which is great! And mostly
they go well." Therefore, Netflix invests more in the long-term sustainability of the company,
always looking to the future and new initiatives, with a "people-oriented" strategy. That is also
Netflix's core philosophy, "people over process".
b. Goal-setting theory
This theory affirms that: "specific goals increase performance; those difficult goals, when accepted,
result in higher performance than do easy goals; and that feedback leads to higher performance
than does non-feedback". (Sinha, 2015)
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Netflix's goal here is to personalize users' home screens to their preferences. As a result, customers
will not have to waste time while still getting to watch their desired titles. To do that, Reed and his
employees applied this theory by providing customers with the information they needed before
they even realized it. For example, Netflix focuses on producing filtered titles that they think will
fit to save users’ time. Netflix's analysts used information collected from customer behavior,
habits, preferences, or even analysis by geography and country to keep track of customer status
and assess the suitability of the titles available. By doing this, they promote customer selfdetermination and the idea of "owning" their experience by using the Netflix application.
To be more specific, Netflix assesses its customers’ application habits by analyzing these behaviors:
• The action of pausing, fast forward, or rewinding
• The device customers use (customers use the TV to watch shows and the tablet to watch
short films, for example)
• Types of movies customers look for
• When customers leave titles (and then return them)
• The time and date customers watch
• Customers’ ratings for the titles
With the data collected from customer behaviors and preferences, Netflix makes sure to know as
much as possible to offer the best services for their customers.
c. Two-factor theory
This theory describes the relationship between intrinsic (motivational) factors (achievement,
advancement, responsibility, recognition) with job satisfaction and extrinsic (hygiene) factors
(pay, supervision, company policies, and work conditions) with job dissatisfaction.
Intrinsic factors are the ones that encourage employees to perform better with high productivity;
otherwise, extrinsic factors do not motivate employees to work harder; however, if these do not
exist, it will create job dissatisfaction.
The company needs to solve both problems: boosting the motivational factors as well as
maintaining the hygiene factors. Because when we solve the factors that caused dissatisfaction,
we do not make employees feel satisfied. Otherwise, when we examine the factors causing
employees’ satisfaction, states of dissatisfaction still probably occur (Thuyết hai nhân tố của
Herzberg, 2021). In the case of Netflix, Reed decided to implement this theory in two steps:
eliminate the employees' and customers’ satisfaction and boost their motivation to work.
Applying this theory to customer motivation, Netflix maintains the hygiene factors that will avoid
customer dissatisfaction, such as ad-free movie watching, superb picture and sound quality, and
a sophisticated, attractive interface. All those experiences are included in Netflix, just one moviewatching application. Users can share accounts with numerous other users and access a vast
movie library for affordable payment. These factors aid Netflix in keeping their customers
engaged because they do not feel that they are being prevented from trying to pick a certain title.
In terms of motivational factors, Netflix drives customer motivation by staying up to date to match
its customer base. They hire mathematicians, designers, and programmers to analyze customer
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habits and geography to create a "better and more modern experience" for their content. However,
they still let customers make their free choices by using "Favorites", or "Shuffle" mode.
Netflix attempts to reduce employee dissatisfaction by paying "personal market top" salaries
(Sohal, 2022). Netflix employees do not need to rely 100% on their bonuses and raise because the
firm always makes sure that their workers get the best within their field. Along with the
competitive salaries, the "Netflix Prize," a 1-million-dollar windfall, would go to the person or
team who most improved the company’s "prediction engine," which is also a Herzberg hygiene
factor that Reed is applying to maintain its employee engagement.
On the other hand, Netflix is also addressing the motivational factors, not only the hygiene ones.
They provide employees with freedom; they have the total right to propose their initiatives and
raise their voices, as the leadership will not be much involved in making the decisions.
Not only that, but Netflix’s leadership bodies do also not usually need to micromanage or microcheck because they want their employees to be the ones who "own" their work, not them. By doing
that, employees also gradually increase their responsibility for completing their tasks. Reed even
created a Netflix feedback culture called "360-degree feedback" because he found that honest
feedback works better than formal ones. Conducting "360-degree feedback" means that you will
receive honest feedback from your co-workers, supervisors, leaders, or any colleagues who want
to give it. It was vastly different from the formal feedback that usually makes you stressed out by
receiving criticism from the upper positions, and you just feel like you must change yourself to
please your bosses. That is not true for Netflix. Working here, you can receive feedback that
consists of two parts: “what went well” (what you should keep doing) “and even better if” (What
you should stop doing). And it is simply a starting point for discussion among colleagues; you
could even practice your critical thinking in this space as well.
At first, they tried to make "360-degree feedback" anonymous, but as time passed, Reed found
that conducting it face-to-face and crediting them would be much more beneficial for both the
feedback senders and receivers (Shah, 2021). Those methods are all based on the Netflix working
culture of "Open and honest".
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?
a. Herzberg Theory
In the case description, Hasting offered the Netflix Prize, a $1 million award given to the
individual or group that can revolutionize the organization's "prediction engine". The prize is a
application of extrinsic incentive because the prize is appearing as a financial reward. To assess
Hastings' work, we must deliberate the theory of intrinsic and extrinsic motivation. Herzberg's
Theory will be mentioned to better understand the two motivators, which one will encourage
employees to perform tasks with high requirements and performance.
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According to the Two-Factor Theory (also recognized as Frederick Herzberg's MotivationHygiene Theory or intrinsic vs. extrinsic motivation), specific workplace factors can create job
satisfaction while others trigger job dissatisfaction. Herzberg (1959) added that while intrinsic
and extrinsic factors both influence motivation, they appear to work independently of one another.
Extrinsic motivation
Extrinsic motivation refers to behavior that is prompted by outside factors like a reward or the
desire to avoid undesirable outcomes. Extrinsic motivational factors can be both tangible and
intangible. Any monetary reward could count as a tangible factor. Examples of imperceptible
external motivations include praise and fame.
Extrinsic motivators represent more tangible, basic needs. In other words, extrinsic motivators
are the kinds of needs found in the lower level of Maslow's Hierarchy of Needs, or the "existing"
category of needs in the ERG theory. Extrinsic motivators include things like status, job stability,
pay, and rewards.
Figure 6: Maslow's Hierarchy of Needs & ERG theory
Four types of extrinsic motivation:
• External regulation - The desire to meet an external demand or to obtain external
incentives.
• Introjected regulation – The pressure from within; avoiding guilt or ego-boosting.
• Identification - Valuing an outcome and believing the activity is personally important.
• Integrated regulation - The desire to be self-aware is guiding behaviors.
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Extrinsic motivation is important because it can be used to effectively modify behavior. The
prospect of receiving external rewards or consequences can often induce people to engage in
advantageous behaviors. Extrinsic rewards can improve people's employability skills, productivity,
creativity, and overall performance, and extrinsic rewards can help people develop professionally.
For instance, Netflix has a Stock Option Program that allows each employee to choose how much
of their compensation is allocated to salary or stock alternatives. It is entirely voluntary, and
Netflix has no say over whether a person contributes to this system.
Intrinsic motivation
Intrinsic motivation refers to being motivated by internal factors such as activity enjoyment.
When someone is intrinsically motivated, their psychological needs are met directly through the
target activity rather than by satisfying drives or some other future satisfaction based on distinct
results, like rewards.
Intrinsic motivators symbolize less tangible and more emotional needs. In other words, intrinsic
motivators are the kinds of needs recognized in the higher levels of Maslow's Hierarchy of Needs,
or the "relatedness" and "growth" categories of needs in the ERG theory and Recognition, complex
task, meaningful work, achievement, and opportunities for personal development are examples
of intrinsic motivators.
Three types of intrinsic motivation:
•
•
•
Autonomy - The need to oversee our own lives.
Mastery - The need to continuously develop at something crucial.
Purpose - The need to do things for something bigger than us.
Intrinsic motivation is essential for regaining self-efficacy, adding quality to one's thoughts and
actions, which gives life meaning. Happiness and satisfaction are enhanced by intrinsic
motivation. Internal motivation, in this way, is critical to a person's overall sense of motivation.
It promotes cohesive interaction, increased effort, and long-term performance.
People apply intrinsic motivation to their early-stage businesses. For instance, learning and
games are connected. Games can be excellent teaching tools. The fact that games (even
educational ones) bring together the pleasure of discovery with the innate desire to improve one's
proficiency is one of the reasons they are so well-liked.
Unsurprisingly, educational software and services like Coursera, Khan Academy, and Lumosity
are common (Watson, 2022). It effective to learn through games. Duolingo, a free languagelearning app, is a superb example. Duolingo applies progress visualization, also recognized as skill
trees, to show users’ progress after each lesson to keep them interested. As they complete sessions,
users earn experience points, Furthermore, when users make a mistake in a course module, they
consume one of their four "lives" on Duolingo. If they lose all four, they must begin again.
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Relationship between extrinsic and intrinsic motivation
The two-factor theory differs from the others in that it considers employee expectations. Herzberg
asserts that the relationship between intrinsic and extrinsic motivators is asymmetrical. In other
words, when intrinsic stimuli are present, they would boost motivation, whereas extrinsic stimuli
often lead to dissatisfaction when absent. This is because of employee expectations.
Comparison
Motivation
Goals
Extrinsic
People engage in the activity to
have an external benefit in
return.
Goals are outcome-focused but fail to meet
your basic psychological needs: External
rewards like money, recognition, power, or
avoiding punishments…
Intrinsic
People participate in the action
because it is internally pleasing
(exciting,
pleasurable,
and
fulfilling).
Goals fulfills your basic psychological
needs for autonomy, competence, and
relatedness.
b. Complex work - intrinsic or extrinsic motivators prove more
effective?
Complex tasks are demanding assignments in which individuals must organize diverse types of
cognitive processing. Because there are typically multiple objectives to be achieved at once, it is
frequently impossible to respond to a situation in an automated or standard manner,
necessitating some predicting and comparing to determine the best course of action. Complex
tasks are quality-driven.
Complex jobs or tasks include those performed by white-collar professionals like business
management, attorneys, accountants, jobs related to economics, consultants, and computer
programmers.
Real case at Netflix
The work of engineers typically requires a good deal of complex technical skills, and these skills
are in high demand as industries become more dependent on technology, which is why engineers
are paid well. In this case, Netflix engineers analyze data on customer viewing habits.
According to a 2009 McKinsey survey, praise, leadership attention, and opportunities to lead
projects were cited as the most motivating types of rewards by employees, who rated non-financial
incentives as more desirable than financial ones. Based on the following explanation of the
effectiveness of both extrinsic and intrinsic motivators in encouraging employees to complete
complex work, it is therefore assumed that intrinsic is the more effective motivator.
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Figure 7: June 2009: McKinsey Global Survey Results
Extrinsic motivation’s effectiveness in terms of encouraging workers to get complex
work done
According to social science research, external rewards are not the best motivators for white-collar
workers. Employees naturally want their basic needs, like food and shelter, to be met, but after
those are, pay raises, bonuses, and other financial incentives don't always promote long-term
motivation.
However, most companies still rely on extrinsic motivation to boost employees to work hard.
Studies have shown that traditional extrinsic rewards are effective at encouraging employees to
complete monotonous tasks. However, when used to encourage employees to complete job
functions that call for innovation, these rewards can undermine intrinsic motivation.
However, for businesses to grow sustainably, it may be necessary to recognize and address
intrinsic motivation.
Intrinsic motivation’s effectiveness in terms of encouraging workers to get complex
work done
For complex work like engineers analyzing data for Netflix, it is better for the programmers to
have intrinsic motivation.
The reward for actions driven by intrinsic motivation is the action itself. People have psychological
needs that must be met for them to develop and flourish, just like their biological needs. These
include the demands for relatedness, competence, and autonomy. Intrinsic motivation involves
seeking out and participating in activities that we find challenging, interesting, and internally
rewarding without the expectation of any external reward. It also involves satiating these
underlying psychological needs.
According to research, intrinsic motivation helps to create higher performance in more complex
tasks. Employees are more likely to fully participate in a task if it is interesting, enjoyable, and
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personally meaningful to them, and people have a greater focus and commitment without the
need for extrinsic motivators.
Comparison
A study of 3 and 5-year-olds given the task of drawing a picture produced one of the most wellknown comparisons of intrinsic and extrinsic motivation. One group received extrinsic benefits
while the other did not. When the same children were given another chance to draw a picture,
those who had received extrinsic rewards were less motivated and were less interested in
sketching a picture, especially since there was no reward.
For difficult tasks given at work, rewards or punishments can work as though it only provides
short-term effects. Employees who are motivated to work from extrinsic motivation will not want
to take on any additional responsibility unless it brings them money, fame, or benefit. Meanwhile,
fear of punishment will cause employees to quickly leave the company, causing their engagement
levels to tend to be very low.
In contrast to it, intrinsic motivation occurs when we act without any obvious external reward.
We simply enjoy an activity or see it as an opportunity to discover, learn, and realize our potential.
It can be said that both motivations have certain effects, but there are many studies showings that
company leaders should use intrinsic motivation to promote more than extrinsic motivation. as
much as possible to make the quality of the work output be better. Also, extrinsic reinforcement
will be seen by many as forcing them to work so we need to limit it so as not to put too much
pressure on employees.
Why did Hastings institute extrinsic motivation over intrinsic motivation?
For sure, Reed Hastings is talented. aware of how important intrinsic motivators are and aware
that if the work becomes dependent on the prize, then when the prize disappears, so does the
commitment.
Reed Hastings initially embraced the Netflix workplace as a learning environment for all his
employees. He started to nurture intrinsic motivators in each of his white-collar workers first.
Then bring in the $1 million prize as an additional incentive for them to excel in their demanding
work.
After all, it is strongly believed that extrinsic motivation can lead to compliance, but intrinsic
motivation is what keeps employees engaged in the company. Workers today require the sense
that they are contributing to something larger than themselves. They seek self-control and
autonomy. They aspire to be the best at what they do.
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III. Conclusion
Through the first question, we can easily realize that there are a few factors that affect the
motivation of Netflix employees when working in the company. The first thing, the talent and
direction of a good CEO will always make employees keep the fire at work. And hiring and training
good bosses will be a huge boon to the company's success. The second factor that affects employee
motivation is the Netflix culture and work environment that management has set up for them.
Netflix has based on Maslow's theory to make corporate culture policies that make employees'
happiness score higher than other companies. The third factor that creates great motivation for
employees is "Employees are the ones who make decisions", that makes employees feel that they
are also an important part so they will be more responsible for their work. There are many benefits
to giving employees the right to make decisions, which we also covered in the previous article. A
challenging working environment is the fourth and final factor that makes employees more
motivated. Because when working in an environment of many good people, full of efforts, they
will try extremely hard to be able to stand alongside them. This method of motivating employees
really resonates with Millennials and GenZ employees.
What engages Reed Hastings is what motivates his employees. Throughout the report, we have
found the main motivations that are core to all participants in the company, which are company
success and personal success. In terms of company success, we focus mostly on understanding
the engagement of Hastings with customer-centricity, then how he influences the company's
incentive to devote to it. Applying Maslow's Hierarchy of Needs Model, we understand the highest
level of one personal satisfaction is self-actualization. Nonetheless, we explain the reason why
employers and employees are so driven by personal success.
Using multiple motivation theories, Reed Hastings inspires customers and increases product
competitiveness, collecting, and combining data to create a "better and more modern experience"
for customers. For Hastings, customer experience is always important, so he constantly applies
practical motivational theories, such as Expectancy Theory, Goal-setting theory, and Two-factor
theory and each one motivates customers in a particular way. Not only that, but Reed also focuses
on creating an environment where employees have the proactiveness and freedom to "own" their
work, thereby increasing their work performance and output quality. Having said that, Reed has
succeeded in applying motivational theories, along with creating unique initiatives for the
company. All contribute to the shape of a smart and flexible working culture of Netflix, a 24-yearold movie-streaming start-up.
We know complex tasks are cognitively demanding tasks in which individuals must organize
several types of cognitive processing, and they necessitate an investment of time and effort. After
analyzing this case, we can conclude that both intrinsic and extrinsic motivation can be effective
for complex tasks. However, it is strongly believed that extrinsic motivation can lead to
compliance, but intrinsic motivation is what keeps employees engaged in the company.
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APPENDIX: TABLE OF FIGURES
Figure 1: Netflix’s Happiness Trendline ........................................................................................................ 4
Figure 2: Maslow's Hierarchy of Needs ........................................................................................................ 5
Figure 3: The reward policies for employees ................................................................................................ 9
Figure 4: Statistics of Netflix employees' satisfaction score towards their salaries and benefits .............. 10
Figure 5: Expectancy theory's relationship diagram ................................................................................... 13
Figure 6: Maslow's Hierarchy of Needs & ERG theory ................................................................................ 17
Figure 7: June 2009: McKinsey Global Survey Results ................................................................................ 20
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