Control at Netflix

Managers do not just control manufacturing processes. They are also responsible for controlling employee behavior. One function of behavioral control is to motivate employees to put forth the effort needed to achieve the organization’s goals. Another function of behavioral control is to focus employees on what is best for the organization in the future and to encourage them to identify opportunities to increase organizational value. There are many methods of behavioral control including management by objectives (MBO), direct supervision, bureaucratic control, and clan control.

Read the case below and answer the questions that follow.

Netflix, a company that offers on-demand Internet streaming of movies, TV shows, and original content, as well as DVDs by mail, uses little bureaucratic control within its organizational framework. There are no traditional performance appraisals, no formal tracking of vacation time, and no performance-based bonuses. On its web page, the company describes itself this way: “At Netflix, everyone gets the freedom to do their best work and the responsibility to achieve excellence. We value candor, transparency, and courage. We embrace context and avoid control, seeking insight and understanding to make sound decisions.”

Much of this lack of bureaucratic control is captured in a presentation called Freedom & Responsibility Culture available on the Netflix website, which has been viewed more than 11 million times. Sheryl Sandberg, the chief operating officer at Facebook, is quoted as saying the slideshow “may well be the most important document ever to come out of [Silicon] Valley.” The presentation’s name comes from the Netflix philosophy of allowing employees to make decisions rather than having a strong command and control environment.

Patty McCord, the former chief talent officer at Netflix, outlined five ideas that defined Netflix’s philosophy in a 2014 Harvard Business Review article.

1. “Hire, Reward, and Tolerate Only Fully Formed Adults”: Netflix asks employees to rely on their own judgment rather than corporate policies when making decisions. Thus, it is important that Netflix hire people who understand how their actions affect others and who put the best interests of the company first.

2. “Tell the Truth about Performance”: The company did away with performance appraisals. It felt they were too infrequent and ritualistic and did not improve performance. Instead, they encourage employees and managers to talk frequently. They also hold informal 360-degree reviews by asking employees to critique each other.

3. “Managers Own the Job of Creating Great Teams”: Netflix focuses its energies on making sure the right people are doing the right job for their skill set. The company places great importance on team building.

4. “Leaders Own the Job of Creating the Company Culture”: McCord makes three points about this: (1) There should not be a difference between how culture and values are described and how they are carried out in the company. (2) Employees need to understand how the business works so they can support it. (3) There should be awareness that within the culture there will be subcultures to manage.

5. “Good Talent Managers Think Like Businesspeople and Innovators First, and Like HR People Last”: She thinks HR is better served to innovate and think of themselves like businesspeople, rather than focus on implementing morale improvement plans that don’t usually work.

Netflix was founded in 1997, launched its subscription service in 1999, and introduced streaming in 2007. It went from 857,000 members in 2002 to more than 81 million members in over 190 countries in 2016. Netflix has been quite successful despite having little bureaucratic control.

QUESTION: UPS has more than 300 rules, regulations, and standard operating procedures that guide the behavior of its drivers. They use ________ control.

A. indirect supervisory

B. bureaucratic

C. clan

D. cultural

E. regulatory