The Netflix Approach to Compensation. Case Study Analysis from a Essay

The Netflix Approach to Compensation. Case Study Analysis from a managing people for competitive advantage perspective - Essay Example The Netflix employed compensation programs that enable them to retain employees. The founder of the organization, Reed Hastings discovered that compensation program is one of the significant management practices that will enable them to retain their employees. Thus, he introduced compensation programs of paying workers cash salaries. This was a significant idea behind the successful organizational performance. Thus, Hastings introduced varied compensation programs with different main components as indicated below; The Netflix compensation policy allowed employees to make their own decisions on compensation system in every year. This system allowed employees to allocate and divide their basic salary with the total compensation as they wished. For instance, an employee earning 200 000 dollars was allowed to divide the salary; thus taking some cash amount and leaving others as a remaining stock. This compensation policy offered employees opportunities for altering their allocation for every year. Therefore, by the year 2009, about 500 employees have already joined the program and non- exempt employees working in the shipping centers were too paid in cash basis per hourly manner. The company makes option grants in a monthly basis with one-twelfth of the total annual allocation, which are granted and priced in the first day of every month. For instance, an employee who earns 24,000 dollars receives a total cash of 2000 dollars in the first day of every month. The company employs the formula of calculating the monthly allocation. This is through dividing the monthly allocation with the stock price. This is through multiplying by 25 percent to get the total number of shares. The aim of using this formula is to offer employees a generous pricing of 50% discount. This will enable the expected value of employees to increase by a certain amount of value. For instance, an