Homework Question - Genius Papers

In Module One you developed the ZOPA (zone of possible agreement) and BATNA (best alternative for a negotiated agreement) for Sharon Slade, Netflix’s chief human resources officer, for use in the upcoming negotiations.

In this assignment, put yourself in the shoes of Alice Jones, the executive facing possible severance in our case study.

Develop a ZOPA and BATNA position for Alice, based on your review of her biography and the background information in the case study (located in the Final Project Guidelines and Rubric document in the Assignment Guidelines and Rubrics section of the course). As you develop your response, consider the following:

If Alice were fired, what would be unacceptable options for her in a severance agreement?
What options could Alice offer that could move severance negotiations toward her goal of keeping her position at Netflix?

Then, determine Alice Jones’ best alternative to a negotiated agreement (BATNA), i.e., her “Plan B.” It is important to do this before entering into negotiations to ensure that she does not agree to unfavorable conditions. Questions that can help formulate Alice Jones’ BATNA include:

What do you believe are the interests of the other party, i.e., Sharon Slade and Netflix?
What actions and alternatives are you prepared to consider if you (Alice Jones) cannot reach a negotiated agreement within your Zone of Possible Agreement?
What creative alternatives can be considered based on the interests of the other party (Sharon Slade & Netflix)?
What trade-offs on the standard ZOPA exist that could result in a creative, successful agreement?

Culture

prior version New version is at: jobs.netflix.com/culture 1
2
focuses on helping us achieve excellence 3
Values are what we Value High Performance Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 4
value statements displayed in the lobby, such as: 5 Integrity Communication Respect Excellence
jail, and which went bankrupt from fraud, had these values displayed in their lobby: Integrity Communication Respect Excellence 6 (These values were not, however, what was really valued at Enron)
opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go 7
behaviors and skills that are valued in fellow employees 8
the following nine behaviors and skills in our colleagues meaning we hire and promote people who demonstrate these nine 9
technical, business, and creative) despite ambiguity You identify root causes, and get beyond treating symptoms You think strategically, and can articulate what you are, and are not, trying to do You smartly separate what must be done well now, and what can be improved later 10 Judgment
instead of reacting fast, so you can better understand You are concise and articulate in speech and writing You treat people with respect independent of their status or disagreement with you You maintain calm poise in stressful situations
amounts of important work You demonstrate consistently strong performance so colleagues can rely upon you You focus on great results rather than on process You exhibit bias-to-action, and avoid analysis-paralysis
and eagerly You seek to understand our strategy, market, customers, and suppliers You are broadly knowledgeable about business, technology and entertainment You contribute effectively outside of your specialty
to discover practical solutions to hard problems You challenge prevailing assumptions when warranted, and suggest better approaches You create new ideas that prove useful You keep us nimble by minimizing complexity and finding time to simplify
you think even if it is controversial You make tough decisions without agonizing You take smart risks You question actions inconsistent with our values
with your thirst for excellence You care intensely about Netflixs success You celebrate wins You are tenacious
for candor and directness You are non-political when you disagree with others You only say things about fellow employees you will say to their face You are quick to admit mistakes
is best for Netflix, rather than best for yourself or your group You are ego-less when searching for the best ideas You make time to help colleagues You share information openly and proactively
Values are what we Value High Performance Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 19
Netflix is someone you respect and learn from 20
Great workplace is not espresso, lush benefits, sushi lunches, grand parties, or nice offices We do some of these things, but only if they are efficient at attracting and retaining stunning colleagues 21
to hire well 22
adequate performance gets a generous severance package 23
family Were like a pro sports team, not a kids recreational team Netflix leaders hire, develop and cut smartly, so we have stars in every position 24
Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at Netflix? 25
Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at Netflix? 26 The other people should get a generous severance now, so we can open a slot to try to find a star for that role
no one in your group should be materially surprised of your views 27
just a leaders responsibility, and you should periodically ask your manager: If I told you I were leaving, how hard would you work to change my mind? 28
for Ensuring We Live our Values You question actions inconsistent with our values is part of the Courage value Akin to the honor code pledge: I will not lie, nor cheat, nor steal, nor tolerate those who do 29
Good, but Imperfect Athletic teams have a fixed number of positions, so team members are always competing with each other for one of the precious slots 30
we have, the more we can accomplish, so our people assist each other all the time Internal cutthroat or sink or swim behavior is rare and not tolerated 31
Be Great 32
Hard Workers? What about Brilliant Jerks? 33
is good as a stabilizer People who have been stars for us, and hit a bad patch, get a near term pass because we think they are likely to become stars for us again We want the same: if Netflix hits a temporary bad patch, we want people to stick with us But unlimited loyalty to a shrinking firm, or to an ineffective employee, is not what we are about 34
We dont measure people by how many hours they work or how much they are in the office We do care about accomplishing great work Sustained B-level performance, despite A for effort, generates a generous severance package, with respect Sustained A-level performance, despite minimal effort, is rewarded with more responsibility and great pay 35
tolerate them For us, cost to effective teamwork is too high Diverse styles are fine as long as person embodies the 9 values 36
on high performance? In procedural work, the best are 2x better than the average. In creative/inventive work, the best are 10x better than the average, so huge premium on creating effective teams of the best 37
on high performance? Great Workplace is Stunning Colleagues 38
Right for Everyone Many people love our culture, and stay a long time They thrive on excellence and candor and change They would be disappointed if given a severance package, but lots of mutual warmth and respect Some people, however, value job security and stability over performance, and dont like our culture They feel fearful at Netflix They are sometimes bitter if let go, and feel that we are political place to work Were getting better at attracting only the former, and helping the latter realize we are not right for them 39
Values are what we Value High Performance Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 40
Self motivating Self aware Self disciplined Self improving Acts like a leader Doesnt wait to be told what to do Picks up the trash lying on the floor 41
and are Worthy of Freedom 42
employee freedom as we grow, rather than limit it, to continue to attract and nourish innovative people, so we have better chance of sustained success 43
they get Bigger Bigger Employee Freedom 44
Freedom and Become Bureaucratic as they Grow? 45
Creates Growth Growth 46
Density % High Performance Employees Complexity 48
Employees Chaos and errors spike here business has become too complex to run informally with this talent level Complexity 49
Chaos Procedures No one loves process, but feels good compared to the pain of chaos Time to grow up becomes the professional managements mantra 50
% High Performance Employees 51
Outcome A highly-successful process-driven company With leading share in its market Minimal thinking required Few mistakes made very efficient Few curious innovator-mavericks remain Very optimized processes for its existing market Efficiency has trumped flexibility 52
Market shifts due to new technology or competitors or business models Company is unable to adapt quickly because the employees are extremely good at following the existing processes, and process adherence is the value system Company generally grinds painfully into irrelevance 53
1. Stay creative by staying small, but therefore have less impact 2. Avoid rules as you grow, and suffer chaos 3. Use process as you grow to drive efficient execution of current model, but cripple creativity, flexibility, and ability to thrive when your market eventually changes 54
Chaos as you grow with Ever More High Performance People not with Rules Then you can continue to mostly run informally with self-discipline, and avoid chaos The run informally part is what enables and attracts creativity 55
faster than Complexity Grows 56
of market compensation Attract high-value people through freedom to make big impact Be demanding about high performance culture 57
big products vs many small ones Eliminate distracting complexity (barnacles) Be wary of efficiency optimizations that increase complexity and rigidity 58 Note: sometimes long-term simplicity is achieved only through bursts of complexity to rework current systems
of a Culture of Process Adherence, We have a Culture of Creativity and Self-Discipline, Freedom and Responsibility 59
rules & processes bad? 60
free speech there are some limited exceptions to freedom at work 61
1. Prevent irrevocable disaster Financials produced are wrong Hackers steal our customers credit card info 2. Moral, ethical, legal issues Dishonesty, harassment are intolerable 62
the Right Model Just fix problems quickly High performers make very few errors Were in a creative-inventive market, not a safety-critical market like medicine or nuclear power You may have heard preventing error is cheaper than fixing it Yes, in manufacturing or medicine, but Not so in creative environments 63
Good process helps talented people get more done Letting others know when you are updating code Spend within budget each quarter so dont have to coordinate every spending decision across departments Regularly scheduled strategy and context meetings Bad process tries to prevent recoverable mistakes Get pre-approvals for $5k spending 3 people to sign off on banner ad creative Permission needed to hang a poster on a wall Multi-level approval process for projects Get 10 people to interview each candidate 64
tend to creep in Preventing errors just sounds so good We try to get rid of rules when we can, to reinforce the point 65
Tracking Until 2004 we had the standard model of N days per year 66
some nights and weekends, responding to emails at odd hours, spending some afternoons on personal time, and taking good vacations 67
dont track hours worked per day or per week, so why are we tracking days of vacation per year? 68
on what people get done, not on how many days worked Just as we dont have an 9am-5pm workday policy, we dont need a vacation policy 69
there is no policy or tracking 70
there is no policy or tracking There is also no clothing policy at Netflix, but no one comes to work naked Lesson: you dont need policies for everything 71
No Vacation Netflix leaders set good examples by taking big vacations and coming back inspired to find big ideas 72
Responsibility 73
around what you can expense, how you travel, what gifts you can accept, etc. Plus they have whole departments to verify compliance with these policies 74
Gifts & Travel: Act in Netflixs Best Interest (5 words long) 75
Generally Means 1. Expense only what you would otherwise not spend, and is worthwhile for work 2. Travel as you would if it were your own money 3. Disclose non-trivial vendor gifts 4. Take from Netflix only when it is inefficient to not take, and inconsequential taking means, for example, printing personal documents at work or making personal calls on work phone: inconsequential and inefficient to avoid 76
people say one cant do it at scale But since going public in 2002, which is traditionally the end of freedom, weve substantially increased talent density and employee freedom 77
As We Grow, Minimize Rules Inhibit Chaos with Ever More High Performance People Flexibility is More Important than Efficiency in the Long Term 78
Values are what we Value High Performance Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 79
a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea. -Antoine De Saint-Exupery, Author of The Little Prince 80
how to get great outcomes by setting the appropriate context, rather than by trying to control their people 81
Strategy Metrics Assumptions Objectives Clearly-defined roles Knowledge of the stakes Transparency around decision-making Control (avoid) Top-down decision-making Management approval Committees Planning and process valued more than results Provide the insight and understanding to enable sound decisions 82
company/functional goals Relative priority (how important/how time sensitive) Critical (needs to happen now), or Nice to have (when you can get to it) Level of precision & refinement No errors (credit cards handling, etc), or Pretty good / can correct errors (website), or Rough (experimental) Key stakeholders Key metrics / definition of success 83
talented people does something dumb, dont blame them Instead, ask yourself what context you failed to set 84
to control your people, ask yourself what context you could set instead Are you articulate and inspiring enough about goals and strategies? 85
performance people will do better work if they understand the context 86
why we do new employee college, frequent department meetings, and why we are so open internally about strategies and results 87
Control can be important in emergency No time to take long-term capacity-building view Control can be important when someone is still learning their area Takes time to pick up the necessary context Control can be important when you have the wrong person in a role Temporarily, no doubt 88
Values are what we Value High Performance Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 89
1. Tightly Coupled Monolith 2. Independent Silos 3. Highly Aligned, Loosely Coupled 90
management reviews nearly all tactics e.g., CEO reviews all job offers or advertising Lots of x-departmental buy-in meetings Keeping other internal groups happy has equal precedence with pleasing customers Mavericks get exhausted trying to innovate Highly coordinated through centralization, but very slow, and slowness increases with size 91
executes on their objectives with little coordination Everyone does their own thing Work that requires coordination suffers Alienation and suspicion between departments Only works well when areas are independent e.g., aircraft engines and blenders for GE 92
1. Tightly Coupled Monolith 2. Independent Silos 3. Highly Aligned, Loosely Coupled 93
Highly Aligned Strategy and goals are clear, specific, broadly understood Team interactions focused on strategy and goals, rather than tactics Requires large investment in management time to be transparent and articulate and perceptive Loosely Coupled Minimal cross-functional meetings except to get aligned on goals and strategy Trust between groups on tactics without previewing/approving each one so groups can move fast Leaders reaching out proactively for ad-hoc coordination and perspective as appropriate Occasional post-mortems on tactics necessary to increase alignment 94
effectiveness depends on high performance people and good context Goal is to be Big and Fast and Flexible 95
Values are what we Value High Performance Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 96
Core to High Performance Culture One outstanding employee gets more done and costs less than two adequate employees We endeavor to have only outstanding employees 97
Market for a Person 1. What could person get elsewhere? 2. What would we pay for replacement? 3. What would we pay to keep that person? If they had a bigger offer elsewhere 98Confidential
is to keep each employee at top of market for that person Pay them more than anyone else likely would Pay them as much as a replacement would cost Pay them as much as we would pay to keep them if they had higher offer from elsewhere 99
Lots of people have the title Major League Pitcher but they are not all equally effective Similarly, all people with the title Senior Marketing Manager or Director of Engineering are not equally effective So the art of compensation is answering the Three Tests for each employee 100
many firms, when employees are hired, market compensation applies But at comp review time, it no longer applies! At Netflix, market comp always applies: Essentially, top of market comp is re-established each year for high performing employees At annual comp review, manager has to answer the Three Tests for the personal market for each of their employees 101Confidential
are no centrally administered raise pools each year Instead, each manager aligns their people to top of market each year the market will be different in different areas 102
people will move up in comp very quickly because their value in the marketplace is moving up quickly, driven by increasing skills and/or great demand for their area Some people will stay flat because their value in the marketplace has done that Depends in part on inflation and economy Always top of market, though, for that person 103
Success Whether Netflix is prospering or floundering, we pay at the top of the market Sports teams with losing records still pay talent the market rate, to get back to winning 104
sets pay at Nth percentile of title- linked compensation data The Major League Pitcher problem Manager cares about internal parity instead of external market value Fairness in comp is being true to the market Manager gives everyone a 4% raise Very unlikely to reflect the market 105
Done Right… We will rarely counter with higher comp when someone is voluntarily leaving because we have already moved comp to our max for that person Employees will feel they are getting paid well relative to their other options in the market 106
model is good prior year earns a raise, independent of market Problem is employees can get materially under- or over-paid relative to the market, over time When materially under-paid, employees switch firms to take advantage of market-based pay on hiring When materially over-paid, employees are trapped in current firm Consistent market-based pay is better model 107
ingrained in our society that the size of ones raise is the indicator of how well one did the prior year but for us the other factor is the outside market Employee success is still a big factor in comp because it influences market value In particular, how much we would pay to keep the person 108
Understand Their Market Value Its a healthy idea, not a traitorous one, to understand what other firms would pay you, by interviewing and talking to peers at other companies Talk with your manager about what you find in terms of comp Stay mindful of company confidential information 109
the most efficient form of comp Most motivating for any given expense level No bonuses Instead, put all that expense into big salaries, and give people freedom to spend their salaries as they think best Employees can decide how much Netflix stock they want, versus cash 110
We dont want managers to own their people with vesting all comp is fully vested We want managers to be responsible for creating a great place to work, and paying at the top of market Employees are free to leave us anytime, without penalty, but nearly everyone stays Employees stay because they are passionate about their work, and well paid, not because of a deferred compensation system 111
We avoid top 30% and bottom 10% rankings amongst employees We dont want employees to feel competitive with each other We want all of our employees to be top 10% relative to the pool of global candidates We want employees to help each other, and they do 112
High Performance Values are what we Value Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 113
some groups, there will be lots of opportunity and growth at Netflix Some people, through both luck and talent, will have extraordinary career growth 114
Very talented people usually get to move up, but only true for the very talented Some luck in terms of what positions open up and what the competition is Some people move to other teams to get the opportunity they want Great teams keep their best talent Some minor league players keep playing even though they dont move up because they love the game 115
for Life In some times, in some groups, there may not be enough growth opportunity for everyone In which case we should celebrate someone leaving Netflix for a bigger job that we didnt have available to offer them If that is what the person prefers 116
1. Job has to be big enough We might have an incredible manager of something, but we dont need a director of it because job isnt big enough If the incredible manager left, we would replace with a manager, not with a director 2. Person has to be a superstar in current role Could get the next level job here if applying from outside and we knew their talents well Could get the next level job at peer firm that knew their talents well 3. Person is an extraordinary role model of our culture and values 117
would promote to prevent an employee from leaving, the manager should promote now instead of waiting Three tests still have to be passed 1. Job big enough 2. Superstar in current role 3. Person is an extraordinary role model of our culture and values 118
by giving them the opportunity to develop themselves, by surrounding them with stunning colleagues and giving them big challenges to work on Mediocre colleagues or unchallenging work is what kills progress of a persons skills 119
Formalized development is rarely effective, and we dont try to do it e.g., Mentor assignment, rotation around a firm, multi-year career paths, etc. 120
performance people are generally self- improving through experience, observation, introspection, reading, and discussion As long as they have stunning colleagues and big challenges to work on We all try to help each other grow We are very honest with each other 121
their own career growth, and not rely on a corporation for planning their careers 122
on your Skills and Reputation We try hard to consistently provide opportunity to grow both by surrounding you with great talent 123
Values are what we Value High Performance Freedom & Responsibility Context, not Control Highly Aligned, Loosely Coupled Pay Top of Market Promotions & Development 124
as we grow We try to get better at seeking excellence 125