In 2012, NetApp was once again named to FORTUNE’s annual list of the “100 Best Companies to Work For.” In response to this highly prized recognition, NetApp believes that “inspired and happy employees make success happen for our customers and partners around the world” (NetApp, 2012). Employees are rewarded in several ways that seek to correlate compensation to company performance. As the company does well, so do the employees.
This is especially important when it comes to innovation. In the case study, the authors highlight the reward system for patent filings. As a matter of course, employees at a firm forgo rights to intellectual property created while employed by that firm, whether they are employed as contractors or full-time equivalents. Firms should therefore consider how they can reward employees for their innovative ideas beyond a regular salary. In the case of NetApp, between $5,000 to $15,000 would be awarded to employees involved in patent filings on NetApps behalf, and this lead to an over $1.0 million incentives payout for 2008 (Gupta et. al., 2009). Such rewards provide a compelling incentive to innovate with NetApp as opposed to exporting great ideas to competing firms offering a higher return on employees’ knowledge investment. Collectively, leadership felt that financial incentives, including RSU and ESPP stock options, “gave employees a sense of belonging” (Gupta et. al., 2009).
NetApp also focused on other rewards and HR practices that targeted emotional factors. The way the company dealt with special circumstances, like layoffs, and their desire to engage employees in the hiring of colleagues, support of new hires, and career relevant training, all helped to create a culture where employees were valued beyond a regular paycheck.
Leadership was selected based on their talent to lead and not necessarily because they were founders. Leadership further made themselves available to employees, which fostered an environment where employees felt they had a pathway for addressing grievances, thus further promoting a positive feedback loop about the leadership of the firm. Employees were offered opportunities to socialize and network with colleagues, and also to increase core competency through training in vital areas such as communication, technical training, managerial training and interpersonal skills (Gupta et. al., 2009). This ensured an environment that was high on top talent, and low on variability between A players and B players – a strategy that is key to executing a highly valuable portfoliobased approach to workforce management (Huselid et. al., 2005).
Even though industry analysts have questioned NetApp’s ability to sustain seemingly generous rewards during downturns (Gupta et. al., 2009), the organization’s unwavering commitment to the value those rewards provide in terms of competitive advantage in the industry have paid off as the firm continues to enjoy its preferred standing on FORTUNE and other qualitative polls of workplace satisfaction (NetApp, 2012).
Finally, we highlight a passage from the case study that demonstrates how HR practices at NetApp guided the organization towards Stage 4 IT maturity:
There was also a practice of ‘Skip Level Meetings,’ which allowed employees to skip their immediate superiors and directly approach the second or higher level of management…This open door policy promoted clearer communication and brought about transparency in the processes. This helped in having better collaboration among the project teams and at the same time encouraged people to share their ideas. (Gupta et. al., 2009).
The stage four company has not only implemented a modularized IT infrastructure, but has also created a culture where employees are highly
motivated and feel that their ideas are valued by the organization. A highly motivated workforce will be better equipped to execute a solutions oriented strategy that adds value to customers thereby increasing the organization’s bottom line. Practices such as ‘Skip Level Meetings’ and recognition from senior level leaders empowers decentralized decision making at all levels, and rewards innovation that is key to remaining competitive in the fast-paced technology sector (Feurer, 2007).
Article References
Feurer, S. (2007). Enterprise architecture – maturity stages. SAP Deutschland AG & Co. KG. Retrieved from http://www.sdn.sap.com/irj/scn/index?rid=/library/uuid/70edb7ce5fd8-2910-1583-db2b2cd98298&overridelayout=true
Gupta, V., Chatterjee, P. (2009). NetApp’s corporate culture and HR practices. ICMR Center for Management Research. Retrieved from http://www.ecch.com/educators/products/view?id=90613
CNN Money. (2012). 100 Best Companies to Work For: 6. NetApp. Retrieved from http://money.cnn.com/magazines/fortune/bestcompanies/2012/snapshots/6.html
Huselid, M. A., Beatty, R. W., & Becker, B. E. (2005). A players or A positions: The strategic logic of workforce management. Harvard Business Review.
NetApp. (2012). NetApp Ranked #6 FORTUNE’s 100 Best Companies to Work for List. Retrieved from http://www.netapp.com/us/company/ourstory/great-place-to-work/
