Netscape's Work Culture
Details
Themes: Organizational Culture
Period : 1994-2000
Organization : Netscape
Pub Date : 2001
Countries : USA
Industry : Information Technology
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Case Code : HROB0013
Case Length : 13 Pages
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Netscape's efforts to build a flexible and supportive culture seemed to have motivated employees and made them highly productive. According to an analyst,16 employee retention is the key to success in the IT industry. Compared to the industry attrition rate of 30%, Netscape's attrition rate was 20%. Netscape's management believed that more than the pay check, employees were interested in meaningful work, independence, flexibility, and a desire to learn on the job. Tim Garmager, principal of the Human Resources Strategies Group at Deloitte & Touche LLP in Chicago, confirmed this belief: "There is less emphasis on pay today than ever. In today's job market, employers need to look closely not only at the benefits they offer but at the culture they engender." The SetbackAfter the acquisition, AOL planned to integrate Netscape's web-browser products and Netcenter portal site with its Interactive Services Group.17 The company created a Netscape Enterprise Group in alliance with Sun Microsystems18 to develop software products ranging from basic web servers and messaging products to e-commerce applications. |
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However, overlapping technologies and organizational red tape slowed down the process of integration. Within a year of the acquisition, Netscape browser's marketshare fell from 73% to 36%. Andreessen, who had joined AOL as chief technology officer, resigned only after six months on the job. His departure triggered a mass exodus of software engineering talent from Netscape. Soon after, engineers from Netscape joined Silicon Valley start-ups like Accept.com, Tellme Networks, Apogee Venture Group and ITIXS. Former Netscape vice president of technology Mike McCue and product manager Angus Davis founded Tellme Networks. They brought with them John Giannandrea. As chief technologist and principal engineer of the browser group, John Giannandrea was involved with every Navigator release from the first beta of 1.0 in 1994 to the launch of 4.5 version in Oct. 1998.
Ramanathan Guha, one of Netscape's most senior engineers, left a $4 million salary at AOL to join Epinions.com. He was soon joined by Lou Montulli and Aleksander Totic, two of Netscape's six founding engineers. Other Netscape employees helped start Responsys. Some employees joined Accept.com and others AuctionWatch. Spark PR was staffed almost entirely by former Netscape PR employees.
Market watchers were surprised and worried about this exodus of Netscape employees. Some of them felt that the mass exodus might have been caused by monetary considerations. Most of the employees at Netscape had stock options. Once the acquisition was announced, the value of those options rose significantly. David Yoffie, a Harvard Business School professor said, "When AOL's stock went up, the stock of most of the creative people was worth a ... fortune." Most of them encashed their options and left the company.
16] Jeffrey Pfeffer, a professor of organizational behavior at Stanford University's graduate school of business in Palo Alto, California, and author of The Human Equation: Building Profits by Putting People First (Harvard Business School Press, 1998).
17] A provider of online Internet portal services and developer of Internet browser software.
18] Sun Microsystems, Inc. is a leading provider of industrial-strength hardware, software, and services that power the Internet.