This is an archive of prior version New version is at: caite.info 1. People find the Netflix approach to talent and culture compelling for a few reasons. The most obvious one is that Netflix has been really successful: During Loosely Coupled. – Minimal cross-functional meetings except to get aligned on goals and strategy. – Trust between groups on tactics without.
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Seven Aspects of our Culture. • Values are what we Value. • High Performance. • Freedom & Responsibility. • Context, not Control. • Highly Aligned, Loosely. This document is about our unusual employee culture. Like all great companies, we strive to hire the best and we value integrity, excellence, respect, inclusivity. Netflix kick started the online culture deck trend by posting their unique company culture deck online, as a means of communicating their.
Adultlike behavior means talking openly about issues with your boss, your colleagues, and your subordinates. Every few years we can feel a real difference in how much more effectively we are operating than in the past. Nearly every document is fully open for anyone to read and comment on, and everything is cross-linked. We know this level of candor and feedback can be difficult for new hires and people in different parts of the world where direct feedback is uncommon. Others take it to new extremes, proudly calling themselves nano-managers. My peers are mostly in the creative sector, and many of the ideas in our culture deck came from them.
Our version of the great workplace is not sushi lunches, great gyms, fancy offices, or frequent parties. Our version of the great workplace is a dream team in pursuit of ambitious common goals, for which we spend heavily. It is on such a team that you learn the most, perform your best work, improve the fastest, and have the most fun. To have an entire company comprise the dream team rather than just a few small groups is challenging. Unquestionably, we have to hire well. We also have to foster collaboration, embrace a diversity of viewpoints, support information sharing, and discourage politics.
The unusual part is that we give adequate performers a generous 2 severance package so that we can find a star for that position. If you think of a professional sports team, it is up to the coach to ensure that every player on the field is amazing at their position, and plays very effectively with the others.
We model ourselves on being a team, not a family.
A dream team is about pushing yourself to be the best teammate you can be, caring intensely about your teammates, and knowing that you may not be on the team forever. Those who do not pass the keeper test i. Getting cut from our team is very disappointing, but there is no shame.
Being on a dream team can be the thrill of a professional lifetime. Given our dream team orientation, it is very important that managers communicate frequently with each of their team members about where they stand so surprises are rare. No matter how honest, though, we treat people with respect. One might assume that with dream team focus, people are afraid of making mistakes.
We try all kinds of things and make plenty of mistakes as we search for improvement. Within a dream team, collaboration and trust work well because your colleagues are both exceptionally skilled at what they do, and at working well with others. You share information openly and proactively. People like loyalty, and it is great as a stabilizer.
Employees with a strong track record at Netflix get leeway if their performance takes a temporary dip. Similarly, we ask employees to stick with Netflix through any short term dips. But unconditional allegiance to a stagnant firm, or to a merely-adequately-performing employee, is not what we are about.
Our view is that brilliant people are also capable of decent human interactions, and we insist upon that. When highly capable people work together in a collaborative context, they inspire each other to be more creative, more productive and ultimately more successful as a team than they could be as a collection of individuals.
Succeeding on a dream team is about being effective, not about working hard. Being on a dream team is not right for everyone, and that is OK.
Many people value job security very highly, and would prefer to work at companies whose orientation is more about stability, seniority, and working around inconsistent employee effectiveness. Our model works best for people who highly value consistent excellence in their colleagues. To help us attract and retain stunning colleagues, we pay employees at the top of their personal market. We make a good-faith estimate of the highest compensation each employee could make at peer firms, and pay them that maximum.
Typically, we calibrate to market once a year. The market for talent is what it is. At all times, we aim to pay all of our people at the top of their personal market. A sports team with a losing record still pays top of personal market for the players they hope will get them back into a winning position.
On the other hand, if the company does well, our broadly distributed stock options become quite valuable. Ultimately, your economic security is based on your skills and reputation, not on your seniority at one company.
At Netflix, you learn a lot working on hard problems with amazing colleagues, and what you learn increases your market value. Knowing that other companies would quickly hire you if you left Netflix is comforting.
We see occasional outside interviewing as healthy, and encourage employees to talk with their managers about what they learn in the process. While our teammates are fantastic, and we work together very well, we know we can always do better.
We strive to have calm confidence, and yet yearn to improve. We suck compared to how great we want to become. There are companies where people walk by trash on the floor in the office, leaving it for someone else to pick it up, and there are companies where people in the office lean down to pick up the trash they see, as they would at home. We try hard to be the latter, a company where everyone feels a sense of responsibility to do the right thing to help the company at every juncture.
We try to create the sense of ownership so that this behavior comes naturally. Our goal is to inspire people more than manage them. We trust our teams to do what they think is best for Netflix — giving them lots of freedom, power, and information in support of their decisions. In turn, this generates a sense of responsibility and self-discipline that drives us to do great work that benefits the company. We believe that people thrive on being trusted, on freedom, and on being able to make a difference.
So we foster freedom and empowerment wherever we can. In many organizations, there is an unhealthy emphasis on process and not much freedom. Specifically, many organizations have freedom and responsibility when they are small. Everyone knows each other, and everyone picks up the trash. As they grow, however, the business gets more complex, and sometimes the average talent and passion level goes down. As rules and procedures proliferate, the value system evolves into rule following i. If this standard management approach is done well, then the company becomes very efficient at its business model — the system is dummy-proofed, and creative thinkers are told to stop questioning the status quo.
This kind of organization is very specialized and well adapted to its business model. Eventually, however, over 10 to years, the business model inevitably has to change, and most of these companies are unable to adapt.
To avoid the rigidity of over-specialization, and avoid the chaos of growth, while retaining freedom, we work to have as simple a business as we can given our growth ambitions, and to keep employee excellence rising. We work to have a company of self-disciplined people who discover and fix issues without being told to do so. We are dedicated to increasing employee freedom 3 to fight the python of process. Some examples of how we operate with unusual amounts of freedom are:.
You might think that such freedom would lead to chaos. Most people understand the benefits of wearing clothes at work. There are a few important exceptions to our anti-rules pro-freedom philosophy. We are strict about ethical issues and safety issues. Harassment of employees or trading on insider information are zero tolerance issues, for example. Transferring large amounts of cash from our company bank accounts has strict controls. But these are edge cases. In general, freedom and rapid recovery is better than trying to prevent error.
We are in a creative business, not a safety-critical business. Our big threat over time is lack of innovation, so we should be relatively error tolerant. Rapid recovery is possible if people have great judgment. The seduction is that error prevention just sounds so good, even if it is often ineffective.
We are always on guard if too much error prevention hinders inventive, creative work. On rare occasion, freedom is abused. We had one senior employee who organized kickbacks on IT contracts for example. But those are the exceptions, and we avoid over-correcting. Some processes are about increased productivity, rather than error avoidance, and we like process that helps us get more done.
One such process we do well is effective scheduled meetings. We have a regular cadence of many types of meetings; we start and end on time, and have well-prepared agendas. We use these meetings to learn from each other and get more done, rather than to prevent errors or approve decisions.
We avoid committees making decisions because that would slow us down, and diffuse responsibility and accountability. We farm for dissent; dissent is not natural or easy, which is why we make a concerted effort to stimulate it.
Small decisions may be shared just by email, larger ones will merit a memo with discussion of the various positions, and why the captain made such a decision. We are clear, however, that decisions are not made by a majority or committee vote. When the captain of any particular decision is reasonably confident of the right bet for us to take, they decide and we take that bet.
Afterwards, as the impact becomes clearer, we reflect on the decision, and see if we could do even better in the future. If you disagree on a material issue, it is your responsibility to explain why you disagree, ideally in both discussion and in writing. The most obvious one is that Netflix has been really successful: During alone its stock more than tripled, it won three Emmy awards, and its U.
All that aside, the approach is compelling because it derives from common sense. Why did you write the Netflix culture deck?
More than people at Netflix have made major contributions to the deck, and we have more improvements coming. Many of the ideas in it seem like common sense, but they go against traditional HR practices. Industrial firms thrive on reducing variation manufacturing errors ; creative firms thrive on increasing variation innovation.
What reactions have you gotten from your peers to steps such as abolishing formal vacation and performance review policies? In general, do you think other companies admire your HR innovations or look askance at them? My peers are mostly in the creative sector, and many of the ideas in our culture deck came from them.
We are all learning from one another.
Which idea in the culture deck was the hardest sell with employees? Have any of your talent management innovations been total flops? Not so far. Patty talks about how leaders should model appropriate behaviors to help people adapt to an environment with fewer formal controls.
With that in mind, how many days off did you take in ? But I did take three or four weeklong family trips over the past year, which were both stimulating and relaxing. The first took place in late Netflix had been growing quickly: It became clear that we needed to put the IPO on hold and lay off a third of our employees. It was brutal. Then, a bit unexpectedly, DVD players became the hot gift that Christmas. By early our DVD-by-mail subscription business was growing like crazy.
I told John I hoped to hire some help for him soon. His response surprised me. Excellent colleagues trump everything else. The second conversation took place in , a few months after our IPO. Laura, our bookkeeper, was bright, hardworking, and creative. Despite her work ethic, her track record, and the fact that we all really liked her, her skills were no longer adequate. So I sat down with Laura and explained the situation—and said that in light of her spectacular service, we would give her a spectacular severance package.
She was sad to be leaving but recognized that the generous severance would let her regroup, retrain, and find a new career path.
This incident helped us create the other vital element of our talent management philosophy: Out of fairness to such people—and, frankly, to help us overcome our discomfort with discharging them—we learned to offer rich severance packages. With these two overarching principles in mind, we shaped our approach to talent using the five tenets below. Over the years we learned that if we asked people to rely on logic and common sense instead of on formal policies, most of the time we would get better results, and at lower cost.
Adultlike behavior means talking openly about issues with your boss, your colleagues, and your subordinates. It means recognizing that even in companies with reams of HR policies, those policies are frequently skirted as managers and their reports work out what makes sense on a case-by-case basis. When Netflix launched, we had a standard paid-time-off policy: People got 10 vacation days, 10 holidays, and a few sick days.
After we went public, our auditors freaked. They said Sarbanes-Oxley mandated that we account for time off. We considered instituting a formal tracking system. So instead of shifting to a formal system, we went in the opposite direction: Salaried employees were told to take whatever time they felt was appropriate.
Bosses and employees were asked to work it out with one another. Hourly workers in call centers and warehouses were given a more structured policy. We did provide some guidance. If you wanted 30 days off in a row, you needed to meet with HR. Senior leaders were urged to take vacations and to let people know about them—they were role models for the policy. Most were happy to comply.
Some people worried about whether the system would be inconsistent—whether some bosses would allow tons of time off while others would be stingy. In general, I worried more about fairness than consistency, because the reality is that in any organization, the highest-performing and most valuable employees get more leeway. We also departed from a formal travel and expense policy and decided to simply require adultlike behavior there, too.
Eliminating a formal policy and forgoing expense account police shifted responsibility to frontline managers, where it belongs.
It also reduced costs: Many large companies still use travel agents and pay their fees to book trips, as a way to enforce travel policies. They could save money by letting employees book their own trips online.
Like most Netflix managers, I had to have conversations periodically with employees who ate at lavish restaurants meals that would have been fine for sales or recruiting, but not for eating alone or with a Netflix colleague. We kept an eye on our IT guys, who were prone to buying a lot of gadgets. But overall we found that expense accounts are another area where if you create a clear expectation of responsible behavior, most employees will comply.
Many years ago we eliminated formal reviews. So we asked managers and employees to have conversations about performance as an organic part of their work. As companies develop better analytics to measure performance, this becomes even truer. Traditional corporate performance reviews are driven largely by fear of litigation. The theory is that if you want to get rid of someone, you need a paper trail documenting a history of poor achievement. They never accomplish what their name implies.
One Netflix manager requested a PIP for a quality assurance engineer named Maria, who had been hired to help develop our streaming service.
The technology was new, and it was evolving very quickly. She was fast, intuitive, and hardworking. But in time we figured out how to automate the QA tests. Her new boss brought in to create a world-class automation tools team told me he wanted to start a PIP with her.
We know how this will play out. After a few weeks there will be tears. This will go on for three months. The entire team will know.
Tell me again how Netflix benefits? Give her a great severance package—which, when she signs the documents, will dramatically reduce if not eliminate the chance of a lawsuit.