How Netflix [Maybe] Changes the Corporate Culture GameI stumbled across Netflix’s somewhat legendary Corporate Culture slide deck created in 2009 by Netflix’s CEO Reed Hastings, chief talent officer, Patty McCord and other team members, during this lazy holiday break. The deck was included as part of an HBR feature article written by McCord claiming that Netflix reinvented the world of HR. We do a lot with HR teams, so the headline drew me in. What I found was that the piece wasn’t so much about HR as it was about corporate culture in general. While I have mixed thoughts, I thought the whole thing was pretty interesting – and spoke to business and management in general, not just about HR.
The slide deck, which ultimately went viral (I’d consider 6.4 million+ views on Slideshare and almost 40K downloads viral, wouldn’t you?) and was called one of the most important documents ever to come out of Silicon Valley by Facebook’s Sheryl Sandberg, and is embedded at the bottom of this post.
While some of Netflix’s ideas and practices sound really innovative, many of them are grounded in two basic premises: be honest, and treat people like adults. My team and I work hard to live this on an ongoing basis, so perhaps that’s why this article and deck and the some of concepts articulated by McCord resonated with me. Here are some highlights that I found particularly interesting and, maybe you’ll find it food for thought for you and your business moving into a new year. Or maybe you’ll think it’s a complete and total crock – either way, it’ll be interesting to hear what you think.
Freedom + Responsibility = Success + Happiness
The basic premise behind Netflix’s corporate culture, as mentioned above, is purportedly about being honest and treating people like adults. And that’s personified by the message on the front of the simply designed slide deck: Freedom & Responsibility. I think there’s an added component at play here, and that’s that Netflix is a pretty successful company. Thus, you don’t have to be a small company to make these premises work, you can be a large, very successful company and still run your organization with the mindset that freedom and responsibility are not only what’s important, they are the path to success. As for me, I think that giving your team the opportunity and the freedom to make good decisions and the responsibility to deliver great results (for you and your clients or customers) leads not to only success for the company but also ensures your team is happy and motivated as well.
The Nine Behaviors
At Netflix, it’s a belief that company values aren’t necessarily those pithy mission statements or value statements that hang in an office lobby or are displayed on an corporate website. Instead, they believe that “actual company values are the behaviors and skills that are valued in fellow employees.” Here’s what Netflix describes as nine behaviors and skills they look for in colleagues (and who are the people who are hired and ultimately promoted):
- You make wise decisions (people, 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 upon later
- You listen well, instead of reacting fast, so you can better understand
- You are concise and articulate in your speech and writing
- You treat people with respect independent of their status or disagreement with you
- You maintain calm poise in stressful situations
- You accomplish amazing amounts of important work
- You demonstrate consistently strong performance so colleagues can rely on you
- You focus on great results rather than on process
- You exhibit bias-to-action, and avoid analysis-paralysis
- You learn rapidly and eagerly
- You seek to understand our strategy, market, customers, and suppliers
- You are broadly knowledgeable about business, technology and entertainment
- You re-conceptualize issues 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 say what you think even if it is controversial
- You make tough decisions without agonizing
- You take smart risks
- You question actions inconsistent with our values
- You inspire others with your thirst for excellence
- You care intensely about Netflix’s success
- You celebrate wins
- You are tenacious
- You are known 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
- You seek what is best for Netflix, rather than best for you 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
What do you think? Does reading this list make you feel overwhelmed and that no one person can possibly possess all these skills? Or does it make you think about how cool it would be if, in reality (and it were even possible), you worked with people who personified all these things? I’ll admit that to me it seems a lot to expect all employees, at all levels, to embody all these things.
Hire Only “A” Players and Always Expect the Best
What Netflix says about corporate culture is that there are no rose-colored glasses. Their focus is always on hiring “A” players and doing all they can to keep them happy. As an aside, I was having a conversation with a friend the other day who was frustrated because he felt he wasn’t good enough at something (I’m being vague but the “something” is something I consider a pretty basic skill) and that was unfairly getting in his way. I told him that it didn’t matter how much he thought it wasn’t a reflection of his capabilities, and that he had other attributes that made this inability excusable. The bottom line was the fact that he couldn’t be counted on to get it right was an indication of how valuable – or not – he might ultimately be — to an employer, to a client, or to a potential business partner. And that he should expect to continue to be negatively evaluated by others and/or to lose opportunities if he couldn’t figure out how to nail that basic skill. I think he walked away from the conversation determined to master that pesky skill that was getting in his way, but only time will tell.
Most of us, when given a choice, prefer to work with people who always bring their “A” game, and that appears to be an underlying premise of everything that comprises the Netflix culture. If you work for Netflix and don’t have an “A” game, if you settle for being adequate and/or if something changes and you don’t have the skills you need to adapt and deliver, you’ll be on your way out with what they call a “generous severance package.” That said, there are any number of skeptical comments online about this practice that reference a company focused on sucking all they can out of their employees, as quickly as possible, then turning them loose.
The No ‘No Time Off’ Policy
One of the most unusual things Netflix has adopted over time, and certainly for a company of its size, includes replacing a standard time off policy with an honor system. This allows salaried employees to take off whatever time they think is appropriate, working out the details with their bosses. Employees in call centers providing customer service have a more structured time schedule, but overall, the goal is to shift responsibility back to the managers, instead of being controlled from an HR standpoint. Of course there are some basic guidelines in place but overall the “system” is pretty reliant on employees doing the right thing. For a company with just over 2,000 employees, that’s pretty unusual.
Ditching Performance Reviews in Favor of 360-reviews
Performance reviews are another area where Netflix is doing something markedly different from their peers. Their focus is on “telling the truth about performance” and not sugarcoating things. Netflix ditched the formal performance reviews in favor of an informal 360-review system. Managers now have conversations with their team members on a regular basis as a function of the work they’re doing and they’ve gotten rid of the ritual that is traditional performance evaluations. With a corporate culture that’s all about regular and honest communication, this ongoing review process is designed to keep people on track, identify problems and let you both (or all) know what needs to change. It’s a lot like the “bring your A-Game philosophy” described above. But the point is that you don’t just assume good performance is happening, you talk about it.
Speaking personally, my managers and I are constantly having conversations with individual team members and evaluating their overall happiness with the responsibilities they have, their comfort level, their success rate, etc. As an experiment, we also recently implemented a quick weekly survey that attempts to address these very things, hoping that this, in addition to lots of conversations on a regular basis will help us continue to put the right people in the right positions, doing the things they love – while also delivering great results. And when something’s not working, we change it. How do you manage your teams? Do you do annual or semi-annual performance reviews or do you do something different?
Create the Team You Need
You don’t simply use what you have when it comes to a team, at Netflix, the philosophy is that managers are responsible for creating great teams. That includes envisioning themselves as players in a documentary and asking themselves questions like:
- What is it your team will be accomplishing six months from now?
- What specific results do you want/need to see?
- How is that different from what your team is doing today?
- What do you need to make these results happen?
The answers aren’t about what their people are capable of doing, it’s about thinking about the goals and objectives they have and challenging them to determine how, as managers, leaders, and as recruiters of talent, they’ll put together a team that’ll make that happen.
It’s also about being honest about the capabilities of your individual team members and knowing when to make a change if their skill set isn’t something that can help you reach your goals. Keeping someone on a team because you like them if they don’t have the skills they need to help reach your goals and/or serve the needs of your clients doesn’t really do either of you any favors. This is routinely a challenge to managers and business leaders and one many struggle with.
I think that that’s one of the things I’ve loved most about being the owner of a small marketing consulting firm versus being a part of a larger agency. We build great teams to serve individual clients’ needs – we don’t stick people on accounts just because we have bodies around and on the payroll who need something to do. We also don’t win business with “A” players and then turn it over to “B” players or junior level employees – our clients get senior level thinking and execution every step of the way. So this practice on the part of Netflix resonated for me.
What’s it Really Like at Netflix?
I didn’t set out with the intention of writing such a long piece, but I guess that shows you how much this particular topic made me think – and hopefully there was something of value in this for you. The original Culture slide deck is embedded below and I’ve linked Patty McCord’s original HBR article focused on HR as well.
In closing and after spending so much time thinking about this, what I now want to know now is the real story: what it’s really like to work for Netflix — from an insider’s point of view. It’s easy to read things like this and see corporate ideals and things that make sense from a management sense, but on paper and in real life are often two very different things. Management’s point-of-view compared to team members’ points-of-view are also often very divergent. And the truth is probably not quite what’s laid out here, and not quite the exact opposite, but likely somewhere in the middle.
What’s fascinating is that there are many conversations taking place online about this deck and the Netflix culture, not all of which are favorable. The conversations on Reddit’s programming pages, which have a large developer base, are largely skeptical and imagine Netflix being a horrible place to work. Those comments include many references to negative GlassDoor reviews and a quick check of GlassDoor shows a negative reviews, but a fair number of positive reviews as well.
There conversations on Reddit’s business pages are slightly less skeptical but still question a lot of what’s laid out by Netflix – both in terms of whether or not it’s even possible and/or whether it’s true.
The most interesting conversations (at least to me, anyway) about this post were happening at HackerNews, where several past and present Netflix employees popped in to share their thoughts.
Here’s the original Netflix Corporate Culture Deck:
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