There’s no point in denying that Netflix has a secret stash of fertilizers that makes its company grow. Its unique modus operandi to manage talent and culture is meritorious for a couple of reasons. The most evident one is that Netflix has inhaled every bit of success since day one of its inception. In 2003 alone, its stock encountered a threefold increase, it won three prestigious Emmy’s and if that weren’t enough, its subscriber base stood at a glorifying 29 million. All that aside, its stratagem is convincing on the grounds that it stems from a very practical standpoint.
In 1997, a time much before it was streaming a billion hours of Internet TV every month, NetFlix had been just a startup. They had a genuine standard vacation policy, which said ‘10 vacation days, 10 holidays, and a hand sized scoop of wiped out days for every individual’. As opposed to formally tracking nowadays, they picked an honor regimen, with workers following their own off days and advising their supervisors when suitable.
Former Netflix chief talent officer Patty McCord recalls how she always insisted that employees take the call of recruiters, ask how much they were offering and send the number over. Surprised? She believes that this is the most valuable information that an employer can get hold of.
Netflix considered putting an official framework into practice, until author Reed contrived a fascinating question – are those organizations obliged to give time off? Under other circumstances, wouldn’t the department just handle it casually and avoid the accounting nonsense?
This is when McCord realized that under Californian law, no such mandatory vacation time policy existed. Hence, instead of moving to the official system, they instead took the road less travelled. Salaried employees were advised to take a quantum of holidays, while their bosses and coworkers were asked to work it out with each other. A much favored practice that is gaining prominence in major MNCs nowadays.
When McCord, drafted a straightforward PowerPoint presentation clarifying a percentage of the flighty progressions the organization had made in its HR policy, she had no clue it would go viral around the web. Since the presentation began circling, it has been viewed more than 5 million times and has been chronicled by Sheryl Sandberg as a standout amongst the most vital reports to rise up out of Silicon Valley.
McCord shelled out five standards that revamped Netflix’s HR strategy.
1. A Place for Fully Formed Adults Only
Most workers would prefer not to be a part of an organization which is keeping an eye on them. In case an organization inspires its employees to depend on sound judgment standards rather than institutional approaches, workers will be better spurred to help and will put resources into the triumphs of the organization. Numerous organizations squander time and money implementing HR policies that just influence the 3 percent of employee-base who need improvement.
Netflix, on the contrary, ruled that its recruits were the kind of workers who would dependably put the organization's interest first. In case, Netflix felt as though it had made a hiring mistake, the employee would be let go off on immediate effect with a bountiful severance package.
Netflix encourages its employees to personify adult behaviors like boldly communicating with their managers and associates. For example, Netflix’s paid time off strategy permits employees to take time off for as many days as they want, but with the comprehension that they must clearly communicate their plans with their supervisors. McCord found that employees were more likely to behave responsibly when their executives expected them to behave in such a manner.
2. Be Honest when it comes to Performance
As opposed to waiting for scheduled employee reviews to come around, Netflix encourages its employees to meet and openly discuss about their performance such that the employees receive organic feedback.
McCord found that it was significantly more effective to have a hearty conversation with an employee who is performing poorly than to make him undergo a Performance Improvement Plan (PIP), which keeps a track of performance over time.
There was an employee at Netflix who has been with the organization for past five years, and had been doing great work until she was compelled to adjust to new technological changes. In spite of her earnest attempts, the employee was not able to successfully do her work. This is where McCord decided to talk sincerely about letting her go.
On a basic level, Netflix makes sure that all its employees get a generous severance package when they are let go off from the organization in light of the fact that it create a more positive culture.
3. Building a Great Team Should be Managers Top Priority
McCord pushed her managers into envisioning how their team would look like in the coming six months. Envision the kind of goals their team would accomplish in the near future, skills accumulated during this period to work on those goals.
At Netflix accomplishing great work and building the right kind of team is a top priority.
Since there is a much greater chance of mismatches in any team, and it is imperative to have open conversations on a regular basis on what needs to be accomplished. Netflix makes it a point that managers understand that team building equals crafting a culture of excellence.
4. Leaders should be entitled to Creating the Company Culture
McCord notices three common issues that take place within the corporate culture:
- Leaders expect employees to be high performers and the workplace culture to remain casual at the same time. However, mismatches in values where leaders who ignore to infuse commitment to their jobs can expect the same careless attitude from their employees.
- Employees should be well aware of how the business functions. For this the HR must explain to the newly hired employees on how the business functions and how the organization profits. In other words, employees must properly understand “the levers that drive the business” and should be provided with a transparent platform.
- The next most common issue is “split personality startup”. This happens usually at firms where there is typically a crack in the information received between two diverse teams which lead to a split personality within the company due to mismatches in practices. Leaders should be aware of such subcultures within the company that require diverse management approaches.
5. HR Managers Think like Businesspeople and Innovators First
McCord believes that HR professionals need to think of themselves as business people. Ways on how to improve the company’s performance plan; policies for the good of the company and the employees, etc. should be a part of their job. In 1998 when McCord first started working at Netflix, she threw away all existing HR norms and started thinking decisively on policies that required improvement for the good of the company and its employees.
Netflix’s HR policies makes it mandatory to tell salaried employees to take time off whenever they feel is suitable. There are no vacation policies, and employees and managers are asked to work out with each other according to their vacation needs.
Disproving existing HR rules and regulations doesn’t owe to Netflix’s success. However, it did change the way managers and their teams saw the company culture. McCord’s PowerPoint presentation that went viral a few years ago makes it clear that a company’s supreme culture owes to recruiting in the right manner. Over the years since the first slide was made public, Netflix has greatly improved some of the specific components to keep up with the evolving times; however, it hasn’t wavered from the original seven culture aspects specified in the slides:
Values are what we value
Freedom & responsibility
Context, not control
Highly aligned, loosely coupled
Pay top of market
Promotions & development
McCord believes that there is no reason why HR cannot be innovative enough. The results of her efforts today stand in the form of an innovative, nevertheless radical, open-minded approach to HR at Netflix.