Last month, I came across these slides about Netflix culture. I found it fascinating, so here are my main takeaway points.
The slides start off by mentioning that Netflix seeks excellence, “Our culture focuses on helping us achieve excellence”. After that they cover the 7 aspects of their culture.
- Values are what we Value
- High Performance
- Freedom & Responsibility
- Context, not Control
- Highly Aligned, Loosely Coupled
- Pay Top of Market
- Promotions & Development
After that, they start covering the first aspect of their culture in depth, “Values are what we Value”. They clarify that they are not about nice-sounding, empty words like “Integrity”, “Communication”, etc… And how companies with “lobby” values like “Integrity”, did not live these values and went bankrupt from fraud.
The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go
So it made sense for Netflix after that to cover how they hire and promote people, and how they are looking for people who demonstrate certain values.
9 behaviors and skills Netflix value in its employees:
- Judgment: you smartly separate what must be done well now, and what can be improved later
- Communication: you maintain calm poise in stressful situations
- Impact: you exhibit bias-to-action, and avoid analysis-paralysis
- Curiosity: you contribute effectively outside of your specialty
- Innovation: you challenge prevailing assumptions when warranted, and suggest better approaches
- Courage: you question actions inconsistent with our values
- Passion: you inspire others with your thirst for excellence
- Honesty: you only say things about fellow employees you will say to their face
- Selflessness: you make time to help colleagues
Let us move on to the second aspect of Netflix values, which was “High Performance”. The slides mention that Netflix is more like a pro sports team and that they are looking to have stars in each position.
We’re a team, not a family
After that the interesting “Keeper Test” gets mentioned and how it can be used by both managers and employees.
Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at Netflix?
You should periodically ask your manager: “If I told you I were leaving, how hard would you work to change my mind?”
The third aspect is “Freedom & Responsibility”, so what sort of employees is Netflix looking for? They are looking for The Rare Responsible Person:
- Self motivating
- Self aware
- Self disciplined
- Self improving
- Acts like a leader
- Doesn’t wait to be told what to do
- Picks up the trash lying on the floor
Responsible People Thrive on Freedom, and are Worth of Freedom
Avoid Chaos as you grow with Ever More High Performance People — not with rules. Because the alternative options are bad:
- Stay creative by staying small, but therefore have less impact 😔
- Avoid rules as you grow, and suffer chaos 🔀
- Use process as you grow to drive efficient execution of current model, but cripple creativity, flexibility, and ability to thrive when market eventually changes 🚦
We should focus on what people get done, not on how many days worked
The following aspect is really interesting, it is “Highly Aligned, Loosely Coupled”. They start off by mentioning the 3 different models of corporate teamwork:
- Tightly Coupled Monolith
- Independent Silos
- Highly Aligned, Loosely Coupled
You don’t need policies for everything
The next aspect is “Pay Top of Market”. It is the core to a High Performance Culture.
One outstanding employee gets more done and costs less than two adequate employees
Three Tests for Top of Market for a Person
- What could person get elsewhere?
- What would we pay for replacement?
What would we pay to keep that person?- If they had a bigger offer elsewhere
And they finish off with some bad practices and how internal ranking like top or bottom 10% can be toxic.
Bad Comp Practices
- Manager sets pay at Nth percentile of title-linked compensation data
- Manager cares about internal parity instead of external market value
- Manager gives everyone a 4% raise
When materially under-paid, employees switch firms to take advantage of market-based pay on hiring
No ranking Against Other Employees
- We avoid “top 30%” and “bottom 10%” rankings amongst employees
- We don’t want employees to feel competitive with each other
- We want all of our employees to be “top 10%” relative to the pool of global candidates
- We want employees to help each other, and they do
I want to finish off with some bad culture examples:
- Gaming rooms, free lunches, etc… are not culture. They are perks we got used to in the tech industry.
- Not being straight up or open about decisions affecting your team.
- Everything is a stretch and vital resources required to finish a task are usually missing.
- Encouraging your people to put extra hours when not required, that will speed up the burn-out rate of the ones willing to do so and discourage the ones who cannot keep up in the long run. A good work/life balance can improve productivity.
- Setting up your team for failure by encouraging bad internal competition and building a cutting throat culture.
My main takeaway points that I would like you to take out of this post are:
- As an organization, live your values or don’t have any.
- Culture is who you hire, promote and fire.
I would love to hear about your experiences of good and bad company cultures.
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