Patty McCord introduced a culture of excellence at Netflix. This makes for a successful business, but at what price? An overview of Netflix’s internal policy, with all its demands and responsibilities.
An internal company policy that becomes viral, that’s quite out of the ordinary. The famous PowerPoint presentation, with its 124 slides, has had over 5 million views on the web. Even Sheryl Sandberg, the current director of operations at Facebook, said that “it may well be one of the most important document ever produced in Silicon Valley.” Here are four points that break with traditional human resource practices.
A “culture of values” not in words but in action
Too often, values are only a matter of words in business. Just think of Enron, which advocated “respect”, “integrity” and “excellence” while the reality was quite different… To ensure that Netflix lives up to its own values, the company hires and promotes employees that embody those beliefs. And for those who do not demonstrate these values, the company dismisses them. If everyone shares common values, they will use their common sense and honesty to always act in the company’s “best interest” and internal rules will therefore not be necessary.
At the beginning, Netflix employees had 10 days of vacation, 10 days’ leave and some sick days. Workers would monitor their own days off and would advise management of their absence. However, their working hours were not recorded. Employees working on a project could respond to emails in the evenings and weekends. Managers decided to follow that same logic for holidays. Employees and supervisors use their own judgment to decide when is a good times to take a break and when it isn’t.
No expense policy
The same reasoning followed for the (non)policy of business spending and travel. Netflix relies on its employees to behave like adults, which is to say to act in the interest of the organization just as they would for themselves and their finances. Thus, travel costs are those that must be paid in addition to one’s usual expenses.
It is therefore up to direct supervisors to manage this aspect of office life, rather than an entire department devoted to policing and ensuring compliance. Some services are monitored a little more closely than others, especially technology that is required to obtain costly tools on a regular basis.
The market as wage barometer
Most of the increases were granted at the end of the year and according to employee performance. However, this method ensures that if during the year the best employees were offered higher pay elsewhere, they would want to change jobs. On the other hand, if they were overpaid, they would be reluctant to leave even if they were no longer motivated. Netflix has decided to set wages at the highest market price, regardless of seniority, title or gender.
On the other hand, if employees are not performing after a certain time or aren’t representing the organization’s values, they will be promptly replaced. It is not because they weren’t contributing to the company, but only because the cream of the crop remains in the office.
While job security is not guaranteed, unions have not yet come knocking on Netflix’s doors. Presumably, the attractive working conditions are worth something, especially when we know that the company is consistently ranked top among the best employers to work for…