The success of Netflix has changed the way people consume television forever.
As of this writing, Netflix has over 100 million subscribers worldwide and has recently overtaken America’s biggest cable companies in subscriber numbers.
According to the company’s CEO, Reed Hastings, its success can be attributed to a powerful company culture that – while it’s been copied by countless companies today – was unlike any other business at the time.
The ‘Netflix Culture: Freedom & Responsibility’ document has been praised by business owners for its innovative approach to talent management. The 124-page document positions itself as the ‘anti-culture.’ It pokes fun at the way companies adopt ham-fisted value statements, those who reward employees with fancy lunches, and the idea of the company being a ‘family’ (more on that later).
Instead, it talks about the expectations of employee behaviour and the skills they need to perform well. The seven aspects of the Netflix culture are summarised as:
· Values are what we value
· High performance
· Freedom and responsibility
· Context, not control
· Highly aligned, loosely coupled
· Pay top of the market
· Promotions and development
Overall, the document is a fascinating read. And while it doesn’t take itself too seriously, underneath the humour is an underlying sincerity that’s almost profound in its simplicity and down-to-earth nature.
Reed Hastings has a lot to say about Netflix’s company culture and what separates them from the rest. It turns out that being different can lead to magnificent results. If you know how to prioritise the right elements of your business.
So what makes Netflix approach to building a culture so unique?
1. Focus on the Core Product
When Netflix was competing with Blockbuster, the company made many attempts to branch out its range of services. A web service to buy used DVDs. Online banners. Buying films from Sundance Film Festival and distributing them on DVD.
Most of these tactics failed to generate much growth. Instead, Hastings decided to simply focus on improving its DVD service, which ultimately helped the company defeat their long-time competitor.
Today, the company maintains a focus on the excellence of its online streaming service. By doing so – they avoid losing their direction, spending money on unnecessary ideas and confusing team members with new work practices.
2. Flexible Time Management
Netflix doesn’t have a 9 to 5 policy. Many employees have the freedom to take paid leave or vacation when they want, and for as long as they want.
Hastings believes that employees should be responsible for managing their own time. Instead of spending time and money on creating HR policies, Netflix simply chooses to hire people who’re most likely to act in the best interests of the company.
By treating employees like adults, they can work at their best when it suits them, while enjoying the satisfaction of managing their own time.
3. Team Members Create the Culture
Unlike many businesses, where a manager or HR person determines the values and vision of the company – Netflix puts this responsibility on the team members.
Every team member gets the chance to have their say and improve on the company culture – not just preserve one that already exists. This way, the culture becomes a living, breathing practice that adapts to changes, learns from their mistakes and grows as a business.
4. No Family On This Team
Hastings is not a fan of referring to his team members as ‘family.’
“We model ourselves on being a team, not a family. A family is about unconditional love, despite your siblings’ unusual behaviour.” Hastings believes this philosophy is counter-productive to the purpose of a company, which should be about striving for excellence and results – not being complacent with mediocre performance.
Hastings refers to his team as a sports team, where people contribute to the business, and maintain the mutual warmth and friendship that helps a great team work together.
Netflix takes a very upfront approach to encouraging honesty in the company.
Just how seriously does Netflix take honesty? According to Hastings, the company regularly hosts ‘Start, Stop, Continue’ dinners. During these dinners, everyone at the table has the chance to provide feedback and tell others what they’d like to start, stop or continue doing.
Some people may find this approach too confrontational. However, by having a specially designated time and place to have these discussions, employees can overcome any issues and move forward.
6. One-on-One Time
In the digital age of email, direct message and live video chat, nothing beats having a face-to-face meeting with someone.
Hastings recognises the importance of this practice. “I have lots of one-on-ones with top 500 people throughout the company, so many levels.” He says these meetings help him better understand what’s happening in the company. And gives the employees a greater understanding of how their contribution fits into the bigger picture.
Most importantly, Hastings doesn’t want to be seen as a manager, but someone who simply wants to be involved in every aspect of the business.
7. Hiring Great Talent
With over 4,700 employees working at Netflix, the company has developed a reputation for hiring only the best and brightest talent. This philosophy goes a little deeper than just hiring tech-savvy people – you have to be nice too.
According to Netflix’s company culture document, “On a dream team, there are no ‘brilliant jerks.’ The cost to teamwork is just too high. Our view is that brilliant people are also capable of decent human interactions, and we insist upon that.”
The company knows that good employees make a valuable contribution to the business. While toxic employees can reduce productivity and affect relations in the company.
8. Letting the Right People Go
With hiring and keeping great talent, comes the realisation that not everyone will make the team forever. Even employees who produce consistently great results can be redundant due to technology or a change of direction in the company.
This concept is quite literally put into practice on a regular basis. On what’s known as a ‘keeper test,’ managers are often asked, “If an employee were to try and leave for another firm, how hard would you work to change their mind to stay?”
If the manager would not fight to keep them, the employee will most likely be given a generous severance package. While this practice may seem confronting, it does reinforce the idea of honesty and motivating employees to perform at their best.
9. Staff Are Treated Like Adults
Instead spending time and money on HR policies to manage time off, vacation and dealing with other problems – Netflix simply chose to hire the people who’ll put the company’s best interests first.
This odd business practice has largely been successful. According to Hastings, 97 percent of employees who have the desire to perform well in the workplace do the right thing.
While hourly workers in warehouses and call centres are given most structured policies, many employees at Netflix have adopted a free-form approach. Employees and managers are encouraged to work out time off and vacations among themselves. Senior leaders are even told to be a role model for employees by taking vacations – thus, enforcing the idea of rewarding yourself every once in a while.
And when it comes to spending company money? Employees are told to spend the money like it were their own. In the company’s own words, “Act in Netflix’s best interests.”