After having reviewed the internal policy on corporate culture by Netflix, it makes me want to subscribe—and work there–just to be affiliated with something unique. If they are everything they say they are, they have created a working culture that is transparent, values its values as well as a hard working, team-oriented, “no jerks allowed” employment policy. It is also a culture that fosters mutual accountability.
When you review corporate history in the last eighteen months, there was a clear disconnect between the stated and applied culture and values in some companies. It is the conflict between who they want to be or who they want us to think they are—and the practical outcome of neither. For Netflix, the results are obvious: they are on track for strong revenue delivery in 2009; they have a strong twelve month stock performance, consistent revenue growth from 2006-2008, a 26% increase in subscribers (Q2 09 vs. Q2 08) and a 21% growth in revenue (Q2 09 vs. Q2 08).
Netflix shared its 128-page internal guide on Slideshare titled “Reference Guide on our Freedom & Responsibility Culture” which is seemingly a working contradiction in both philosophy and action. I say this because it places a lot of emphasis on the expected “behavior and skills” of their salaried employees. They define nine core values, moving beyond the superficial descriptors of judgment, communication, impact, curiosity, innovation, courage, passion, honesty, selflessness. Below is a snapshot of their internal guide and some points that I think are pretty compelling for executing to core values and creating a viable company culture.
Slide 21:
Values reinforced in hiring, in 360 reviews, at comp review, in exits and in promotions.
This is probably the most critical point in the whole presentation because it is about compliance to their values (which includes behavior). Adherence to the values becomes a common message throughout the 128 slides. When they review someone on the value of Honesty—it is not just about being truthful, it is about candor and directness. This is a culture that wants people to challenge the system through innovation, inquiry and alternatives—not status quo. I think that is pretty bold and impressive!
Slide 29:
The “Keeper Test” Managers Use
Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix?
The other people should get a generous severance now so we can open a slot to try to find a star for that role.
This is a great litmus test about the value of contributors, employee advocacy, effective performance and honesty. Coupled with slide thirty, they encourage their employees to solicit this feedback as well: If I told you I was leaving, would you fight hard for me to stay? This places the responsibility of performance and behavior on the employee not just the manager. If done right, this fosters meaningful dialogue about performance and results and can also improve retention.
Slide 32:
Loyalty is good
Loyalty is good as a stabilizer
People who have been stars for us and hit a bad patch, get a near term pass because we think they will become stars for us again
We want the same: If Netflix hits a temporary bad patch, we want people to stick with us
But unlimited loyalty to a shrinking firm, or to an ineffective employee, is not what we are about
This is a pretty direct statement and a reinforcement of what is expected, tolerated, and reciprocated. It also takes into consideration that there can be ebbs and flows to performance for companies and individuals—but a consistent work history of ineffectiveness is not accepted.
Slide 34:
Brilliant Jerks
Some companies tolerate them
For us, the cost to teamwork is too high
Diverse styles are fine, as long as the person embodies the 9 values
What more can I say? If you have worked with a jerk, you know how disruptive they can be—no matter how brilliant. They can undermine teams and results and morale. As noted above, the cost to teamwork is too high.
Slide 35:
Why are we so manic on high performance?
In procedural work, the best are 2X better than the average
In creative work, the best are 10X better than the average, so huge premium on creating effective teams of the best
High performing teams are strength based teams and Netflix places a high value on individual skills in a collective, team environment.
While all of this may seem warm and fuzzy, it isn’t. It is a strong example of employee communication but it is also a data driven, highly accountable framework for culture. The difference is that what they value is written in common terms that people understand and is, in general, contrary to a lot of corporate cultures. There is a strong undercurrent of accountability but it leads with the value of the individual, teamwork and sound judgment.
Stay tuned for part two which focused on the seven aspects of Netflix’s culture.
Netflicks’ generosity to share their mode of operation might just make everyone who reads it better at anything… respect, values, integrity are elements easily pushed to the wayside when we forget what we’re really trying to do.
[...] 13, 2009 by Valerie Dennis In part one of this series, I talked about some key points in Netflix’s corporate culture that help them [...]