Culture at Netflix

Netflix is a unicorn and functions on an ‘unusual’ company culture.

What starts off with the core philosophy of ‘people over processes” ends up with a company the company wants to improve not preserve.

This blog goes into the culture, the impact, what employees think, and the evolution of this culture.

The Genesis

The Netflix Culture Deck is one of the most important documents that came out of Silicon Valley. It was a collaborative endeavor among CEO Reed Hastings, Patty McCord, who worked as the company's Chief Talent Officer for 14 years, and whoever was in management at the time.

Core Principles of Netflix's Culture

Here are the core behaviors that make Netflix's culture stand out.

• Judgment
• Selflessness
• Courage
• Communication
• Inclusion
• Integrity
• Passion
• Innovation
• Curiosity

Netflix has valued behaviors, not values.

Here’s how Netflix embodies these behaviors

Empowerment and Responsibility

Netflix trusts its employees. In the words of Scarlett Alle, Director, Brand & Editorial- France at Netflix, “It’s like being an entrepreneur in a big environment”

This empowerment is not without its counterpart: responsibility.

The company believes that great people make great decisions, and it's this trust that fuels innovation within the company.

Openness and Transparency

The ideal environment is where everyone learns from each other. People constantly give each other feedback on what could help them work better together. By democratizing information, all employees are equipped to contribute meaningfully to the company's direction.

Candid Communication

Truth and directness lead to better problem-solving and innovation. This candidness is expected not just horizontally across peers but vertically across all levels of the organization. It's this honesty that Netflix credits for its agile and effective decision-making process.

High Performance and the Dream Team

Netflix's culture is about assembling a "dream team" of high performers. The company is clear about its high expectations: "Keep only our highly effective people." It's a meritocratic approach, where contribution and impact are the measures of success.

Innovation and Simplicity

The company encourages its employees to question the status quo and to always look for ways to improve. This relentless pursuit of innovation is balanced with a desire for simplicity, so the new ideas enhance rather than complicate the user experience.

Diversity and Inclusion

Netflix builds a workforce as diverse as its audience. In an inclusive environment where everyone feels respected and valued.

Integrity and Impact

Do the right thing, even when no one’s watching. The focus is always on the impact of one's actions on the company and its goals.

Netflix's core value are the principles that guide every decision, action, and innovation within the company.

Netflix's Cultural Practices

“Hire only A players” so they know how to perform well!

There's a “keeper test” for every team member, they ask the managers: if this person left Netflix for a role at another company, would you fight to keep them? If the managers wouldn't fight to keep an employee they’re let go.

If someone’s not adequately performing that’s the only thing you can do, the discomfort of letting go is soothed with a rich severance package. So the employees have enough time and resources to regroup, relearn, and reintegrate into a new environment.

Money shouldn’t be the reason A players leave Netflix

The company pays top-of-the-market paychecks and asks its employees to regularly interview at other places so they know the market rate.

The vacation policy is ‘take vacation’

Unlimited vacation..Is it even real? Employees answer the doubts in the following youtube video:

“Being the family father of two small kids and starting and ending the work whenever I want is such a luxury”

“If you need some time out, go ahead and take it no questions asked”

People in Netflix’s higher management regularly take vacations to return with a fresh mind and new ideas. This lets the junior team members know that sometimes taking a break is important.

How does Netflix measure work performance?

There are no hard measurable KPIs at Netflix. No established ways of measuring performance for the company. You’re measured by your team and you are the measure of your own success.

If they had set KPIs people would have a bias about ticking particular boxes, taking no risks.

“Hire great people and trust them to make good decisions” works every time.

There are no performance bonuses because when you hire people who just do their best, an annual bonus isn’t needed to make them work better and deliver more. This doesn’t mean Netflix doesn’t pay well at par with market rates, it just doesn’t believe in paying with performance bonuses.

There are no annual reviews. Formal performance reviews are instituted with informal 360-degree reviews. How they work is: Everyone identifies things their colleagues should stop, start, or continue doing. This was first implemented with an anonymous software taking anonymous feedback which overwrites the behavior of courage and open communication. So now it’s ‘signed feedback’, with teams doing their 360s face-to-face.

Subcultures within a culture

From its original version, the culture deck with 120 slides it’s been translated into 10 pages of prose that answers every question people might’ve had when the deck first came out.

There’s an overarching ‘company culture’ but now without its ‘subcultures’.

In an article on the Harvard Business Review, Patty McCord recalls how the finance team at Netflix once wanted to formalize the whole company with direct-deposit paychecks. She pointed out that not all hourly workers have bank accounts.

It comes back to the employees

While Netflix’s culture is not for everyone it certainly works for Netflix. That’s why the company has always been transparent about how it works- the employees can decide if they want to commit to the culture or not.

Some Netflix employees don’t like it either. In an interview by the Wall Street Journal, 70 Netflix employees (current and former), described the environment as “ruthless, demoralizing and transparent to the point of dysfunctional.”

To someone who values stability and doesn’t do well in a culture of open feedback and always being able to perform the best - working at Netflix wouldn’t be a good career move.

Adopting Netflix's Cultural Practices

With these idealized company cultures, remember that this is what worked for Netflix.

‘Culture’ is the kind of organization you want to build, the kind of people you want to work with, and what they value. What works for every organization is different, some find solace in sticking to set KPIs for measuring employee performance because it’s working well for them.

So, what are your most important values? Are your employee behaviors mismatched with what it takes to align with these values? Great culture comes from learning what’s important to you, and your organization and doing what it takes to get there.