Netflix’s culture seems to fly in the face of what people associate with Silicon Valley. Credit: Netflix
In a world of ping pong tables, “Chief Happiness Officers,” moustache Mondays andThursday recess, one tech giant stands apart, shakes its fist at company-wide yoga retreats and indoor rock climbing walls, and instead offers the oldest perk in the book: cold, hard cash - and lots of it.
What do they expect in return?
Performance. Major league, game-changing performance. And they don’t care how you do it or where you do it from, but if you make it happen, you’ll be rewarded with even more cold hard cash.
And if you don’t?
Well, you’ll also get a big pile of cash, on your way out the door.
The company, as I’m sure you’ve guessed by the title and the photo of this article, is the content streaming giant Netflix. The culture at the California-based organization, which was created by CEO Reed Hastings and HR crusader Patty McCord, forgoes all the typical perks associated with the standard Silicon Valley company for a high-intensity environment that rewards the best and quickly removes the rest.
Here’s a few quotes to illustrate the point, the first one by Hastings:
At most companies, average performers get an average raise. At Netflix, they get a generous severance package.
And here’s another from McCord, who is just a fountain of blunt, anti-HR talk:
During 30 years in business I’ve never seen an HR initiative that improved morale. HR departments might throw parties and hand out T-shirts, but if the stock price is falling or the company’s products aren’t perceived as successful, the people at those parties will quietly complain—and they’ll use the T-shirts to wash their cars.
The Netflix Culture
The Netflix culture is no secret: its culture code was released on the Internet a few years ago and, from all reports, appears to capture the essence of the corporation.
There are seven aspects of the Netflix culture, according to the code:
Okay, that’s a bunch of stuff. But what does it really mean?
Well, the Netflix mantra, first and foremost, is being really transparent with employees. They come out and tell employees what they need and the challenges facing the company – increased competition, unexpected costs, etc – and tells their workers to fix them.
From there, Netflix doesn’t really care how they fix them, so long as they are fixed (context, not control). They were one of the first companies to give their employees unlimited vacation, as Netflix doesn’t care how much time it takes to get something done, just that it gets done.
If you do get it done? Netflix pays you a lot of money (they actually pay their employees a lot of money already, far more than most, but you can earn even more if you make it happen). Don’t make it happen?
Well, I’ll let McCord explain it:
I said goodbye to the whiners and the babies and the people who didn’t believe. If they didn’t believe then we had no chance at all.
Believers, whiners and babies also includes people who don’t have the skills to make it happen, i.e. they didn’t get it done. And that’s reflected in Glassdoor reviewsof the company, as workers continually said the same thing: a place that pays great but is very demanding and is quick to fire.
Netflix, in keeping with their overall philosophy, has almost no policies and a five-word expense report credo that reads, “Act in Netflix’s best interest.” The idea is that processes and policies and expense reports and all of that slow down innovation and cost money to enforce, and get in the way of what the company really needs to achieve.
The Netflix Perks: High Salaries And “Stunning” Colleagues
So how does Netflix get great people? It pays them really high salaries, the highest the market will bear for that person.
Hastings has talked about this in several interviews: the company determines the absolute most amount of money an employee should make on the open market and then pays them that, regardless of position or experience or anything else. McCord even elaborated that if a recruiter from another company calls and offers a higher salary, the employee should tell Netflix.
After all, they might match it. Here’s McCord again:
Many HR people dislike it when employees talk to recruiters, but I always told employees to take the call, ask how much, and send me the number—it’s valuable information.
How about other benefits? Netflix gives okay health insurance, as even they admit the co-pays are high, and doesn’t believe in bonuses or matching contributions to charities or anything like that. The belief is just to give employees really high salaries and give them the freedom to do what they want with their money.
They also don’t do much as far as development or trainings or anything along those lines. Again, the idea is to learn it on your own or through your colleagues, as opposed to seminars and conferences. If you can’t learn it because you don’t have the skills, well, then Netflix is more than happy to hand out another generous severance package.
Why no development? Because, as Netflix put in its culture code, real development occurs when people are pushed hard, not through trainings:
We develop people by giving them the opportunity to develop themselves, by surrounding them with big challenges to work on. Mediocre colleagues or unchallenging work is what kills progress of a person’s skills.
There are two other key benefits Netflix offers though – “stunning” employees, as they put in their culture code, and challenging work. The company fundamentally believes that those two factors outweigh any other benefit an employee could offer.
McCord, one last time:
The best thing you can do for employees—a perk better than foosball or free sushi—is hire only ‘A’ players to work alongside them. Excellent colleagues trump everything else.
So Is It Smart?
So is this a good strategy? Well, it is hard to argue with the results: Netflix is one of the most successful, innovative companies in the world that earned a remarkable $4.37 billion in revenue in 2014, despite having just 2,000 employees (which equates to roughly $2.2 million an employee, an insane figure).
The Glassdoor reviews indicate that workers feel legitimately afraid of losing their jobs at all times, and perhaps rightfully so, but they also lauded the challenging work, the freedom and, naturally, the high pay. And Netflix is exceptionally upfront with its policies and the environment, so it isn’t as if anything comes as a surprise.
At the end of the day, Netflix’s culture might not work for every company. But Netflix knows exactly what it is, it creates a culture that mimics it perfectly and that, ultimately, is more important than the actual policies themselves.
And that’s the real lesson: it doesn’t really matter what you believe, so long as it is consistent and is applied equally across the company. Or, as Abraham Lincoln once advocated, “whatever you are, be a good one.”
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