You could say Netflix is the Chris Hemsworth of media companies: young, talented, and in-demand. Netflix has not only captivated the attention of its customers around the world, but also continues to grow its reputation as an attractive, sought-after employer. Among many people, especially those in their twenties and thirties, Netflix ranks as one of the most coveted jobs to land.
Netflix has often been touted as best-in-class when it comes to culture. But is culture what makes Netflix so desirable?
With this question in mind, I picked up Patty McCord’s new book Powerful: Building a Culture of Freedom and Responsibility (Missionday). I walked away with three key takeaways that run counter to how most companies operate:
Strategic Talent Management: Don’t compromise on hiring.
Dismantling Process: Shift the power dynamic from the employer to the employee.
Organizational Tenet: Operate as a team, not a family.
Strategic Talent Management: Don’t Compromise On Hires
Most organizations rarely consider talent management a strategic endeavor. Instead, it’s overlooked. This problem is especially pervasive in media companies, an industry that has relatively low barriers to entry for new employees and is plagued by mass layoffs.
Netflix, perhaps more than any other company, has challenged that idea, leveraging a tough economic environment to their advantage.
“In 2001 we had to lay off a third of the company. The dot-com bubble had burst….and we were on the brink of bankruptcy….Then that Christmas the cost of DVD players dropped and they became the big gift, and the business took off. Now we had to do twice the work with two thirds the people….And yet everyone was much happier….I said to [Reed], ‘Why is this so fun?….Our first big realization was that the remaining people were the highest performers, and it taught us that the best thing you can do for employees is hire only high performers to work alongside them. It’s a perk far better than foosball or free sushi or even a big signing bonus or the holy grail of stock options,” writes Patty McCord.
What makes a great hire? Most organizations fail to understand that a great hire is subjective. Standard hiring practices gauge the strength of candidates based on resume and credentials, and if they’re smarter, recommendations. But very few companies actively look to match skillset (which is not always reflected in credentials) with the demands of the company. “Making great hires is about making great matches. One company’s A player may be a B player for another firm, and vice versa,” McCord writes.
Hiring the right talent has a multiplier effect. As Bezos recently wrote in his 2017 annual letter to shareholders, “high standards are contagious.” McCord echoes this point. “Motivation is about talent density and appealing challenges. We didn’t understand right away at Netflix that great colleagues and tough challenges to tackle were the strongest draws to working at the company.” Once you find the best talent, you have to enable them to tackle those problems.
Dismantling Process: Return The Power To The People
Where does the power sit in an organization? Most employees today are stuck inside a model where the company holds power over the employee. The company dictates your salary, your hours, your promotion. Employees rely on their employer to define their power and worth.
Today the notion of work is becoming increasingly decentralized, as played out in the gig economy. But the mental shift of employees hasn’t followed suit, as employees readily give up their power to their employers. This is the underlying reason so many employees today “feel stuck” in their job, they feel powerless. Employees forget they have the power to walk away. It isn’t the employee’s fault though, most companies reinforce this idea.
Netflix rightfully threw that model in the trash. “A company’s job isn’t to empower people; it’s to remind people that they walk in the door with power and to create the conditions for them to exercise it. Do that, and you will be astonished by the great work they will do for you.”
How does an organization give the power back to the employee? McCord has an answer, by dismantling the excessive and useless processes that exist in most organizations. Netflix noticed many procedural practices in place today are remnants of 20th-century models no longer relevant to how business is conducted today. They gave up process in favor of returning the decision rights to the employees.
“To my mind, people across the full spectrum of functions would love nothing more than to be free to tackle projects in the way they think will produce the best results in the shortest possible time. So often, though, they are thwarted by management second-guessing them or by inefficient systems,” McCord remarks.
Tactically this infused all aspects of the organization, starting with entrusting the employees to be responsible to manage their own time. Results, finally, speak for themselves.
Organizational Tenet: Operate As A Team, Not A Family
Don’t get the wrong impression, Netflix doesn’t coddle their employees. As CEO Reed Hastings points out, Netflix is not your family, Netflix operates like a sports team. You join the company to compete. And every day you do your best to contribute to the success of the team.
In his podcast, Masters of Scale, Reid Hoffman interviewed Reed Hastings about this very idea. “We decided to use the metaphor that the company was like a sports team, not a family. Just as great sports teams are constantly scouting for new players and culling others from their lineups, our team leaders would need to continually look for talent and reconfigure team makeup. We set the mandate that their decisions about whom to bring in and who might have to go must be made purely on the basis of the performance their teams needed to produce in order for the company to succeed,” Hastings explained.
This touches on an undervalued aspect of talent management: systematically assessing the talent pool. Talent management today focuses much more heavily on recruiting talent and much less so on re-evaluating existing talent. One without the other leads to complacency. If you want to be Netflix-good, you have to do both. You have to be willing to give up the talent you had initially hired to face future challenges.
According to McCord, “Don’t expect that your current team can be your team for tomorrow.”
Can You Define Your Culture?
McCord concludes, “In my experience, one of the most important questions business leaders must regularly ask is ‘Are we limited by the team we have not being the team we should have?’” I posed this question to a number of people who work in the media industry and an astonishing number answered “yes.”
Culture attracts talent. And yet most organizations have no idea how their culture is differentiated because for the most part, it isn’t. The key to culture is to make it distinctive. There is no one size fits all, but it has to stand out and the company has to own it. Think Netflix, Bridgewater, or Airbnb. Once defined, it does the work for you in attracting more employees of the same ilk.
Culture is too often forgotten, but it is the invisible structure that carries a company. I’ve always held the belief that the culture of a company can tell you a lot about a company’s future success. Netflix seems to indicate that’s right.