How Netflix Reinvented HR
Believe in people, not rules. Reward honesty. And discard the conventional playbook. Through Patty McCord
One of the most significant documents to ever come out of Silicon Valley, according to Sheryl Sandberg. On the internet, it has received more than 5 million views. However, when Reed Hastings and I (along with a few other colleagues) developed a PowerPoint presentation outlining how we influenced the culture and encouraged performance at Netflix, where Hastings served as CEO and I served as chief talent officer from 1998 to 2012, we had no clue it would become so popular. We came to the realization that several of the talent management concepts we had pioneered, including the idea that employees should be permitted to take as much vacation time as they saw necessary, had been viewed as a little odd (at least until other companies started adopting them). However, we were somewhat aback by how influential a simple set of 127 slides would become with no music or animation.
There are a few reasons why people find Netflix's approach to talent and culture fascinating. The first is that Netflix has been incredibly successful: In just 2013, its stock more than quadrupled, it won three Emmy awards, and its U.S. subscriber base increased to close to 29 million. With that said, the strategy is convincing since it is based on common sense. I'll go beyond the bullet points in this essay to discuss five concepts that have shaped how Netflix finds, keeps, and manages talent. I'll first describe two talks I had with early workers that both contributed to the development of our overarching concept.
The initial one happened in late 2001. Netflix had been expanding swiftly; we had a staff of around 120 people and were preparing for an IPO. However, with the 9/11 attacks and the collapse of the dot-com boom, circumstances changed. It soon became apparent that we needed to cancel the IPO and let go of a third of our workforce. It was harsh. Then, quite unexpectedly, DVD players started to dominate the Christmas gift market. Our DVD-by-mail subscription business was exploding by the beginning of 2002. Suddenly, we had 30% fewer people and far more work to complete.
I was having a conversation with John, one of our top engineers, one day. He had overseen three engineers before the layoffs, but he was now a one-man team working extremely long hours. I informed John that I was hoping to get him some help shortly. I was astonished by his answer. I'm happier now, so there's no urgency, he replied. It turns out that the engineers we had fired weren't particularly outstanding; rather, they were just adequate. John acknowledged that he had wasted too much time correcting their errors and rode roughshod over them. I've found that working by myself is preferable to working with inferior workers, he stated. Whenever I discuss the most fundamental aspect of Netflix's talent strategy, his words ring in my ears: Hiring only "A" players to work alongside them is the nicest thing you can do for your staff—a benefit superior to foosball or free sushi. Excellent coworkers come first above all else.
A few months following our IPO in 2002, we had our second conversation. Our bookkeeper, Laura, was intelligent, diligent, and imaginative. She had created a system for precisely tracking movie rentals so that we could pay the right royalties, and this had been crucial to our early development. But now that we were a public firm, we required CPAs and other accounting experts with complete credentials and extensive experience, and Laura just had an associate's degree from a community college. Despite her dedication to her career, her success, and the fact that we all admired her, her abilities had deteriorated. Out of fairness to such people—and, frankly, to help us overcome our discomfort with discharging them—we learned to offer rich severance packages. Some of us considered creating a new role for her by accident, but we thought that wouldn't be appropriate.
I then got down with Laura and explained the situation, assuring her that we would provide her with an exceptional severance payout in recognition of her outstanding work.
Laura responded nicely; she was sad to be leaving but understood that the generous severance would allow her to recoup, retrain, and find a new career path. I had braced myself for tears or histrionics.
Our talent management philosophy's second essential component—and one that was inspired by this incident—was born. If we wanted only "A" players on our team, we had to be prepared to let go of individuals whose talents no longer matched, regardless of how beneficial their prior contributions had been. We shaped our approach to talent utilizing the five tenets listed below, keeping these two broad themes in mind.
Learn more about how Netflix grew to 190 nations in just 7 years.
Only fully formed adults should be hired, rewarded, and tolerated.
Over the years, we discovered that most of the time, we would obtain better results and pay less if we asked employees to rely on reason and common sense rather than on formal policies. 97% of your employees will act honorably if you take care to choose people who will put the company's interests first and who comprehend and support the need for a high-performance workplace. To address issues that the other 97% might bring about, the majority of businesses spend a lot of time and money creating and enforcing HR regulations. Instead, we made a concerted effort to avoid hiring them, If we had done so, we let them go.
Talking freely about problems with your supervisor, your coworkers, and your subordinates is an example of adultlike behavior. It entails accepting the fact that, even in organizations with reams of HR laws, these regulations are regularly broken as managers and their reports choose what makes sense in each particular situation.
Follow for more :-
Comments
Post a Comment