Netflixdid not necessarily innovate HR but it did reinvent the current HR policies. Itmade them simpler. When Netflix started in 1997, it was a startup. It had the standardHR policies especially when it came to vacations. They offered the standard 10vacation days, 10 holidays and a few sick leaves. As they grew, they realized that theorganization structure has become more complex.
They saw a decline in talentedindividuals in the company and making it less attractive to highly skilledindividuals. Netflix always focused on quality over quantity when it came to itsemployees. A key role played in shaping the current corporate culture is byPatty McCord. She worked for 14 years as Netflix’s chief talent officer (CTO). Accordingto her, there Netflix followed the some basic concepts in order to change theorganizational culture in the company. These principles are laid down in the NetflixCulture Document, which was created by Patty McCord, Reed Hastings and otheremployees. The document has been credited as the most important document tocome out of the Silicon Valley by Sheryl Sandberg, COO of Facebook and is nowused in companies even outside the Silicon Valley.
These concepts are 126.96.36.199 Hire, Reward, and Tolerate Only FullyFormed AdultsNetflix focuses on common sense over long andcomplicated policies. It was observed that if the company carefully hirespeople that would put the company’s welfare first and understands the need fora high performance workplace, and then when faced with conflicting situations,97% of your employees will do the right thing irrespective of the policies.Also, when individuals work with like-minded high-performing individuals, theyare more happy & productive. Also Netflix focuses on Adult-like behavior atthe workplace. It means being transparent withbosses, colleagues & subordinates.
Netflix implemented the adult-like behaviorin two areas – policy regarding leaves and travel and expense policy. Instead of following aformal leaves & vacation system, Netflix has kept this area open-ended. Salariedemployees were told to take off whenever they felt was appropriate. Bosses andemployees were asked to sort it out within themselves. There are a few groundrules to avoid any problems.
For examples, employees from accounting departmentshouldn’t plan any leaves during the beginning or end of the quarters. Also formore than 25 days of leave, the employee had to contact HR. Senior leaders were made the role models ofthis policy. They were asked to inform the other employees about their leaves. Netflix alsoeliminated the formal travel & expenses policy. Their current expense policyis “Act in Netflix’s best interests.” The employeesare expected to treat the company money as if it was their own and spend it economically.This moved the responsibility of the expenses to the front-line managers.
Italso helped Netflix save some costs such as the cost of outsourcing a travelagent. 188.8.131.52 Tell the Truth about PerformanceNetflixeliminated a formal feedback procedure for its employees.
This helped in creatingan environment where the employees had honest & transparent conversationswith each other. Netflix believes that formal procedures are ritualistic anddoes not show the employees true caliber. Instead,Netflix introduced 360o reviews. The rules for this were very simple– employees had to find the things that they believe their colleagues should startstop or continue with. Initially, the system was kept anonymous. Today,majority of these 360o reviews take place face-to-face. Netflixalso doesn’t organize any performance review meetings or annual employeereviews.
184.108.40.206 Managers Own the Job of Creating GreatTeamsNetflixasks managers focus on the short-term six month accomplishments of the team andto focus on the skills required to reach those goals. This is because managers wouldelect the right candidates, if they know their objectives clearly. Only whenthe manager was fully sure of the team skills and the objectives, they wereasked to analyze how their current team members would fit into the skill setsrequired.
This helps the managers understand the strengths and weakness of theirteam members and use them to the advantage of the team. 220.127.116.11 Good Talent Managers Think Like Businesspeople and Innovators First Having the right type of HR mangers was a veryimportant part of Netflix’s HR policy.
The right talent manager would focusless on the superficial peace at the workplace and would emphasize more on transparentcommunication. This involves letting the employees know about the company’s expectationsas well as specify the required actions to reach their goals. Instead of beingcheerleaders, the talent manager should focus on what is actually best for thecompany.