Netflix did reinvent the current HR policies. It

Netflix
did not necessarily innovate HR but it did reinvent the current HR policies. It
made them simpler. When Netflix started in 1997, it was a startup. It had the standard
HR policies especially when it came to vacations. They offered the standard 10
vacation days, 10 holidays and a few sick leaves.  As they grew, they realized that the
organization structure has become more complex. They saw a decline in talented
individuals in the company and making it less attractive to highly skilled
individuals. Netflix always focused on quality over quantity when it came to its
employees. A key role played in shaping the current corporate culture is by
Patty McCord. She worked for 14 years as Netflix’s chief talent officer (CTO). According
to her, there Netflix followed the some basic concepts in order to change the
organizational culture in the company. These principles are laid down in the Netflix
Culture Document, which was created by Patty McCord, Reed Hastings and other
employees. The document has been credited as the most important document to
come out of the Silicon Valley by Sheryl Sandberg, COO of Facebook and is now
used in companies even outside the Silicon Valley. These concepts are

3.2.2.1 Hire, Reward, and Tolerate Only Fully
Formed Adults

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Netflix focuses on common sense over long and
complicated policies. It was observed that if the company carefully hires
people that would put the company’s welfare first and understands the need for
a 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, they
are more happy & productive.

Also Netflix focuses on Adult-like behavior at
the workplace. It means being transparent with
bosses, colleagues & subordinates. Netflix implemented the adult-like behavior
in two areas – policy regarding leaves and travel and expense policy.

Instead of following a
formal leaves & vacation system, Netflix has kept this area open-ended. Salaried
employees were told to take off whenever they felt was appropriate. Bosses and
employees were asked to sort it out within themselves. There are a few ground
rules to avoid any problems. For examples, employees from accounting department
shouldn’t plan any leaves during the beginning or end of the quarters. Also for
more than 25 days of leave, the employee had to contact HR.  Senior leaders were made the role models of
this policy. They were asked to inform the other employees about their leaves.

Netflix also
eliminated the formal travel & expenses policy. Their current expense policy
is “Act in Netflix’s best interests.” The employees
are 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. It
also helped Netflix save some costs such as the cost of outsourcing a travel
agent.

3.2.2.2 Tell the Truth about Performance

Netflix
eliminated a formal feedback procedure for its employees. This helped in creating
an environment where the employees had honest & transparent conversations
with each other. Netflix believes that formal procedures are ritualistic and
does 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 start
stop or continue with. Initially, the system was kept anonymous. Today,
majority of these 360o reviews take place face-to-face.

Netflix
also doesn’t organize any performance review meetings or annual employee
reviews.

3.2.2.3 Managers Own the Job of Creating Great
Teams

Netflix
asks managers focus on the short-term six month accomplishments of the team and
to focus on the skills required to reach those goals. This is because managers would
elect the right candidates, if they know their objectives clearly. Only when
the manager was fully sure of the team skills and the objectives, they were
asked to analyze how their current team members would fit into the skill sets
required. This helps the managers understand the strengths and weakness of their
team members and use them to the advantage of the team.

3.2.2.4 Good Talent Managers Think Like Businesspeople and Innovators First

 Having the right type of HR mangers was a very
important part of Netflix’s HR policy. The right talent manager would focus
less on the superficial peace at the workplace and would emphasize more on transparent
communication. This involves letting the employees know about the company’s expectations
as well as specify the required actions to reach their goals. Instead of being
cheerleaders, the talent manager should focus on what is actually best for the
company. 

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