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Unlimited vacation. No dress code (just don’t show up naked). No cost approval is required. And if you criticize the company, you can get a reward with a promotion.
“It’s risky to trust employees as much as we do. To give them as much freedom as we do,” Netflix CEO and co-founder Reed Hastings said in an interview with NPR. “But it’s essential in creative companies, where you have a much higher risk of a lack of innovation.”
More than a smart strategy or a good time or just luck, Hastings attributes the company’s unorthodox workplace culture to its meteoric rise.
Netflix’s fortune continued to rise during the pandemic with millions of people left at home. Already the largest subscription video streaming service, Netflix has added 26 million new users so far this year, increasing its subscriber base to nearly 200 million worldwide.
“Our IPO was at $ 1 about 20 years ago. We are now at about $ 500,” he said. “We attribute a lot of that to culture.”
In his new book, No rules, no rules, Hastings discusses one of the guiding principles of his radically transparent management style: The Keeper Test.
The idea is to ask your boss, “If I wanted to leave, how much would you fight to keep me?”
If the answer is “not very difficult”, maybe it’s time to go.
“Our culture note says that things like adequate performance get a generous release package,” he said.
This culture causes some employees to constantly look over their shoulder, worried that they will be perceived as something less than a star worker.
In 2018 Wall Street Journal in an investigation in which the newspaper spoke to 70 current and former Netflix employees, the company’s culture was sometimes described as ruthless and transparent “to the point of dysfunction.”
Some officials said people of color did not feel empowered like their white counterparts to offer outspoken feedback. Some were under so much pressure that they left before they could preserve themselves.
Hastings counters that people of all backgrounds have ways to rise in the company. He notes that of Netflix’s top 20 leaders, half are women and a quarter are colored, although he acknowledges that the way Netflix is not for everyone.
“Those who are afraid tend to check because it’s an unpleasant feeling. And it’s really best for people who can recognize the risks intellectually, but in fact they are so happy to play with great teammates,” Hastings said. “People who receive a promotion and a reward are iconoclasts and are curious, but often disagree.”
This climate can certainly be abusive, said Jonathan Cole, a professor at the Columbia Business School and a former investment banker.
“There are certainly versions of this that would obviously be completely destructive,” Knee said.
Still, he admits to Hastings that he has tried something different, and says he has created a better environment than many jobs in the United States, where people go through difficult topics on their toes instead of addressing them directly.
“People are not rewarded for giving feedback. There will be emotions. There will be people. Someone will cry. You just don’t want to. It’s like, ‘You know what?’ Let’s just wait, “Knee said.
“Corporate America sees feedback as terrible. It’s bad for the organization and bad for people’s development,” he said.
There are parallels between the way Netflix treats its employees and the many shows it produces. More than three dozen broadcasts have been canceled or not renewed in the last two years, including those that have received critical acclaim as Ozark,, Dear white people and One day.
Still, Netflix’s big boost in original programming, with award-winning movies and noisy shows like Tiger king, made Netflix’s profits faster than traditional Hollywood studios.
Hastings says that if Netflix had a stable corporate culture, this may not have been the case.
“Netflix’s culture, on the other hand, is known – or scandalous, depending on your point of view – to tell it as it is,” he wrote. No rules Rules co-author Erin Meyer.
Leader “unencumbered by emotions”
In an interview with NPR, Hastings acknowledged that culture can be difficult, even for him.
Hastings’ leadership style was once described as “unencumbered by emotion,” an observation that some of his colleagues told him directly.
A Netflix vice president once told him he wasn’t a good listener and tended not to be sympathetic.
“Which, I must say, hurts even at the level of success,” Hastings said. “I thought I did better in that dimension. But I remember that the feedback is like an exercise and those are the last few presses, those last few presses that hurt, they make you stronger.”
Anything else that hurts? Realizing that Netflix had reimbursed an employee in Taiwan for $ 100,000 for personal travel, an incident that Hastings described in the book.
The employee was fired. But since there are no approvals for labor costs, this went unnoticed on Netflix for three years.
“The challenge of freedom is that it can be abused,” Hastings said. “There are very few people who abuse it, but it’s a shame when it happens.”