How Netflix Reinvented HR
There’s no reason the HR team can’t be innovative too.
When Netflix executives wrote a PowerPoint deck about the organization's talent management strategies, the document went viral--it was viewed over5 million times on the web. The idea behind the deck is, if a company hires correctly, employees will want to be star performers, and they can be managed through honest communication and common sense.
Netflix claims that many companies focus too much on formal polices aimed at the small number of employees who interest aren’t fully aligned with the firm. The solution, they claim is to “hire, reward, and tolerate only fully formed adults.”
In this newsletter, we will further explain exactly what Netflix means by this statement, the actions they put in place to support it, and how it can be applied to other organizations.
Hire, reward, and tolerate only fully formed adults.
“Adult-like” behavior means talking openly about issues with your boss, your colleagues, and your subordinates. It means recognizing that even in companies with reams of HR policies, those policies are frequently skirted as managers and their reports work out what makes sense on a case-by-case basis.
Netflix HR team put this into practice by simplifying their Vacation and Expense Policies.
Expense Policy: The company’s expense policy is now five words long: “Act in Netflix’s best interests.” They expected employees to spend company money frugally, as if it were their own. Eliminating a formal policy and forgoing expense account police shifted responsibility and saved the company countless hours over reporting rigmarole.
Vacation Policy: Salaried employees are told to take whatever time they felt was appropriate. Managers and employees were asked to work the details out with one another.
Tell the truth about performance.
Netflix scraped formal reviews in favor of informal conversations once they were too ritualistic and infrequent. Now managers and employees to have frequent conversations about performance as an organic part of their work.
To support this, they instituted informal 360-degree reviews and keep them fairly simple: People were asked to identify things that colleagues should stop, start, or continue. In the beginning, they used an anonymous software system, but over time they shifted to signed feedback, and many teams held their 360s face-to-face.
Managers own the job of creating teams
Netflix doesn’t measure managers on whether they got their paperwork done on time. Instead they measure them on their team success. Great teams accomplish great work, and recruiting the right team is the top priority.
To support this mentality, Netflix ask managers to “imagine what new accomplishments you need your their team to achieve six months from now”, then they follow-up this question up with the supporting inquires below:
“What specific results do you see?”
“How is the work different from the work your team is doing today?”
“What skills are needed to make this become reality?”
“What needs to take place to bring these skills to your team”
Leaders own the job of creating the company culture.
Leaders must actually model and encourage the behavior they preach, by ensuring the following:
The organizational values and encouraged behaviors line-up with the desired culture.
Every employees understand the levers that drive the business, clearly communicating how the company makes money and what behaviors will drive its success.
Awareness of subcultures that might require difference management, for instance ”hourly vs. salary” or “field vs. support center” employees.
Think like businesspeople and innovators first, and like HR last.
HR leaders should constantly discuss the following:
What’s good for the company?
How do we communicate that to employees?
How can we help every worker understand what we mean by high performance?
Simple Test: If a company has a performance bonus plan, they should be able to go up to a random employee and ask, “do you know specially what you should be doing right now to increase your bonus?” If he or she can’t answer, the HR team isn’t making things as clear as they need to be.
Overview: Although Netflix’s polices may not work in all organizations, taking into account some of their ideas into our own HR department may help us achieve some of the positive results in retention and cost/time savings that Netflix ‘s HR department has experienced.
