Even a few years on, we still struggle to find another example that so perfectly outlines the key elements of culture, and the related performance & revenue impact, as Netflix’s cultural strategy.
For a couple of years now the company has created real buzz in the HR world around their unique elements of culture. Their powerpoint deck – The Freedom & Responsibility Culture, has been viewed more than 5 million times. This is something we have talked about before, and we’re going to talk about it again. Why? Well here’s a couple of reasons…
- They have been phenomenally successful – They are nearing 150 million in subscribers, recently reported net profit over over $400 million, and just to top it all off, they have won multiple Emmy awards.
- They began their change as a growing SME – Netflix began to recognise the need for change and shape new philosophies in late 2001 when they had only 120 employees. So their journey is just as relevant to growing SMEs as it is to corporates.
So now we have established why this is worth a read, here’s a couple of Netflix’s most successful elements of culture…
1. Hire only fully formed Adults…
Netflix pride themselves on only hiring responsible adults. By hiring people who make adult level decisions have a passion for high performance and keep the best interests of their company at heart, they believe that 97% of employees will do the right thing. This adult belief system allows the business to provide flexible benefits and incentives, with the same guiding principle “do the right thing for Netflix”. Two of their “non policies” following this ethos are:
- Unlimited vacation – As long as employees take vacation time that does not interfere with work or projects, they can take it whenever they want. Several other companies are now following this trend with really successful results.
- A five word expense policy – “Act in Netflix’s best interests”. In an adult culture, employees spend company money more frugally, as if it were their own. And by working in this way they eliminate the need for job roles or complicated policies that police expense use.
2. Truthful performance…
Netflix operates an open and honest system to performance management. They hold 360 reviews where they are asked to identify one thing that each colleague should start, stop and continue. By being open and truthful there is no need for performance management as it is quickly clear if an employee is performing or not.
3. Managers have true ownership…
Team managers at Netflix are encouraged to create winning teams. Unlike many companies, where managers often lack real autonomy, Netflix requires its managers to envision their goals for their team, then build the right team to execute this. This drives ownership driven behaviour like recruiting only the right people (not a ‘nearly there’ fit). As part of their strategy for attracting the best people, Netflix operate a market value salary scheme. They pay a person what they are worth in the market. If they grow their skills and become more valuable then they get a raise in salary, if they stay the same, their salary does too.
4. Leaders create the culture…
At Duo we see so many businesses where their cultural aspirations and reality don’t quite match up, and often leaders let a culture happen rather than creating the one they want. Netflix recognised this and challenges their leaders to consistently create the culture needed for the business to be successful. In addition to leading from the front, they proactively manage of any sub cultures that appear during growth or company change.
5. Replace traditional HR with business innovation…
Many HR teams focus on traditional HR incentives or models, as opposed to thinking commercially. At Netflix, the HR team are held responsible for driving commerciality through HR activities. This means reporting on things that demonstrate real ROI versus traditional HR KPIs.
To look your key elements of culture and make sure they work to help you reach your business goals, why not book a free virtual 60 minute culture strategy insight session with one of our team?