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Is Netflix the future of HR or a radical fringe?

For most people, Netflix means weekends spent binge-watching series after series. In the HR world, Netflix is so much more.

Strong values that actually matter internally, unlimited holiday and constant investment in the best talent - this just scrapes the surface of how one company in Silicon Valley has influenced global HR thinking. So is this the way HR is moving or is there another side to an otherwise attractive company culture?

(If you want to read more detail about what Netflix are doing, check out these slides that went viral back in 2009.)

Genuine company values

Netflix start very strong with a critique of meaningless company values and uses Enron as a poetic example. In Enron’s lobby were their company values, proudly displayed: Integrity, Communication, Respect, Excellence. In 2001, senior managers went to prison for fraud and the company went bankrupt because of it. Many people would jump on this case study as another example of a business being two-faced and insincere but Netflix saw it as something much less Machiavellian: the values of a company are defined by what behaviour leads to reward, promotion and  firing. While in theory Enron may have liked the warm values displayed in their lobby, in practice these values simply weren’t valued.

The general public are becoming increasingly sensitive to company’s moral behaviour and they can be very vocal about it on social media. Employer branding is also becoming more significant as people care about what type of company they work for. Company values that actually compliment company objectives and ambitions will gradually become vital to maintain brand image. How long this takes is harder to predict but the tide has definitely turned.

Hard work is irrelevant, results matter

Netflix don’t care how many hours you work. They don’t care what time you get into the office. They don’t even care how much holiday you take (seriously, it’s unlimited). This can encourage efficient solutions and even higher performance. If somebody does phenomenal work in half the expected time, they probably feel that this behaviour should be rewarded, not penalised. If the quality of your work isn’t good enough, the amount of effort you put in is irrelevant, so why is the reverse not true too? On the other hand, too much focus on results may discourage some risk taking that could otherwise be beneficial to the business. Netflix cover this in their company values but it is something that may not work for some organisations.

Adequate performance gets a generous severance package

Here’s where things get really controversial. Netflix describe it as “We’re a team, not a family” – if somebody isn’t the best any more, they don’t belong at the company any more. Regardless of your recruitment perspective, this is a very radical strategy – and Netflix know it. 

Firstly, this is really only viable if you can afford to hire the very best. It’s also a very demanding environment so the job has to be equally rewarding – you can’t put a high-performing expert into a mediocre role and there’s nothing wrong with admitting that some of the jobs in your company aren’t that exciting. Netflix admit that this environment isn’t right for everybody. Anybody who wants job security and stability won’t get that and a lot of people just don’t want a high-pressured work environment. It’s still common for people to tolerate their jobs and in turn fund enjoying their spare time.

This is not a policy to be used lightly and any company needs to take their own situation into account, but just because it won’t be ubiquitous doesn’t mean it won’t be a major trend and as working environments become increasingly flexible we may see more of this to come.

Use high-performance hiring to create dynamic corporate structure

That’s quite a bit of jargon but it’s actually really interesting! Basically, Netflix argue that the best way to stay flexible and responsive to industry change yet still keep growing is to hire high-performing staff rather than introduce more procedures. They try to keep the company’s offering and structure as simple as possible and then let their staff organise themselves. This doesn’t mean zero procedure, just keeping it to a minimum.

Cutting procedure is always an easy sell to employees but it also requires keeping staff teams lean and efficient and, as above, many people don’t want to work for a company that is that cut-throat. This also requires managers to relinquish some control and trust the setup. Netflix also admit that this works because they are in an industry where mistakes aren’t very costly. More companies are going to have to prove this as viable before such a radical setup becomes more mainstream.

Unlimited holiday

This is one that a lot of people have heard of. Netflix explain it as “There’s no clothing policy at Netflix but no one comes to work naked. You don’t need policies for everything”. They don’t track what hours you work so why track the days?

This obviously only works with a motivated workforce and with flexible working hours. If you’re staff don’t really want to be there, they may take advantage of unlimited holiday but with more companies embracing flexible work, we may very well see more companies taking this on. 

And more!

Believe it or not, there is still more to go through. You can see all of Netflix’s policies here. What do you think? Is this the future of HR?