What is Behind The Magic of Netflix Company Culture?

Listen to this feature

Revolutionary video streaming giant, Netflix is ingrained in modern-day society. Stop and think, do you know anyone of your generation or the generation above and below you without Netflix? Probably not. 

While we are used to hearing, ‘Netflix and chill’, what we aren’t used to hearing is, ‘Netflix and their pioneering company culture’ – and we should be. Because Netflix has fast gained a reputation for creating a company culture that has left 70% of employees leaving Glassdoor reviews saying they would recommend working at Netflix.

Netflix wanted to achieve a company culture built on freedom and responsibility. If you hire the people that appreciate freedom and can take full accountability and responsibility for their behaviour and decisions – you will create a thriving culture and business. Here’s how Netflix did it.

Netflix believes in creating a culture that puts people before process. Company leaders were quick to recognise that silly office perks and gimmicky benefits were not going to add an enormous amount of value to the lives of their employees. In fact, the company culture at Netflix doesn’t even revolve around financial incentives, you can read the full Netflix Culture manifesto here.

“Our version of the great workplace is not comprised of sushi lunches, great gyms, fancy offices or frequent parties. Our version of the great workplace is a dream team in pursuit of ambitious common goals.”

The above quote is taken directly from the Netflix manifesto, which has been described by Sheryl Sandberg as, “the most important document to ever to come of the valley”.

So, just what is so important about this document?

The 127-slide deck quickly became one of the most influential HR documents to have been created.

The Netflix culture deck, otherwise known as the Netflix manifesto, was a collaborative project between founder and CEO Reed Hastings, and Patty McCord, who worked as the chief talent officer at Netflix for 14 years.

First published in 2009, the deck was cause for conversation in the HR world, as well as the tech industry. Up until this point, talent management and company culture were not priorities for businesses and Netflix’s focus on them, was even thought of as a little crazy – until others saw how successful it made the company and began to adopt the same approach.

The manifesto has been viewed around 20 million times over the years, proving that its principles have stood the test of time, remaining relevant and inspirational. Since being updated in 2017, there is now an emphasis placed on inclusion and integrity, and in a society obsessed with instant gratification, and a ‘just get it done’ mentality – this sets Netflix apart.

The real story of the reason the company began is somewhat elusive. Rumours have circulated that say Netflix was born after CEO Reed Hastings was required to pay a fee after returning a video late, but co-founder Marc Randolph discredits this. Instead, he has reportedly said that he and Hastings wanted to create ‘the Amazon.com of something’. 

Another story of the idea behind Netflix is that a problem inspired it with bandwidth.

While the reason behind its inception is difficult to pin down, the inspiration behind its manifesto and culture philosophy came from within, and there is a lot that leaders can learn from the story.

After the dot com bubble burst and America was devastated after the 9/11 terror attacks, Netflix had to let go of 30% of their employees. However, shortly after, their then DVD by mail subscription business snowballed, and they had to do more work with fewer employees. 

After speaking with some of the team, and promising them that they would hire more team members to help, it became clear that in fact, now that sub-par employees had been let go – the staff that remained performed at a higher level because nothing was holding them back.

From understanding the environment that empowered their best employees to perform to their best ability, Hastings and McCord began to understand the importance of working with a team that possessed the ability to work on common sense and logic. By hiring these people, they didn’t need to rely on strict formal policies. This ‘adultlike’ behaviour meant that issues are talked about openly with one another, rather than rely on outdated HR policies that allow managers to skirt around the real problem.

They concluded that companies spend an enormous amount of time and money, creating and enforcing HR policies that only deal with around 3% of the workforce because 97% would do the right thing naturally.

The new ‘adultlike’ approach means that Netflix offers staff unlimited vacation days. Rather than a formal expense system, the policy is simply, ‘act in Netflix’s best interests’, and treat the company’s money as if it were their own. Employees also take responsibility for their travel plans, which has ultimately saved them money because they no longer need to use third-party travel agents for this job. 

Bureaucratic formal reviews have been eliminated, and instead, senior team members are asked to have conversations around performance organically, as part of their day to day work.

Performance improvements plans, or PIP’s, are not part of the company culture at Netflix. This technique causes suffering for both parties, and there is no benefit to the business. 

PIPs inherently involved taking time to create objectives for the team member to achieve. However, often they can’t because they lack the skills, or personal inclination, leading to a drawn-out process that leaves the employee unmotivated and the leader frustrated.  

Instead of following formal performance management processes, Netflix asks leaders and senior team members to have honest conversations and offer generous severance packages that enable people to regroup, then perhaps retrain or upskill, and find a new career.

In most instances, people will have already identified that they can’t, or won’t perform at their job, and rigid processes will only delay the inevitable, making it difficult for all parties involved.

Many companies have created a set of core values. However, many of these are for show, and rarely do leaders organically encourage employees to live and breathe these values, using them as a basis for the way they make decisions and execute work.

Netflix uses these values to recognise and reward great employees. Those who embed them into their professional lives are more likely to receive a promotion, and many employees recognise the worth that they bring to their personal lives. One Glassdoor review, left by a senior software engineer said, “The environment encourages you to be a better version of yourself, which is far from the case in many places and often the opposite of that.”

The values are provided in full, in the Netflix manifesto, but in short, they are:

Judgement – make wise decisions, identify root causes rather than treating symptoms and think strategically and articulate what you are trying to achieve.

Communication – listen well rather than react fast, be concise and articulate in speech and writing, remain calm in stressful situations and treat people with respect regardless of status or difference of opinion. 

Impact – accomplish outstanding amounts of meaningful work, consistently deliver a strong performance, focus on great results – not process.

Curiosity – Learn rapidly, seek to understand, be knowledgeable about the business and industry, contribute outside of your speciality. 

Innovation – reconceptualise issues to discover practical solutions, challenge assumptions and suggest new approaches, minimise complexity and find time to simplify. 

Courage – say what you think, even if it’s controversial, make tough decisions, take smart risks, question actions inconsistent with our values.

Passion – inspire others, celebrate wins, be tenacious and care intensely about Netflix’s success.

Honesty – Be direct, but be non-political when you disagree with others, only say things about colleagues that you would say to their face, be quick to admit mistakes.

Selflessness – seek what is best for the company, not yourself or your team. Be ego-less; take time to help colleagues and share information openly and proactively. 

As you can see, the values that have been created by Netflix will only be present in individuals that are emotionally intelligent, highly self-aware and not operating from their ego. 

To create a truly collaborative environment, and a tight-knit, performance-driven team, you must employ leaders and employees that are honest with themselves first, and others. Hiring ‘rockstar’ performers with bad attitudes will not help the business in the long run; instead, it will create a toxic environment.

Honesty is key. Those with an ‘adultlike’ approach may not always enjoy being brutally honest but recognise its importance. While it may be uncomfortable, it breeds trust and understanding and is imperative for creating close-knit teams. 

It is ok to ditch draconian HR policies – have you measured how much they are helping your business? If you have employees that are responsible and accountable, you will be comfortable with relinquishing control, leaving you free to focus on making your business successful.

If you are inspired by the Netflix company culture and would like to discuss how you can embed a unique company culture and your core values  into your own business, contact me today.