It’s been viewed online nearly 7 million times. Sheryl Sandberg calls it one of the most important documents ever to come out of Silicon Valley. And it was created by the company whose stock increased in 2013 more than any other’s in the S&P 500—up nearly 350%.
“It” is a 126-slide PowerPoint called “Netflix Culture: Freedom & Responsibility,” and it outlines Netflix’s approach to just that—culture—although it has primarily been interpreted as a “reinvention” of HR, as this Harvard Business Review article puts it.
Going through the entire PowerPoint (I have) is valuable in and of itself; if nothing else, you’ll see how very well done PowerPoints can be, for a change. But the HBR article, written by the former head of HR at Netflix itself, distills their approach to talent into five tenets based on two key insights into how people actually feel about performing their jobs.
The first insight came nearly a dozen years ago when Netflix had been planning an IPO but after 9/11 not only put it on hold but laid off about one-third of their 120 employees; a “brutal” time, as the former HR head describes it. The insight came from a conversation with a head of engineering who’d lost all three employees who used to report to him, and who was now a one-man band working very long hours. The HR head said she hoped to have some more help for him soon and he replied that there was no rush: “I’m happier now.”
What? Turns out the laid-off employees weren’t great and they were more of a burden to manage than they were worth: Between arbitrating personality conflicts and redoing subpar work, it wasn’t worth it.
Lesson #1: Hire only A team people.
The second insight took place a year later, a few months after the delayed IPO. Netflix’s bookkeeper had been very important to the firm’s early growth, “bright, hardworking, and creative [but] now as a public company we needed CPAs and other fully credentialed, deeply experienced accounting professionals—and [she] had only an associate’s degree from a community college.” And here comes the brutal news, folks: Rather than trying to jury-rig a new role for her, they let her go. The saving grace, if you can call it that, was “in light of her spectacular service, we would give her a spectacular severance package.” The lesson a la Netflix? “If we wanted only “A” players on our team, we had to be willing to let go of people whose skills no longer fit, no matter how valuable their contributions had once been.”
Lesson #2: Cull to keep only the A team.
So here are the five tenets I promised: