Nothing Short of the Best: Netflix’s Unique Organizational Culture

by Susanna Savage
While every organization has its own unique culture, some stick out more than others. Netflix’s culture is one that is very different from the norm. As the organization has grown from a small DVD rental company, to the booming business that it is today, its management style and interesting culture can lend lessons to other organizations (McCord). This case study explores the culture and management style of Netflix with a critical eye to the impact of this environment on the employees.

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Photo Credit: https://www.linkedin.com/pulse/culture-new-strategy-netflixs-remarkable-view-marc-do-amaral

Netflix’s Culture

Netflix’s unique culture is based on seven basic principles. The first of these is “values are what we value” (Netflix, slide 5).  Netflix seeks to employ only those who embody all nine of their organizational values. These include communication, innovation, courage and passion, among others. Second, is “high performance” (Netflix, slide 23). Netflix wants its employees to be the best in their field. The philosophy behind this is that one incredible employee accomplishes a larger amount and puts out higher quality work then several average employees (Nisen). And when it comes to deciding who stays at Netflix and who is let go, managers make decisions by asking themselves this question; “Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix” (Netflix, slide 30).

Another aspect of Netflix culture is “freedom and responsibility” (Netflix, slide 38). Netflix believes that if it works hard to ensure that its employees are the best, it can foster a creative and mature environment that shows respect for those employees by giving them as much freedom as possible and charging them to use that freedom responsibly. As evidence of this, Netflix does not have a vacation policy. This is because it trusts that employees will take as much or as little vacation as they need while ensuring that the work that they are responsible for is accomplished. This no-policy-policy is made possible by Netflix’s focus on results rather than effort. The hours that someone puts in or the amount of effort that they invest are not as important as what they produce (Nisen).

“Context and control” refers to Netflix’ belief that directly controlling employees creates a negative culture (Netflix, slide 76). Because Netflix only employs the best, it can treat all employees like adults who do not need to be controlled. However, Netflix does not completely abandon management. Instead management is more about leading than controlling. In order to lead and guide employees in the right direction, Netflix believes that management should set contexts that maximize employees’ ability to do well. To exemplify the principle of context setting, Netflix quotes Antoine De Saint-Exuperty, “If you want to build a ship, don’t drum up the people to gather wood, divide work, and giver orders. Instead, teach them to yearn for the vast and endless sea” (Netflix, slide 77). This quote clearly shows the difference between control and context. Rather than telling employees what to do, Netflix managers set a context which will empower the employees to achieve the goal on their own.

Netflix strives to maintain a model of management that is “highly aligned, loosely coupled” (Netflix, slide 86). Being highly aligned virtually means that managers, individual employees and team members have a unified sense of their goals. At the same time, being loosely coupled means that individuals are trusted to pursue goals with what they feel to be appropriate tactics, without having to get approval from management. Netflix’s goal when compensating employees is “pay top of market” (Netflix, slide 93). This means that for any given job, Netflix plays the employee that holds that position above the highest pay for that position anywhere in the current job market. Additionally, Netflix makes use of “promotions and development” (Netflix, slide 109) to reward excellent employees.

Critical Analysis

While I have never experienced an organizational culture anything like that of Netflix’s, I believe that I would thrive in such an atmosphere. Most of the organizations in which I have worked have been much closer to a traditional organizational culture and traditional management styles. Their was little competition, and job security was fairly high. Their was also very little drive to achieve or to put in more then the average amount of effort. I have definitely not experienced an organization that focused on results above effort.

The Netflix culture is incredibly appealing to me for several reasons. When I took the StrengthsFinder 2.0 analysis , I found that one of my top strengths is “Achiever.” This means that I gain personal satisfaction from producing high quality work and going above and beyond to be “the best,” at any given area or task. The Netflix culture rewards people who are achievers and also creates an environment that enables them to achieve to their full potential and to be the best that they can be. I also think that the self management aspect of Netflix’s culture would facilitate my creativity and work productivity. I am able to work best when I am in complete control of how I spend my time and how I approach tasks. When I am managed in the traditional sense, I can feel stifled and unproductive. Netflix’s culture of trusting its employees to manage their own time, and focusing mainly on results, creates an environment in which I would thrive.

Another great aspect of Netflix is that accomplishments and not effort are valued and compensated. This model makes sense. Students are not awarded grades based on the amount of time they spend studying, but on their ability to preform on various measures of their learning. In much the same way, it seems that results are all that should matter to an employer. Any given task takes some people a longer time and others a shorter time to accomplish. For some the task might require more effort and be more challenging, while for others it is easy. The Netflix focus on results rather then effort seems to be the most fair, both to the employee, and the organization.

References

McCord, P. (2014, January). How Netflix reinvented HR. Harvard Business Review. Retrieved from https://hbr.org/2014/01/how-netflix-reinvented-hr

Netflix. (2009, August 1). Netflix Culture – SlideShare. Retrieved from http://www.slideshare.net/reed2001/culture-2009?next_slideshow=1

Nisen, M. (2013, December 30). Legendary ex-HR director from Netflix shares 6 important lessons. Business Insider. Retrieved from http://www.businessinsider.com/netflix-corporate-culture-hr-policy-2013-12

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