
How Netflix Reinvented HR - throwaway481
http://hbr.org/2014/01/how-netflix-reinvented-hr/ar/1
======
rsweeney21
I was an engineer at Netflix from 2010-2012. There were a lot of things that I
really liked about the Netflix culture. They really do live the "Freedom and
Responsibility" culture. It was very empowering. There is a dark side to that
culture though. At Netflix it was _too_ easy to fire people.

This had two side affects.

1) People were afraid of being fired. You could come in one day and be sent
home that afternoon without ever having any idea that you were under-
performing. You'll hear Netflix employees talk about the "Culture of Fear".

2) In a meeting with my team Patty said "We are your co-workers, not your
friends." `The idea being, you don't make friends at work because you might
have to fire that person one day. It was really strange, people were very
guarded and almost never talked about their lives outside of work.

PIPs protect employees from the constant fear of being fired. They require
managers to give an employee negative feedback. Without them, managers can
take the easy route and never have the uncomfortable conversations.

#2 made life really hard at Netflix. The majority of my friends come from my
co-workers. You spend more time with them than most other people in your life.
Some teams ignored the company culture and became close friends anyway. I
think the correct thing to do here is to expect your managers to be adults and
do the hard thing. Fire your friend.

~~~
jedberg
It's interesting that your experience is so different from mine (I work at
Netflix now).

for #1, I've never heard of someone being let go without having any idea. When
a manager goes to HR and says "I'd like to let this person go", they ask,
"will it be a surprise?" and if the answer is yes, they send you back to have
the hard conversation first.

for #2, I have lots of friends from Netflix. And some of them have even been
let go and we're still friends. I was even friends with my boss, but like any
company, when it is a relationship with a manager it must always be reserved.

~~~
elq
re: friends - I think people are just put off by Patty's "we manage the
company like a sports team, not a family" philosophy.

~~~
jedberg
That's probably true, but even the sports guys are friends. :) Even when they
get traded and have to play against each other.

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blazespin
Simple: [http://www.glassdoor.com/Reviews/Netflix-
Reviews-E11891.htm](http://www.glassdoor.com/Reviews/Netflix-
Reviews-E11891.htm)

You can filter for just engineers, if that's who you want to pay attention to.
Netflix rates very low compared to Facebook, Google, etc. Those companies
demand hard work from their employees, but are great places to work. They do a
good job with hiring.

Netflix does not, they just grind through people very rapidly .. like they're
cheap batteries. Thus the poor glassdoor reviews.

Fact is, Netflix culture is terrible for employees but effective for the
Company.

I advise anyone before they apply for a job anywhere to study glassdoor
carefully. Ignore ratings, read comments carefully. Reviews which balance
positive with negatives are the ones to take as credible.

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phamilton
The big accounting firms in the US are an interesting case to look at.
Accountants will join the firm and spend 8-10 years there. Eventually, they
either become partners or they wash out (most don't make partner). The culture
has developed in such a way that "washing out" is not really seen as a
negative thing. They've established a concept of alumni and maintain good
relationships. The "washed out" alumni go on to become CFOs and CPAs and there
is a steady stream of referrals to and from the big firms.

Maintaining relationships after letting an employee go is hard. If employees
are only let go for incompetence, it may not even be worth the effort. But if
an employee is let go because there's a resource mismatch I think there is a
lot of value in maintaining that relationship.

Netflix seems to say "We just don't need your exact skill set right now"
instead of "You aren't good enough for us". That seems like a prime situation
to try and keep a good relationship.

~~~
gruseom
I've often wondered whether the structure you describe, which is also used by
law, consulting, and investment firms, could be adapted to startups. It seems
like it might be a way out of the employee/founder dichotomy.

The key concept here is that of partner. I like that word, but would like to
know exactly what it means in such a structure. How, besides having high
status, do partners differ from non-partners? How are they compensated? What
sort of equity do they get?

~~~
ghaff
In a (US) Limited Liability Partnership, partners get a share of the firm's
profits--while still having their individual liability protected in a similar
way to a corporation. In a large firm, you probably have multiple levels of
partners. While I'm hardly an expert, I imagine that this structure would
probably limit the options for raising capital.

~~~
lkrubner
LLCs vary by state in the USA. Some states allow almost complete freedom
regarding the structure of the business entity. I lived in Virginia for
several years. My friends and I launched a business in 2003. We decided to go
for a custom LLC structure. We spent about $5,000 on lawyer fees, but we got a
structure that allowed us to sell shares in our LLC. It was a hybrid
structure, partly a C form, partly a normal LLC.

~~~
absconditus
LLPs are not LLCs.

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falcolas
Anecdote time:

My wife worked for Netflix customer service (CS) back about 9 years ago - in
their formative years. She likens her time there as similar to any other large
company. The individuals were great, but the management was your typical
bureaucracy. Rankings were heavily based on seniority, not actual individual
value.

As CS reps were considered to be fully interchangeable (and the first to be
let go to maintain profit margins), it was a terrible department to try and
gain seniority in.

Never seemed all that different, HR wise, from any other company. Perhaps
they've changed; I can't say.

~~~
rst
Note the part of the article about "split personality" cultures. A lot of the
policies that this article was about were for the engineering team, and do not
apply at all to what the author calls "hourly employees", which may well
include customer service.

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andy10
Article mentions the shift to "unlimited vacations". Sounds like it worked at
Neflix, larger companies are starting to move toward unlimited vacation model,
but it appears that it's driven by not having carry accrued paid time off on
the books and studies that show that people actually take less vacation under
unlimited plans. How is it done at your company?

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nilkn
While the generous severance package and transparency about the process ease
my concerns over whether it's ethical or not to cut employees so frequently,
all I really got out of this is that I will probably never apply to Netflix.

~~~
pandaman
I am counting my blessings that my contact with a Netflix recruiter did not go
past the initial phone screen. At that time I had no idea what kind of company
it was.

Unsurprisingly, even though this happened less than three years ago, all the
people I had been in contact don't work in Netflix any more.

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PaulHoule
I think some of this is bizzare.

I mean, an employee is satisfactory, but only satisfactory, so they give him a
generous severance package and go hiring somebody else. Really?

This sounds like "stack ranking" where they fire the bottom 60% every year.

~~~
michaelochurch
_I mean, an employee is satisfactory, but only satisfactory, so they give him
a generous severance package and go hiring somebody else. Really?_

Netflix wants a high-performance team. That means that "merely satisfactory"
in a sleepy, less demanding company would make someone an outlier.

You have to cut the "merely adequate" 4s and 5s if there's no way to turn them
into 7+; what you should do is do it humanely. Personally, I think that a 3-5
month severance is (a) not that expensive, in the grand scheme of things, and
(b) by far superior to the morale toxicity of the traditional PIP-- especially
when you're talking about a good-faith employee who did nothing wrong.

~~~
smackfu
The tricky bit is successfully hiring high performance people. You have to
have a pretty high success rate, and low turnover, or else you'll just be
constantly churning through the "satisfactory" people and getting an
occasional gem in there.

~~~
michaelochurch
I don't think it's that hard, if you have high-level people involved in the
hiring process and you're not stingy with pay and benefits.

You need enough of a draw to get a competitive applicant pool, and enough
people who have sufficient talent to judge it.

Most companies err by hiring based on specialty, e.g. "we need exactly 3 data
scientists and that's it". If you're looking for generally good people and
willing to accept the variability that comes with that, and you have a
managerial environment that provides multiple avenues to success (which is the
definition of a good management environment) rather than multiple ways to
fail, I think it's not _that_ hard.

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blinkingled
So what problems are your typical Netflix Engineers solving? I really don't
mean to be insulting but given my interaction with Netflix as a consumer it's
hard to see the stellar part. Lots of bandwidth play and even some Web app
challenges but what part about it requires only A players with 200K+ salaries?
Genuinely curious.

~~~
pcl
I'd guess that the challenging stuff is around the recommendation engine at
this point.

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seunosewa
After getting to this line - "after I left Netflix and began consulting..." \-
I couldn't help wondering whether or not the author was fired and whether this
means there are significant portions of her advice that the current management
of Netflix would disagree with.

~~~
jedberg
She was not fired -- she left on great terms and most everything she put in
place is still there. She had just been there a long time and wanted to help
other companies.

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yalogin
I am not sure its all positive though. I only heard bad things about Netflix
and the atmosphere. I stay away from it and their recruiters proactively
because of that. Just like the "there is no limit on vacation" scam that they
pull over their employees got implemented in many startups, I am sure a lot of
that "culture" spilled into the startup world as well.

~~~
kelnos
_Just like the "there is no limit on vacation" scam that they pull over their
employees..._

Why do you call it a scam? It certainly can be, but it doesn't have to be. We
used to have a fixed-PTO policy (3 weeks per year) at my company, and moved to
an unlimited policy sometime in 2012. In the 2013 calendar year I've taken
about 4 weeks off. I'm actually not sure of the exact number of days I've
taken off, as we don't really track it so closely. I'm perfectly happy with
this arrangement.

Do you have any evidence that it's a "scam" at a large number or majority of
companies?

~~~
yalogin
From what I hear (from the few people I know at Netflix) since there is a lot
of fear that you can be fired at will, no one takes a vacation at all. It
actually makes sense too, if one member of the team does not take a vacation
but you do then you will come across as the one "slacking off". On the other
hand if you are a set number of time off days you can take them without
feeling guilty about it. Of course it depends on the culture in the group as
well but I am very skeptical about it working in a company the size of
netflix.

~~~
kelnos
Result of a shit culture, then. Taking a reasonable amount of vacation means
you're taking care of yourself, not that you're slacking off. Burned-out
employees are certainly not a plus to a company's bottom line.

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tunesmith
I see some tension between values like "go for the root cause rather than the
symptoms" vs "bias towards action rather than analysis-paralysis", as well as
"speak up when we we aren't practicing our values" vs "value action rather
than process".

At the end of the day it'll come down to the personality of your manager and
the dynamics on your day-to-day team.

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girvo
Makes me wonder how awesome their documentation and knowledge base must be to
pull off that sort of churn.

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727374
I appreciate the philosophy of getting rid of HR rules in favor of treating
people like adults with good judgement. However, good judgement is probably
one of those things whose definition is open to disagreement. E.G. one
person's good judgement might mean taking risks and another's might mean
playing it safe. Is Netflix just forming a monoculture of people with the same
definition of good judgement.

Also, it's interesting that the writer validates Netflix's efforts by saying
the company's stock went up, 3 Emmys were won, and the firm acquired a bunch
of new customers. Are employees expected to optimizing these metrics, first
and foremost, which seem very short sighted to me? What about fundamentals
like profitability and customer retention?

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dba7dba
Got few issues with the culture of Netflix.

So once someone is not needed, the person is just sent off? I understand a
generous severance is given. But, you couldN'T use that money to try to
retrain the worker with another technology/task/job?

What about mentoring? Someone has to start somewhere. So if Netflix ONLY hires
someone who's A grade, where do B and C grade people get their chance to learn
and improve? Sounds like a very selfish way of hiring (granted every company
is selfish).

I do agree with one thing in the article. The whole year-end or half-year end
performance review is just a sham. No one in management cares until management
decides to lay off someone. They start putting down C or D grade all of sudden
when earlier it was mostly As and Bs. And next thing you know, you are let go.

~~~
elq
Engineers are expected to take responsibility for themselves. They are, after
all, "fully formed adults" (in Patty's parlance). And honestly it's not that
hard to figure out which skills are useful to the work around you.

Netflix has traditionally only hired very senior engineers. Mentoring, at
least technical, isn't seen as necessary for these people. Further, if an
engineer thinks mentoring would help them, the onus is on them to seek it out.

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mcot2
Sorry, this sounds like a terrible place to work.

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TinyBig
The author unabashedly claims credit for Neflix's success, but provides no
evidence that HR was the source of it.

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auggierose
Is it a coincidence that the main character in the TV Show "Damages" is called
Patty, too?

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michaelochurch
Netflix sounds like an extremely well-managed company. Can anyone comment on
the accuracy of what's in the slide deck? I'd be curious to know how it all
works out.

~~~
jedberg
The slide deck is accurate -- we usually point people at it when we think they
aren't following it.

