Netflix- Common Sense Rules Talent Management

Can common sense be the underlying principle for a Talent Management program?  Evidently it can and is for successfully managing talent at Netflix.  In “How Netflix Reinvented HR” in this month’s Harvard Business Review, former Chief Talent Officer Patty McCord chronicled how the culture was shaped and performance motivated through some basic, common sense HR practices. I thought I would share some of the highlights as what might be considered Next Practices in Talent Management.  

First, Netflix has of late been on our radar screen because of some innovative business practices that led to three Emmy Awards, a significant increase in its’ U. S. subscriber base and its stock that more than tripled.  But the hidden jewel here may be their approach to culture and talent which is derived from common sense – imagine that!  According to Patty McCord , here are the  . . . . “five ideas that have defined the way Netflix attracts, retains and manages talent.” 

1. Hire, Reward and Tolerate Only Fully Formed Adults.  Here the philosophy was quite simple,  . . . .  “hire people who will put the company’s interests first, who understand and support the desire for a high-performance workplace  . . . .”.  Some elements here are :

• Talking openly about issues with your boss, peers and employees. Underlying premise – do the right thing
• No vacation policy – salaried employees took whatever time off they felt was appropriate as long as they worked it out with their boss / colleagues
• Company expense policy was simply stated – “Act in Netflix’s Best Interest”
• Rich severance packages – be willing to let go of people whose skill set no longer fit

 2. Tell the Truth About Performance.  Here, formal performance reviews were eliminated because they were seen as “too ritualistic and too infrequent”.  They were replaced with:

•  frequent, ongoing conversations between managers and employees which proved to be much more effective;
•  Performance Improvement Plans (PIPs) were replaced by honest, tough conversations that employees appreciated (supported by generous severance packages where appropriate 
• Informal 360-degree reviews

 3. Managers Own the Job of Creating Great Teams.  Here, managers are asked to envision the future and use that vision to determine the skills and competencies they need in their people to get there.  Some interesting elements include:

• Honest conversation with team members whose skills do not fit
• Market based compensation
• Flexible compensation structures – employees decide  how much risk they are willing to take; salary vs. salary + stock options
• Recruiting the right team was top priority for managers

 4. Leaders Own the Job of Creating Company Culture.  Here, values and culture are not only articulated by the leaders but also modeled through their behavior.  Some lessons include:

• Values and goals are clearly articulated and communicated
• Reward behavior that supports those values and goals
• Leaders need to do more than talk – they need to walk the talk
• Clearly communicate how the company makes money and what behaviors are required to drive success
• There will be subcultures within the organization that may require different management approaches

 5. Good Talent Managers Think Like Businesspeople and Innovators First, and Like HR People Last.  Here, the message is to think like a businessperson and consider what is good for the company in managing talent.  Some key points include:

• Help employees understand what is meant by “high performance”
• If your company has a bonus plan, make sure that employees understand what it takes to earn that bonus
• Communicate, communicate – employees want to know what is going on, good or bad
• If innovation is a critical value for the company, make sure that innovation drives every part of your business INCLUDING talent management

What I found most interesting about this article was that Netflix attributes its’ success to its people.  With all the talk about disruptive business models, rapidly changing technology, on-demand content, digital, big data, etc., all of which can be attributed to them, Netflix is talking about people as their greatest asset.   To me, this was not only refreshing but made the most common sense of all. . . . . . .

Share your thoughts with us and join in the conversation  . . . .