Because it’s been a terrible, horrible, no good and very bad year, imagine if your entire team announces they’re jumping ship.
Who do you persuade to stay? And who do you help pack up and send on their way?
At Netflix, managers call this the keeper test.
You’re a keeper if you’re exceptionally creative, do loads of great work, love your job and play well with others. In exchange, you’re well-paid and treated like a grown-up.
If you’re a jerk, slacker or a sweet person who’s a non-stellar employee, you get a generous severance package. Your departure frees up a spot for a new hire who’ll add to Netflix’s talent density.
“Your number one goal as a leader is to develop a work environment consisting exclusively of stunning colleagues,” says Netflix CEO and No Rules Rules: Netflix and the Culture of Reinvention co-author Reed Hastings.
“For top performers, a great workplace isn’t about a lavish office, a beautiful gym or a free sushi lunch. It’s about the joy of being surrounded by people who are both talented and collaborative. People who can help you be better. When every member is excellent, performance spirals upward as employees learn from and motivate one another.”
Combining top talent with a commitment to candor and honesty always lets you rip most of the pages out of your creativity-killing and initiative-stifling employee handbook. The thinner the book, the better your chances of unleashing your team’s entrepreneurial spirit and ability to move fast.
“If you build an organization made up of high performers, you can eliminate most controls,” says Hastings. “The denser the talent, the greater the freedom you can offer. At most companies, policies and control processes are put in place to deal with employees who exhibit sloppy, unprofessional or irresponsible behavior. But if you avoid or move out these people, you don’t need the rules.”
It’s been a winning formula for Netflix.
Hastings and his business partner once tried to sell Netflix to Blockbuster for $50 million. At the time, Blockbuster was a $9 billion company.
“Blockbuster held all the aces,” says Hastings. “They had the brand, the power, the resources, and the vision. Blockbuster had us beat hands down. It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls. Our culture has allowed us to continually grow and change as the world, and our members’ needs, have likewise morphed around us.”
Blockbuster declared bankruptcy in 2010 and shuttered more than 9,000 stores (the last remaining store is in Bend, Oregon which you can book through Airbnb for all-night, back to the 90s slumber parties). Today, Netflix has just shy of 170 million subscribers in 190 countries. A stock price that started at $1 hit $350 in 2019. The company runs its own studio and streams award-winning original content. Netflix ranks as America’s most highly regarded company and it’s where tech workers say they’d most like a job.
“Netflix is different,” says Hastings. “We have a culture where ‘no rules’ rules. Once you start developing this type of culture, a virtuous cycle kicks in. Removing controls creates a culture of freedom and responsibility which attracts top talent and makes possible even fewer controls. All this takes you to a level of speed and innovation that most companies can’t match.”
Hastings asked Erin Meyer, an INSEAD business school professor and author of The Culture Map, to take an impartial look at Netflix’s culture, interview hundreds of current and former employees and help write No Rules Rules. “In most organizations, people join the dots the same way that everyone else does and always has done,” says Meyer. “This preserves the status quo. But one day someone comes along and connects the dots in a different way, which leads to an entirely different understanding of the world. That’s what happened at Netflix.”
So while binge-watching Netflix over the weekend, think about who on your team you’d fight hard to keep. Assembling a team of stunning colleagues is your first dot.
Jay Robb serves as communications manager with McMaster University’s Faculty of Science, lives in Hamilton and has reviewed business books for the Hamilton Spectator since 1999.
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