Flipping the script
There is a scene in House of Cards, Netflix’s first-ever self-commissioned original series, where Frank Underwood, an ambitious US politician who plots, schemes, betrays, and literally murders his way to the US presidency, vehemently challenges the instructions of his boss and soon-to-be-predecessor.
He turns to the audience to acknowledge the boldness of the move: “Sometimes, the only way to gain your superior’s respect is to defy him.” Gaining respect at House of Cards’ broadcasting partner is not so political, and a lot safer, with Netflix deliberately celebrating the risk takers and disruptors. A core tenet of the company’s culture is the concept of “freedom and responsibility”, Scott Domann, the Global Vice President of Talent and HR for its Marketing, Public Relations, and International teams, tells HRM Asia.
A history of culture
Given Netflix’s current reputation as a media visionary, it’s only natural that this autonomous culture developed in tandem with the business’ own evolution. The company launched as a brick-and-mortar DVD rental mail service in 1998, with only 30 employees and 925 titles. But amid declining DVD demand and the growing possibility of video streaming, the company announced its plans to rebrand and restructure in 2011.
Less than two years later, House of Cards premiered. This not only re-introduced Netflix to new audiences, but also revolutionised the way television formats were consumed. It introduced “binge-watching” and high-speed video streaming to the masses, a concept more established broadcasters previously thought would be impossible to pull off. But with the success of that and other series, content viewing was changed forever.
Netflix went on to take a significant piece of the pie traditionally shared by the established broadcasting players in the US, including ABC and CBS. This same principle and penchant for risk-taking and reimagination has also guided Netflix’s talent management model, flipping the HR function as the rest of the world still knows it, on its head.
And all this is manifested in the famous Netflix Culture Deck, a 124-page Power Point presentation, which Facebook chief operating officer Sheryl Sandberg once referred to as “the most important document to come out of Silicon Valley”. It might be seen as a risk, but if there is one ingredient Netflix knows is needed for an invention to succeed, it is commitment. And the company has plenty of that across its workforce.
Values statements are "more than lip service"
Central to its re-imagination of the people function is the notion of employee “freedom and responsibility”. But as Domann points out, this “plays out” differently at Netflix than many other workplaces.
The company stresses its value statements pay more than lip service. They are not just “nice-sounding” declarations that might otherwise be meaningless in reality, says Domann. Through the Culture Deck, Netflix cites the example of US energy company Enron, which collapsed in 2001 after one of the world’s biggest corporate corruption scandals.
Netflix notes that Enron once had the values of “integrity”, “communication”, “respect,” and “excellence” displayed proudly in its office lobbies, but those ideals were nowhere to be found in the company’s actual business practices. Keen to avoid such hypocrisy, Netflix genuinely follows through with its values, Domann says.
In particular, its “freedom and responsibility” tenent means giving employees the freedom to make even the most critical of decisions, while requiring them to also take full ownership for their actions and results. Domann says the organisation strongly encourages employees to use their judgment and take risks that are likely to drive the business forward, and then share ideas and feedback candidly. The ultimate goal is to create an environment where high performers can thrive among like-minded talents.
“We encourage them not to ask permission to do every little thing,” says Domann.
Through its own research, Netflix found that most companies today actually limit employee freedom the larger they grow. This comes from an instinct to control the chaos that emerges as businesses become more complex.
Organisations start introducing more and more processes, sacrificing employee liberty for greater perceived optimisation.
But Netflix notes that this has a counterproductive effect on a company in the long run. While highly-successful process-driven companies might be very efficient, they minimise the need for innovation, and this ultimately drives away the “innovator-mavericks” of the world.
When market shifts occur, these organisations may find it difficult to adapt quickly because they do not have the agile skillsets required.
So the new media company decided to go off-script, designing its HR model with the goal of increasing employee freedom as the company grows, rather than curtailing it.
Netflix hoped that by enforcing a culture of freedom, it would continue to attract and nourish innovative talent for a long time, leading to higher chances of sustained success.
“Instead of managing the process, we are focused on solving problems with our business leaders, hiring and coaching our talent, and finding innovative ways to bring our culture to life across a global team,” says Domann.
To reinforce the importance of its corporate values, Netflix also ties these directly to pay and performance. It rewards, promotes, and sometimes dismisses staff based on how closely they exemplify these codes.
No vacation days?
The values of freedom and responsibility is also reflected in the company’s well-documented “no vacation” policy.
This does not mean employees do not receive any leave benefits, but rather, without a fixed number of vacation days each year, it is entirely up to each individual staff member to decide the length and scheduling of their time away from the office.
The policy – or lack of one – was first born out of the idea that if the company does not track hours worked per day or per week, then why should it track annual leave days?
“We’re all working online some nights and weekends, responding to emails at odd hours,” Netflix explains in the Culture Deck.
“We should focus on what people get done, not on how many days worked,” it continues, noting that employees often find their best inspiration and ideas when they are outside the office.
Netflix CEO and founder Reed Hastings, who leads this policy by example, takes at least six weeks’ vacation every year, a fact that he is “very open about internally”.
“You often do your best thinking when you’re off hiking in some mountain, and you get a different perspective,” Hastings told CNN in late-2015.
Ensuring an inclusive environment
To effectively embody such values, Netflix expects all its potential hires to demonstrate a total of nine behaviours. These include having good judgment, being highly curious, courageous in questioning inconsistencies, and being honest about expressing even negative thoughts.
“In a more global cultural environment, we hire people regardless of the location, who share the traits we value,” says Domann.
But he says the company understands these behaviours can take some getting used to, especially since so many staff will transfer from organisations where this type of working is not emphasised.
Netflix has also been focused on creating inclusive environments across all of its offices, reflecting its values of diversity (which also extends to the characters on its self-commissioned programming).
As of the end of last year, the company’s US leadership team was made up of 62% men, and 38% women, while its technology team comprised of 78% men and 22% women. These numbers for female representation, along with those measuring racial diversity, are higher than the averages across Silicon Valley businesses, but Netflix is not resting at this point.
Domann says the company is continuing its push for greater diversity and inclusion. To attract more women to join its workforce, it extended its parental leave policy to allow new parents, as well as their spouses, as much as one year of unlimited and flexible paid leave.
These policies also apply to the company’s Asia-Pacific headquarters in Singapore, where Netflix hires across a broad range of roles, including public relations, recruitment, content, marketing, and business development.
“We are excited to be here,” says Domann. “Singapore is a city that is constantly reinventing itself and that is reflective in its talent pool of highly-tech savvy, skilled and globally-minded individuals.”
Ever-evolving cultural model
But Netflix’s unique approach to HR is not without its detractors, who have criticised that its laissez-faire model is excessively unstructured, leaving too much to employee interpretation.
In fact, with regards to the “no vacation” policy, employees have complained that they are unsure of what is an acceptable vacation length, so many end up taking fewer leave days than they would if regular leave schemes were in place.
Peer pressure, and pressure from line managers have also caused some workers to not fully access their rightful entitlements.
Domann, who got his start in HR as an intern with Warner Music Group, before progressing to social networking site Facebook as a HR Business Partner and now Netflix, acknowledges the argument, but says Netflix is not rejecting standard HR practice.
“On the contrary, it just means the role of HR has evolved in a culture like ours, which makes things all the more exciting,” he says.
“I won’t speak for the rest of the HR team, but always thinking about how our business and talent needs are shifting definitely keeps me engaged and excited.”
Domann, who is presenting in the Redesign Stream at the HR Summit and Expo Asia 2017 on high performance teams, says he is looking forward to giving attendees more insight into Netflix’s unique culture and how its HR team works.
“I’m passionate about our culture and our talent...and I hope the audience can take away some insights that will help them think about their own company cultures,” says Domann.