Netflix is a leading online streaming services provider with a large customer base that has grown bigger than 167 million. The company has acquired very fast growth globally during the last five to ten years since it started its expansion internationally in 2010. Now it has more than 167 million subscribers and users across 190 countries can access Netflix content on any internet-enabled device. The growth of Netflix is a result of the company’s continued focus on product quality and customer experience. Netflix has a vast collection of original content including movies, shows, and documentaries. Its focus on technological innovation has helped it achieve higher customer loyalty and grow its user base faster. As an online streaming services provider, Netflix has built a very strong reputation in the market. However, the company is highly innovative in other areas as well including HRM. It has established a distinct organizational culture that is unique in several aspects. One of the primary focus areas for Netflix in terms of HR and organizational performance is employee motivation which Netflix has made a key ingredient of its organizational culture.
Business success in today’s world is driven by employee performance and it is why organizations and business leaders focus a lot on creating an organizational culture that emphasizes performance but also inspires creativity and collaboration. Culture has been recognized as a central driver of business success in the twenty-first century. It is an important factor that drives employee performance but apart from that organizational culture is linked to the reputation of the organization in the market. Companies with creative culture and excellent focus on HR management tend to have a stronger image and higher success rates in their respective industries. In the tech industry especially, it is important to establish an organizational culture that fosters collaboration and productivity. The organizational culture at Netflix is meant to drive higher transparency and more openness between the team members as well as independent decision making.
Just like the other tech companies, Netflix strives to hire only the best employees. The company also values integrity, excellence, respect, inclusion, and collaboration. The key features of its unique culture can be listed as follows:
- encourage independent decision-making by employees
- Share information openly, broadly, and deliberately
- be extraordinarily candid with each other
- Retain only the highly effective people
- Avoid rules or rigidity.
The company has created a flexible and fun work environment for its employees. The core philosophy of the company is people over processes.
Cultural Values at Netflix:
Values are a fundamental element of organizational culture. Netflix has adopted cultural values that drive organizational performance and employee productivity but also sustain collaboration and passion. These cultural values are described below:
As a part of its organizational culture, the company places a heavy focus on how decision making is carried out inside the organization. People are encouraged to make wise decisions even in ambiguous situations. The focus should be on identifying the root cause instead of just treating the symptoms of a problem. Employees are encouraged to think strategically and articulate clearly what they are trying to achieve and what not. They should not base their decisions solely on intuition but use data to make well-informed decisions. Moreover, their decisions should be long term and not just short term.
Communication is an important element in the culture of Netflix since effective communication drives higher productivity and improved performance. The employees should be efficient at communication whether written or verbal. People should listen to others in the team and try to understand what someone is saying before reacting. Drawing out the clearest thinking is possible only when you are calm even in the most stressful situations. Adapt your communication style to suit everyone in the world irrespective of his native language. Apart from these things, it is important to provide candid, timely and helpful feedback.
Curiosity and the eagerness to learn is also an important element in the culture of Netflix. People at Netflix are required to learn fast and eagerly. Moreover, they must remain limited to their specialty only but instead also contribute to areas outside their specialty. People should make unique connections and understand Netflix members around the world so as to find better ways to entertain them. They should also seek alternative perspectives.
People should say what they think when it is in the best interest of the company even if they are uncomfortable doing so. Make tough decisions without agonizing and take smart risks even when there are possibilities of failure. If you see someone around you acting in a way that is inconsistent with the Netflix culture, be ready to question such actions.
A thirst for excellence is important to find higher success in life. It is also a fundamental cultural value at Netflix. Your thirsty for excellence should be so strong that it inspires others. However, people at Netflix are also required to be passionate about the success of the organization. People should care intensely not about their personal success only but also about their teams and the entire organization. Be tenacious and optimistic while also confident and humble.
Being self-centered does not work at Netflix and people should not think about their own success only because it is against the Netflix culture. Rather than just seeking what is best for themselves or their teams, people should seek what is best for Netflix. Be open-minded and search for great ideas. Apart from that, find some time to help others around you. It is also important for Netflix employees to share information openly and proactively.
Innovation is also a key cultural element at Netflix since the entire business model of the company is built around innovation and innovativeness. People should create new ideas that are useful instead of relying only on old and tested ideas. People must also reconceptualize issues to discover solutions to complex problems. Challenge assumptions and suggest better and new approaches. Keep the organization nimble by minimizing complexity and finding time to simplify things. Change is the rule so believe in change and thrive on it.
Netflix has worked to build an inclusive culture that fosters inclusion and collaboration. People from diverse backgrounds and cultures come to work at Netflix and therefore it is important to collaborate with people even if they are from a different background or culture. Making better decisions is possible when you include diverse perspectives. Rather than pretending that diverse backgrounds do not affect anything at Netflix, one should focus on how diverse backgrounds affect work at Netflix. Instead of being held by biases, people should work to overcome them. Moreover, marginalizing others is not an option at Netflix and you should also see that no one around you is being marginalized.
Politics and dishonesty hurt performance and productivity. So, instead of being political one should be known for his candor, authenticity, and transparency. Do not speak behind people’s back but only say things that you can tell people in their faces. Admit your mistakes freely and openly because that is not disrespectful. Treat others with respect irrespective of their status or any personal differences.
Be ready to make an impact. Consistently strong performance is important to gain the trust of your colleagues at Netflix. So, people are required to accomplish more than normal or be above expectations in terms of performance. Their focus should be higher on results than on the process.
Communication and Ongoing feedback at Netflix.
Communication and feedback are very important ingredients of the organizational culture at Netflix and apart from building higher trust, feedback also ensures superior performance. Giving and receiving feedback makes work-life at Netflix a lot less stressful. Continuous feedback is a part of the work culture at Netflix and not a formal exercise, undertaken occasionally. Moreover, it is important for people to be transparent in terms of feedback. Being selfless when giving feedback to colleagues helps build trust. Another important advantage of the ongoing feedback at Netflix is that it helps the organization avoid the need for too many rules. It also helps avoid any misunderstanding which can hinder collaboration and performance. If the underlying relationship between people is strong and they trust each other, it is easier to exchange feedback. This is why people at Netflix invest time in developing trustful relationships. Being candid is a trait that is highly appreciated at Netflix, especially in the case of people who are in more powerful roles. To teach the newcomers the value of ongoing feedback, the company offers them coaching and leaders model the behavior they want to see in their employees.
The Netflix Dream team
Working at Netflix is not without pressures and the company focuses upon hiring and retaining only the best people. So, the pressure related to performance always remains. The company aspires to operate as one Dream Team. The concept of the Dream Team is based on the fact that working as one high performance team is critical to survive in a highly competitive industry environment. What is a Dream Team at Netflix? The Netflix version of dream team is one where everyone is extraordinary at what he does and is also a highly effective collaborator. It is tremendously satisfying and valuable to be the part of a dream team.
“Our version of the great workplace is not sushi lunches, great gyms, fancy offices, or frequent parties. Our version of the great workplace is a dream team in pursuit of ambitious common goals, for which we spend heavily. It is on such a team that you learn the most, perform your best work, improve the fastest, and have the most fun.”Netflix
To convert an entire organization into a dream team can be challenging and the company has to focus on efficient hiring and retention in order to have only extraordinary people on their team. Apart from that, Netflix also focuses on several other important things like fostering collaboration, embracing higher diversity of viewpoints, supporting information sharing as well as discouraging politics. Just adequate performance does not work at Netflix and adequate performers have to go. The company is always looking for extraordinary people or stars to fill those positions. However, the company also offers an adequate severance package to the staff who have to go. The company prides itself in being a team and does not like to operate as a family because inside a team everyone pushes himself to be the best.
How strict are performance standards at Netflix?
Performance standards are rather strict at Netflix but not very strict and the company states that it does not believe in following a rigid set of rules. The company does not use performance quotas or rankings. There are no bell curves or rank and yank systems either. Netflix does not follow the system of cutting out the bottom 10% performers either each year. It does not support a rule-based approach since that is detrimental to fostering collaboration inside the organization. The company has instead developed a keeper test which is based on the manager’s judgment. The people who cannot pass the test are given a generous severance package before leaving. Netflix always tries to find better people for vacant positions so it can continue to improve its Dream team. This shows that the pressure related to performance at Netflix can be high. So, it shows that if someone has to leave then he is not a bottom performer but instead only a little behind the others.
Given the performance orientation of Netflix, it is important that the managers continuously provide feedback related to employee performance. Netflix does not leave much chance for surprises and employees are continuously given feedback about their performance and where they are. At the same time, the company also ensures that the performance-related pressures do not make people feel afraid of making mistakes. The keeper test instead is related to the overall expected contribution of an individual employee. To find success at Netflix, one does not need to work hard but instead only needs to be effective. Hard work or long hours of work does not decide a person’s fate at Netflix because the company does not use it as a measure of performance.
To ensure that the company has the best players in the team, Netflix pays its employees competitively. It extensively researches its competitors to know what they are paying their employees and then pays its own more than the market rate. This has helped the company ensure that the workers are happy with their compensation. Instead of giving its employees small pay raises like that of 2 or 4%, it calibrates to the market each year once. However, there are some other factors too that affect compensation at Netflix. For example, while one employee despite his exemplary performance may not find a significant year on year growth, while another may find more growth without working a lot. The reason can be the type of skill, the area in which an employee is working or the shortage of talent in a particular area. If there is the shortage of talent in a specific area, then retaining such talents may require extra compensation. However, working at Netflix can be a great experience for anyone since when someone leaves he is going to be hired quickly by another firm.