Netflix has been facing a lot of scrutiny in the media recently due to their unorthodox treatment of employees. With a culture that encourages openness and honest feedback, as well as a ruthless firing system – working for Netflix sounds more like a rollercoaster than a 9-5 job.
However, regardless of what people say it’s unquestionably working for Netflix. They added ‘6.96 million subscribers in the 3 months ending September 30, and beat Wall Street expectations as well as its own forecast given in July’. So why is Netflix’s culture still under heavy criticism?
Openness and transparency is a core component to the Netflix culture and is embedded into the chain of command, from the very top to the bottom level of employees. ‘Sunshining’ is an expression used by Netflix to describe the practise of encouraging employees to disclose any mistakes they may have made to colleagues.
Salary pay is also a subject that’s normally kept private among colleagues, however, those at Netflix who are director level or above can see the salaries of all employees at Netflix. Wall Street Journals have said that approximately 500 people have that type of access.
All employees at each level for Netflix are supposed to give honest and straightforward feedback/criticism to fellow employees. Netflix has justified this brand of culture by saying that it gives employees numerous opportunities to improve, rather than a single annual review which wouldn’t allow the same number of learning opportunities.
The ‘Keeper Test’ is another way that Netflix gets managers to assess their employees; by getting them to ask themselves, ‘Would you fight for that employee?’. This question puts an immense amount of pressure on managers because they either have to fire people or risk looking weak.
Fired or Not
The culture at Netflix can be described as ‘up-or-out’ because employees aren’t judged or assessed based on yesterday’s required market competencies but on those of today’s and tomorrow’s. There are several ways that this approach could be interpreted; it could be seen as an environment that becomes too individually competitive where everyone is simply trying to save their own back, or an approach that guarantees an efficient and high performing organisation.
The atmosphere created at Netflix could be described as a frightening one, however, it’s been proven that it’s 2 or 3 times more effective than the average organisation. Netflix’s system also attracts some of the best and most ambitious talent in the industry.
A re-occurring theme among consultancy organisations with similar cultures is that the process becomes unsustainable due to the incredibly high labour turnover rate which can sometimes reach as high as 50%. However, Netflix have managed a rate of 3-4% over the last two years which isn’t too bad considering the U.S average is 6%.
The culture at Netflix is most certainly a unique one; it’s face-paced, ruthless, competitive but overall encourages the highest performance possible. Comfort and security aren’t features of an innovative organisation, “comfort leads to complacency”. Netflix are pushing the boundaries to pave way for the future, a future that looks incredibly bright for them.