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Lesson #5: “Our model is to increase employee freedom as we grow rather than limit it”

Article Overview: “Imagine if every person [you worked with] is someone you respect and learn from,” says Hastings. “In creative work, the best are ten times better than the average.”

Lesson #5: “Our model is to increase employee freedom as we grow rather than limit it”

"Imagine if every person [you worked with] is someone you respect and learn from," says Hastings. "In creative work, the best are ten times better than the average."

Netflix has risen to the top of its game for many reasons, one of which is the culture that Hastings has worked hard to foster among his employees. Just like the unique business model he decided to follow, Hastings has implemented a number of unique human resources policies, which help ensure that at every step along the road to success he is surrounded only by the best and most dedicated team.

First, Hastings believes that there is no room for ‘good' employees at any company. If they are not superstars, you do not want them hanging around. Once you weed out the lowest performers, then start to get rid of the average performers as well. In the last economic downturn, Netflix got rid of one-third of its workers, all of whom were ‘good' performers. The company went from having 120 good employees to 80 superstars. After Hastings took the drastic move, productivity and the fun of working at Netflix were reported to have increased.

So how do you weed out the people you do not really need around? First, according to Hastings, companies should never give bonuses. Think about it: do you want someone who works for you because of the extra money they might get at the end of the year, or because they love the work they do and want to achieve results?

By that same token, Hastings implemented a generous severance package for those who left the company, even giving incentives for people to leave on their first week on the job. After all, if someone is willing to take money over keeping their job in the very first week, then their heart is not really in the job in the first place; your interests - and theirs - will best be served by getting them out.

"Responsible people thrive on freedom and are worthy of freedom," says Hastings. "[They are] self-motivating, [pick] up the trash lying on the floor, [and behave] like an owner...Our model is to increase employee freedom as we grow rather than limit it." That meant, among other things, not tracking the vacation time of employees, but letting them decide how much time they needed off and when they took it.

Hastings also made it a top priority to reward his employees with benefits and career development tools. He gave them flexibility with regard to pay, allowing employees to opt for many stock options in return for lower pay, or only a salary for those who are more risk averse. He also took an active interest in understanding their career development goals by mapping a career path with them, and helping them find a job elsewhere if those goals did not fit within Netflix.

Finally, Hastings also made it a habit to work from his laptop computer in a different office each day, ensuring that he would constantly be surrounded by new employees, and by being in touch with them, also get a better understanding of what was happening throughout the company.

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Article Tags: business model, creative work, dedicated team, freedom, game, hastings, human resources policies, netflix



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