So I sat down with Laura and explained the situation-and said that in light of her spectacular service, we would give her a spectacular severance package. Some of us talked about jury-rigging a new role for her, but we decided that wouldn’t be right. Despite her work ethic, her track record, and the fact that we all really liked her, her skills were no longer adequate. But now, as a public company, we needed CPAs and other fully credentialed, deeply experienced accounting professionals-and Laura had only an associate’s degree from a community college. She’d been very important to our early growth, having devised a system for accurately tracking movie rentals so that we could pay the correct royalties. Laura, our bookkeeper, was bright, hardworking, and creative. The second conversation took place in 2002, a few months after our IPO. How Netflix Expanded to 190 Countries in 7 Years Excellent colleagues trump everything else. His words echo in my mind whenever I describe the most basic element of Netflix’s talent philosophy: The best thing you can do for employees-a perk better than foosball or free sushi-is hire only “A” players to work alongside them. “I’ve learned that I’d rather work by myself than with subpar performers,” he said. John realized that he’d spent too much time riding herd on them and fixing their mistakes. ![]() It turned out that the engineers we’d laid off weren’t spectacular-they were merely adequate. “There’s no rush-I’m happier now,” he said. I told John I hoped to hire some help for him soon. Before the layoffs, he’d managed three engineers, but now he was a one-man department working very long hours. One day I was talking with one of our best engineers, an employee I’ll call John. Suddenly we had far more work to do, with 30% fewer employees. By early 2002 our DVD-by-mail subscription business was growing like crazy. Then, a bit unexpectedly, DVD players became the hot gift that Christmas. It became clear that we needed to put the IPO on hold and lay off a third of our employees. But after the dot-com bubble burst and the 9/11 attacks occurred, things changed. Netflix had been growing quickly: We’d reached about 120 employees and had been planning an IPO. But first I’ll share two conversations I had with early employees, both of which helped shape our overall philosophy. In this article I’ll go beyond the bullet points to describe five ideas that have defined the way Netflix attracts, retains, and manages talent. All that aside, the approach is compelling because it derives from common sense. subscriber base grew to nearly 29 million. The most obvious one is that Netflix has been really successful: During 2013 alone its stock more than tripled, it won three Emmy awards, and its U.S. ![]() People find the Netflix approach to talent and culture compelling for a few reasons. But we were surprised that an unadorned set of 127 slides-no music, no animation-would become so influential. We realized that some of the talent management ideas we’d pioneered, such as the concept that workers should be allowed to take whatever vacation time they feel is appropriate, had been seen as a little crazy (at least until other companies started adopting them). But when Reed Hastings and I (along with some colleagues) wrote a PowerPoint deck explaining how we shaped the culture and motivated performance at Netflix, where Hastings is CEO and I was chief talent officer from 1998 to 2012, we had no idea it would go viral. It’s been viewed more than 5 million times on the web. Sheryl Sandberg has called it one of the most important documents ever to come out of Silicon Valley. Forget throwing parties and handing out T‑shirts make sure every employee understands what the company needs most and exactly what’s meant by “high performance.” Talent managers should think like businesspeople and innovators first, and like HR people last. You’ve got to actually model and encourage the behavior you talk up. Leaders own the job of creating the company culture. Don’t rate them on whether they are good mentors or fill out paperwork on time. Offer generous severance rather than holding on to workers whose skills no longer fit your needs. Scrap formal reviews in favor of informal conversations. Ask workers to rely on logic and common sense instead of formal policies, whether the issue is communication, time off, or expenses. Hire, reward, and tolerate only fully formed adults. Now one of those executives, the company’s longtime chief talent officer, goes beyond the bullet points to paint a detailed picture of how Netflix attracts, retains, and manages stellar employees. When Netflix executives wrote a PowerPoint deck about the organization’s talent management strategies, the document went viral-it’s been viewed more than 5 million times on the web.
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