We recently rediscovered the excellent article on the HR transformation of Netflix, first published in the Harvard Business Review back in 2014.
Reflecting on her time as Netflix Chief Talent Officer, Patty McCord details the impact of an internal HR PowerPoint document that explained how Netflix shaped their culture and motivated performance.
The PowerPoint has been described as one of the most important documents to originate from Silicon Valley, and has been viewed more than five million times. You can find the article and the presentation here (redirects to HBR).
There are some interesting observations to be gleamed from the way Netflix developed their high performance culture. Netflix took a head-on approach to attracting top talent, ditching poor performers (or strong performers who could no longer develop) and valued agility over complexity (Netflix promote the term ‘highly aligned, loosely coupled’).
Some of the directives may make Netflix appear cut-throat (valuing ‘P’ for performance over ‘A’ for effort, which runs as a harsh counterpoint to other people-focused organisations). However, it is apparent their roadmap created a company that was able to outperform the market, pioneer game changing technology and develop strong brand-loyalty.
As talent acquisition specialists and resourcing partners to leading global organisations, Factology view the Netflix policy on staff compensation as a key differentiator in their approach to talent.
Netflix believe in market-based pay and instruct employees to interview with competitors when the chance arises, to gain understanding of the market rate for their talent:
‘Many HR people dislike it when employees talk to recruiters, but I always told employees to take the call, ask how much, and send me the number - it’s valuable information’. (Patty McCord)
While Factology always advise career professionals to keep an ear to the market to asses their current value, most employers often advise against this, due to the perceived risks of destabilising their organisation (perhaps acknowledging an undervaluing of their staff’s market value).
We would like to hear what you think of this policy - is it beneficial, or risky?
- Should HR/talent leaders allow their best employees to court the attention of competitors?
- Do employees feel comfortable ‘playing’ the market at the risk of appearing disloyal?
- Should this be an open market information-sharing exercise, or kept as an in-house secret?
- Does this type of market sampling become a non-issue when you already attract the best staff with outstanding compensation packages?
Factology provides compensation analysis as part of our research service, extrapolating MI reporting that helps our clients assess potential benefits or perceived risks (again, this depends on your individual and organisational outlook).
We welcome the opportunity to share our advice and findings, on an employer or employee basis. Please get in touch to get the conversation started.