Want to build a successful corporate culture? Do these 4 things:

Look at this: a document outlining the work culture at Netflix. It’s worth clicking through it just for those opening slides about Enron: not what your average corporation would put in a slideshow. You can almost hear Netflix CEO Reed Hastings dictating this in 10 minutes: it’s obvious that this is something that is deeply engrained in Hastings.

According to PandoDaily, Sheryl Sandberg of Facebook said that “it may well be the most important document ever to come out of the Valley”. (What would be the contenders? Bill Gates’ letter on software copyrights, I guess?)

Here’s four things from the slideshow that jumped out:

1. Practice what you preach

I especially liked the slide where he says: “we value these values, meaning we hire and promote people who demonstrate them“. I guess that’s the trick about corporate culture and values: you have to live them.

As Eric Ries writes in ‘The Lean Startup’, people are great at detecting patterns. In fact, we’re so great at it that we see them even when there are no patterns to detect. Small wonder that your employees will quickly learn that what you say is not what you do. It’s the old Ralph Waldo Emerson wisdom: “Your actions speak so loudly that I cannot hear what you say.”

2. Remind yourself that you’re NOT a family

I also liked the part where he says: “We’re a (professional sports) team, not a family”.  There’s too many companies proclaiming to be a family already.

The comparison doesn’t hold for 100 percent, however, says Hastings. In teams, athletes have to compete with each other to be assigned one of a very limited number of positions on the field. In a company, adding talent means you can accomplish more. Which means that at Netflix, ‘internal cutthroat behavior is not tolerated’. (Although Hastings adds in another slide that ‘some people feel that Netflix is a political place to work’.)

3. Explain the context 

Says Hastings: if you’re the manager and your  people fail, don’t blame them. Ask yourself how you created a context that allowed them to fail. Also, explain the context to your people: “High performance workers perform better if they understand the context”.

4. Pay at the top of the market for every employee

Hear this: “One outstanding employee gets more done and costs less than two adequate employees.” Netflix every year asks itself three questions about employees:

  • what would this person get elsewhere?
  • what would we pay for replacement?
  • what would we pay to keep that person?

The goal, writes Hastings, is to keep each employee at the top of the market pay for that person. Interesting thought – I’d love to hear if in this case, they also practice what they preach.

Netflix sounds like a very demanding place to work. Hastings states that Netflix tolerates a rough patch in high performance employees, but says that you can’t coast indefinitely. Something that also repeatedly comes up is the ‘generous severance package’ for people who underperform.

On the other hand, it seems like the company actually works very hard to create the conditions for people who love to work hard and achieve goals.

What I like about this document is the clear focus. It reminds me a bit of the Atlassian story, actually. Everything starts from this one mission: Netflix should only hire top people. If Netflix fails to do this, everything in this document becomes moot and even dangerous to the company. With this document, Hastings is forcing Netflix to focus on hiring only top talent. I think that’s the beauty of great businesses: they are radical and seem to defy common business sense (you’re going to do WHAT?).

Culture from Reed Hastings, photo: dteweney, Flickr

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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