Workplace Spotlight: The No Rules Rules of Netflix’s Organisational Culture
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Coined in 1951 by Dr Elliott Jaques, a company’s Organisational Culture encompasses the values, philosophy and behaviours that combine to make up ‘the unique social and psychological environment of an organisation’.
A definitive and united corporate culture can make or break a business, and demonstrates itself in the following ways:
The way in which the company conducts its business, treats its employees, customers and the wider community
The extent to which freedom and autonomy is granted to its staff in terms of decision making, innovation and personal development
How information circulates through the organisational hierarchy
The commitment and investment of employees towards collective goals and objectives
In this, the first of several case studies, I will explore the organisational culture of Netflix, which has gained recent widespread attention due to the release of Netflix co-founder and CEO Reed Hastings’ new book ‘No Rules Rules: Netflix and The Culture of Reinvention’.
People Over Process
Not content with revolutionising the media streaming sector, Netflix is also on a mission to transform organisational culture.
At the heart of Netflix’s corporate culture is the philosophy of people over process.
This is evident in many of the benefits afforded to its employees, including unlimited holidays and an expense account policy that speaks to trust and autonomy, simply stipulating that staff may use the account in any manner they deem appropriate as long as they ‘act in Netflix’s best interests’.
Affording staff this kind of freedom only works, however, if the team are genuinely invested in the organisation and its success.
At Netflix, the leaders have managed to create a workplace that others can only aspire to.
In a 2018 survey by Hired, tech workers overwhelming rated Netflix as the number one company they would want to work for, ahead of Google, Tesla and Apple.
In another 2018 survey conducted by Comparably, which was based on over five million anonymous reviews from workers at 45,000 of the largest companies in America, Netflix was ranked as having the second happiest employees of the thousands ranked.
So how has Netflix managed to create a company that not only succeeds in terms of performance and profitability, but also has a culture that empowers its staff, pushing them to greater heights personally and professionally?
Netflix Culture: Freedom and Responsibility
When Netflix first published their culture deck, a set of 127 slides originally only intended for internal use, on the internet in 2009, Sheryl Sandberg, COO of Facebook called it ‘the most important document to ever come out of Silicon Valley’.
Reed Hastings said that when he started Netflix, he wanted to ‘promote flexibility, employee freedom, and innovation instead of error prevention and rule adherence’. Through a gradual approach, Hastings was able to create what he describes as a culture of ‘Freedom and Responsibility’. To develop a foundation that allowed this level of freedom, he found he first needed to increase two other elements; talent density and increased openness. It is then, and only then that an organisation can begin to reduce controls and procedural micro-management. Hastings teaches his managers to ‘lead with context, not control’.
Hastings describes the process as a three-step implementation approach.
Firstly, organisations should:
Build up their ‘talent density’ by recruiting and creating a team of high performers
Introduce honesty in the workplace by encouraging feedback and open communication
Begin to remove controls such as holiday, travel and expense policies
Secondly:
Strengthen the density of talent in the workforce by compensating workers fairly
Increase the level of vulnerability-based trust and candour through emphasising transparency
Delegate decision making approvals and resist the urge to micro-manage
The third and final step involves the following:
Continue to increase talent density through the ‘Keeper Test’
Create circles of feedback to enhance transparency and communication; and
Eradicate controls by leading with context, not control
While this approach to organisational culture may not work for every team, it is a prime example of how corporate culture drives innovation and success. At Infinity HR, we can work with you to develop a culture specific to your industry and people. Contact Iolanda on 0400 489 743 or email Iolanda@infinityhr.com.au to learn more.
References:
AHRI:ASSIST Organisational culture
Hastings, Reed & Meyer, Erin, No Rules Rules: Netflix and The Culture of Reinvention, Penguin Random House, 2020