Last week on LinkedIn I shared a blog by Kevin Kruse entitled ‘Netflix Has No Rules Because They Hire Great People’. His article resonated with me and had me thinking about how sometimes ‘simple makes sense’.
Whether you are a Chief Executive Officer hiring new personnel or you are searching for an appropriate Executive Search firm to help you with the task, heeding Mr. Kruse’s advice is I believe sound practice.
In his blog Kevin explores what we can learn from Netflix’s approach to business culture and rules.
In a nutshell there are two things that companies should concentrate on:
1. Investing in hiring high-performance employees
2. Building and maintaining a culture that rewards high-performers, and weeds out continuous, unimproved low performers.
The blog explains the long term benefits of first searching for and then hiring responsible people. Furthermore it cites the need for employers to ‘allow’ their chosen employees to become better versions of themselves without having to comply with pointless rules and regulations.
Following the above dictates, and the result is clear, employers end up with employees that thrive and as a result company productivity increases.
In the January 2014 issue of the Harvard Business Review Patty McCord, then Chief Talent Officer with Netflix Inc. set out her stall with the following words of wisdom
“If you’re careful to hire people who will put the company’s interests first, who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing. Most companies spend endless time and money writing and enforcing HR policies to deal with problems the other 3% might cause. Instead, we tried really hard to not hire those people, and we let them go if it turned out we’d made a hiring mistake.”
Examining Netflix’s approach more thoroughly shows us that they have two key principles that underscore their workforce model. They believe in ‘Freedom and responsibility’ for the employees and in ‘Crafting a Culture of Excellence’ within their business.
With these two overarching principles in mind, Netflix further shaped their approach to talent using the five tenets below.
1. Hire, Reward, and Tolerate Only Fully Formed Adults
2. Tell the Truth About Performance
3. Managers Own the Job of Creating Great Teams
4. Leaders Own the Job of Creating the Company Culture
5. Good Talent Managers Think Like Business people and Innovators First, and Like HR People Last
With all of the above in mind I now suppose the question is, how can you effectively apply such important principles and relevant advice to your working environment?
I believe you must ask yourself the following questions truthfully. Then more importantly answer them truthfully too:
1. How much more can you invest into the hiring process?
2. If you’ll be spending less on enforcement, can you raise the compensation you offer (resulting in higher quality candidates)?
3. What type of culture are you producing? Is it designed so high performers will thrive, or does it protect against low performers?
4. Are managers reluctant to let go low performers? If so Why?
In essence the higher the quality of your workforce the less likely it is that you’ll need rules.
As McCord sees it, you should “hire, reward, and tolerate only fully formed adults.”