Recruiting Great Talent Is the Core of the Netflix HR Revolution

Jan 15, 2014
This article is part of a series called News & Trends.

NetflixHow did Netflix reinvent HR? In one word, “Recruiting.”

“Hire, reward, and tolerate only fully formed adults,” writes Patty McCord in the Harvard Business Review. “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. Excellent colleagues trump everything else.”

If you hire the right people, so much of what companies do in the name of human resources becomes, if not superfluous, at least of much less importance.

McCord, who was Netflix’ chief talent officer from 1998 to 2012, and CEO Reed Hastings chronicled the company’s innovative management concepts, and its culture, in a 127-slide PowerPoint deck. Since first appearing in 2009, the slides have been viewed more than 5 million times and are considered among the most influential guides for startups and progressive firms.

McCord’s article, “How Netflix Reinvented HR,” details the thinking behind such formerly radical notions as unlimited vacation time and the still-edgy notion that Performance Improvement Plans and annual reviews are pointless, if not counterproductive.

These are just some of the ideas Netflix tested. Imagine a workplace where the employee handbook was cut in half and mostly demanded “adultlike behavior” on the part of employees? Imagine a company travel policy was a mere five words long: “Act in (the company’s) best interests”?

Since doing the very things described above — and plenty more — Netflix has become an entertainment force, winning three Emmys, tripling its stock price, and growing to 29 million subscribers in just the last year.

Exploding all the HR rules can’t be credited for all of the company’s success. But it sure changed the way managers and their teams saw the company culture.

McCord’s article that fleshes out the bare-bones PowerPoint describes in clear, and very direct detail just how it was that Netflix reinvented HR. And it begins and largely depends on right recruiting.

We continually told managers that building a great team was their most important task. We didn’t measure them on whether they were excellent coaches or mentors or got their paperwork done on time. Great teams accomplish great work, and recruiting the right team was the top priority.

In the years since the slide desk first appeared, Netflix itself has tinkered with some of the specific elements to meet the changing times, though it hasn’t wavered from the seven cultural aspects enumerated in the slides:

  1. Values are what we value
  2. High performance
  3. Freedom & responsibility
  4. Context, not control
  5. Highly aligned, loosely coupled
  6. Pay top of market
  7. Promotions & development

Applying what she learned from her 14 years at Netflix to the consulting work she now does, McCord says HR puts too little effort into explaining to workers how business works. “How can we help every worker understand what we mean by high performance?” she writes.

“At Netflix I worked with colleagues who were changing the way people consume filmed entertainment, which is an incredibly innovative pursuit … There’s no reason the HR team can’t be innovative too.”

This article is part of a series called News & Trends.