Lessons I Learned from Netflix’s Former CEO Reed Hastings and Former Chief Talent Officer Patty McCord

I love reading books and articles that challenge my thinking and inspire me to learn new things. That's why I was thrilled when I found an old copy of HBR's 10 Must Reads (my dad's copy) in his library.

As I browsed through the titles, one of them caught my eye: How Netflix Reinvented HR by Patty McCord. I watch Netflix all the time, but I didn't know much about their HR practices. So I decided to give it a read.

It was one of the most insightful and provocative articles I have ever read on HR.

But what really fascinated me was how they managed to create a culture of freedom and responsibility, where employees are treated as adults who can make smart decisions without being micromanaged or constrained by rigid policies.

In this newsletter, I want to share with you five key takeaways from the article that I think any HR professional or business leader should learn from, as well as how we can emulate them in our HR practices.

These are the lessons that Patty McCord, Netflix's former chief talent officer, who co-created the famous Netflix Culture Deck with former CEO Reed Hastings, shared with us.

Lesson 1: Hire, reward, and tolerate only fully formed adults.?

Netflix doesn't hire people who need constant supervision, feedback, or hand-holding. They hire people who are self-motivated, passionate, and capable of doing amazing work with minimal direction. They also pay them top of the market salaries and give them generous benefits, such as unlimited vacation time and stock options.

But they also expect them to deliver high performance and act in the best interest of the company. If they don't, they will be let go quickly and respectfully. This way, Netflix ensures that they have only the best people on their team who can thrive in a culture of freedom and responsibility.?

This lesson resonates with me because I believe that treating people like adults is the best way to empower them and unleash their potential.

It also creates a culture of trust and respect, which are essential for collaboration and innovation. However, I also recognize that this approach requires a lot of courage and discipline from both the leaders and the employees. It means that we have to be honest about our expectations and feedback, and be willing to let go of people who are not a good fit for our culture or goals.

Lesson 2: Tell the truth about performance.?

One of the most striking practices that Netflix has is what they call "informal 360-degree reviews". These are candid conversations that managers and peers have with each other about how they are doing, what they are good at, what they need to improve, and how they can help each other grow.

These conversations are not tied to any formal process or rating system. They are not used to determine promotions or bonuses. They are simply meant to provide honest feedback and coaching, without sugarcoating or avoiding difficult topics.

This practice helps create a culture of transparency and trust, where people can learn from their mistakes and celebrate their successes.

Lesson 3: Managers own the job of creating great teams.

Netflix did not have any HR policies or procedures for hiring, firing, or promoting people. Instead, they gave managers full authority and responsibility for building their teams. They expected managers to hire only A players who could do amazing work with minimal direction or supervision.

They also expected managers to fire anyone who was not meeting their expectations or fitting into their culture. And they expected managers to promote only those who had demonstrated exceptional performance and potential.

This lesson makes sense to me because I think that managers are in the best position to know what kind of people they need for their teams, what kind of work they are doing, and how well they are doing it.

They are also in the best position to coach, mentor, and develop their people, and to create a positive and productive work environment for them. By giving managers ownership and accountability for creating great teams, we can also empower and motivate them to do their best.

However, I also realize that this lesson requires a lot of trust and support from the HR department and the senior leadership.

It means that we have to give managers the tools and resources they need to make good hiring, firing, and promotion decisions.

It also means that we have to train and coach them on how to be effective leaders and team builders. And it means that we have to monitor and evaluate their performance and results, and give them feedback and recognition accordingly.

Lesson 4: Leaders set clear, specific, and aggressive goals.

Netflix doesn't have a long-term strategic plan or a detailed budget. Instead, they have a short-term roadmap that outlines the key priorities and initiatives for the next few months. They also have a set of metrics that measure their progress and performance. They communicate these goals and metrics clearly and frequently to all employees, and they encourage them to align their actions and decisions with them. They also welcome feedback and debate from anyone who has a different perspective or idea.?

Lesson 5: Keep only those who are essential to your current and future success.?

Netflix doesn't try to retain its employees at all costs. They don't offer loyalty bonuses or tenure rewards. They don't have golden handcuffs or non-compete clauses.

They don't worry about losing talent to competitors or startups. Instead, they constantly evaluate their talent needs and adjust accordingly.

They ask themselves: Who do we need now? Who do we need next? Who do we no longer need? And they act swiftly and decisively on those answers. They also encourage their employees to do the same: To assess their own skills and interests, to seek new challenges and opportunities, and to pursue their passions and dreams.

Lesson 6: Good talent managers think like business people and innovators first, like HR people last.

This lesson really resonated with me because I have seen how many HR professionals get stuck in the traditional mindset of policies, procedures and compliance. They forget that their main role is to support the business goals and strategy, and to enable the employees to perform at their best.

Netflix's approach is to empower the HR team to think like businesspeople and innovators first, like HR people last.

This means that they are constantly looking for ways to improve the employee experience, to align the culture with the vision, and to foster a high-performance environment.

They are not afraid to experiment with new ideas, such as unlimited vacation, no formal travel policy, or paying top of market salaries.

By thinking like businesspeople and innovators first, like HR people last, Netflix's HR team has been able to create a unique and successful culture that attracts and retains top talent.

I think this is a lesson that we can all learn from, especially in Nigeria, where we face many challenges and opportunities in the HR field.

In conclusion, I think Netflix has a lot to teach us about how to create a culture of excellence that drives innovation and growth.

Of course, not everything they do may be applicable or suitable for our context in Nigeria, but I think we can learn from their principles and practices and adapt them to our own needs and realities.

I hope you enjoyed reading this newsletter as much as I enjoyed writing it, and I would love to hear your thoughts and feedback on it.

Until next time,

Jennie