What I learned from Patty McCord (ex-Netflix)

What most people don’t realise is that Netflix started as a DVD postal service. Long before streaming services existed, people used to rent movies from Netflix by post. It was a step up from the Blockbuster VHS store that I remember visiting every Friday night with my dad and brother as a teenager, making sure to get to the store early enough not to miss out on all the copies of the latest releases before they were gone for the night.

As technology advanced at a rapid pace, Netflix evolved from a DVD postal service to the very first streaming service. From there, when more streaming competitors entered the market, they evolved again, by leveraging the data collected from users about what they watched and liked, to create their own content in the form of Netflix Originals. These programs are produced and commissioned in-house by Netflix production crews. A far cry from posting DVD’s!

As a business, this type of evolution is impressive. We can all point to the Kodaks and Blockbusters that were unable to stay relevant. Netflix possessed a relentless focus on innovation, and in order to innovate at such fast pace they created, fostered and relied upon a high-performance culture, where parting ways with underperforming employees was par for the course.

Patty McCord joined Netflix as one of the very first employees in 1998 and served as the Chief Talent Officer until 2012. She was a co-creator of the famous Netflix culture deck (a PowerPoint presentation that was released in 2009 and went viral). One of my good friends referred to her as HR Royalty when I told her of my upcoming visit, such is her influence.

The Uber dropped me off and I made my way up a driveway surrounded by thick foliage. I noticed the sound of running water, slowly trickling downhill. Birdsong rang out from the surrounding trees. It was so peaceful.

The path veered to the left and there was a bridge that crossed a running stream and some steps leading up to a full height glass front door. A little dog started barking loudly alerting its owner to the presence of a guest. And there, on the doorstep I was met with a big gracious smile and a warm embrace from a woman that I had admired for the longest time, but until this moment, never met.

As I sat down to join Patty in her living room, her little dog Dólce came to join her on the couch. What I immediately noticed after spending 15-20 minutes with her over a coffee was that she was warm and welcoming. She possessed that generosity of spirit that attracts so many of us to the HR profession. But she was also no nonsense. She was sharp, direct, and had a great bullsh*t detector. She was a business woman first and an HR professional second. I liked her immensely already.

Patty and I spoke in her living room for approximately 5 hours with a pause that lasted only long enough to duck to the bathroom. We covered so much ground in this time, and there is so much that I feel the HR community at large could learn from her savvy business mindset. Too often HR practitioners cry that they are still fighting for a seat at the table. They are overlooked, their function undervalued. My experience at SafetyCulture couldn’t be further from that. We are seen as a critical business enabler. Just as Patty’s team were at Netflix. Our thinking was incredibly aligned, which was hugely reassuring for me. As such, I thought I would share the lessons I walked away with.

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Lesson 1: The only engagement metrics that matter are the P&L.

The People function MUST be commercial. If you want to build a business, you must think like a business owner. Anyone that works in a tech company that offers shares or options (like Netflix did), is a business owner. Too much focus in HR is spent on metrics such as attrition rates, engagement scores, and performance ratings. Whilst these metrics might paint a part of an important overall picture, efforts to improve these measures can result in many hours of effort being invested that don’t drive commercial outcomes and that aren’t in the best interests of customers. Business growth and innovation are the best ways to measure the health of your business, and as such all employees should understand the P&L. What’s interesting to note is that with all this focus on high performance, Netflix weren’t attempting to win Best Place to Work Awards. However, they have been regularly recognised with numerous innovation awards.

Q: Is your People Team focused on the right measures of success?

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Lesson 2: Recruiting the right people is paramount to success

Patty was a recruiter before she managed an HR function and her passion in this space was still evident. Anyone that knows her work appreciates her views on talent density. For unique skill sets to your business, people are worth what the market will pay them. Whilst this view tends to hurt most compensation and benefits specialist’s brains, for hyper growth businesses, a pragmatic approach is necessary. A one size fits all model won’t work for high growth businesses due to the timeframes that problems need to be solved in. So, find a way to hire great people that will transform your business, and figure out a way to remunerate them for their effort.

Q: Is your compensation and benefits approach flexible enough to enable high talent density?

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Lesson 3: Parting ways respectfully with great people is just as important

Your business will outgrow people. It’s inevitable.? This is even more true in high growth environments. The problems that someone was originally hired to solve will become more complex and require different thinking over time. People join a new business with a desire to add value and do great work. But over time, even if their attitude is stellar, it’s likely that the problems the business is facing will require people who know different things. And that’s ok. Being able to have honest conversations with people that allow them to part ways from a company and also keep their dignity is something Patty believes shouldn’t be shied away from.? In fact, every year Patty and Reed used to share a bottle of wine at the Sundance film festival and she would ask him, “am I the right person for the next year?” They had made a promise to never lie to each other. Then one year, after 14 years of working together, Reed said ‘no’. Patty left Netflix with all her dignity intact and she and Reed are still the very best of friends.

Q: Are your leaders able to be honest with their team members about their performance?

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Lesson 4: Leadership is the one thing that rolls downhill

As a People Team we spend an exorbitant amount of time thinking about the development of people. Speaking for myself, I scour the world for the absolute best content I can find that will leverage the capability of the workforce, and we deliver this through the SafetyCulture Leadership Academy. I know most of my contemporaries bring the same passion for training and development to their organisations. But if people don’t implement the skills that they learn, then all that effort is for nothing. If they don’t make an effort to improve themselves and develop their capability, then nothing will change. It’s up to the leaders (and it starts at the very top) to model the behaviours and skills that we are seeking. If they don’t do it, then we can’t expect the rest of the workforce to. To quote Patty “we mimic and perform based on who we look up to.” ?Leaders must drive accountability for development in their own teams and view the People function as a willing partner, not the responsible party.

Q: Are your leaders demonstrating the right behaviours and driving accountability for growth and development in their team?

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It was about now that my brain was full, and Patty’s daughter was due to drop by and so our conversation was brought to a close. Before we finished up however, she offered me a tour of her home. To say it was spectacular is an understatement. Throughout our discussion we’d been listening to the birds in the thick foliage that surrounded her home and looking out to the views of Santa Cruz bay. This day will be etched in my memory forever. It was during the house tour that we paused long enough to have a photo taken. After 5 hours of suspicious avoidance, it was about now that Dólce decided to (finally) allow me to give him a pat. I guess we were all parting ways new friends.