Netflix and trust: Why this is the number one hiring trend


As experts project the top hiring trend for the year ahead, one of the world’s most agile companies has valuable lessons.

One of the buzzwords to sweep HR in 2016 (along with “AI” and “analytics”) was trust; the concept that the more power you give people to make their own decisions and own their own actions, the more likely you’ll have staff that take leadership initiative – and don’t pass the buck. It’s also a noteworthy hiring trend. 

A recent survey on the top hiring trend by recruitment consultancy Robert Half shows that 42 per cent of Australian HR managers say they place equal importance on both technical and soft skill capabilities when hiring new candidates. They placed leadership aptitude, communication skills and adaptability as the top three soft skills they looked for in a candidate. What’s more, 82 per cent of talent leaders in Australia believe an employer’s brand has a significant impact on their ability to hire great talent, as revealed in LinkedIn’s Australia Recruiting Trends 2017 report.

Ultimately, is a focus on recruitment the key to ensuring engaged, high performing workforces? And if so, how do you bring a holistic approach to recruitment that is in line with your company’s culture and purpose?

It’s worth revisiting this seminal essay about disruptive HR published at Harvard Business Review by Patty McCord, former chief talent officer at Netflix. Under her leadership, Netflix grew from a startup running a DVD delivery service to a seven billion dollar enterprise; adapting in response to market disruption while innovating new practices and technologies.

Underpinning it all was a daring – now legendary – ‘no rules’ approach to human resources.

According to Kevin Kruse at Forbes, while rules are supposed to protect quality, consistency and profits as a company grows, they often reinforce behaviour that tends to reward average performers and stifle high performers.

This is best expressed by the (infamous in the tech world) Netflix Culture Deck. It’s been touted “one of the most important documents to come out of Silicon Valley” by Facebook COO Sheryl Sandberg and has views in the millions. One of the most significant statements inside?

“Netflix posits that responsible people – the people that every company wants to hire – are not only worthy of freedom, they thrive on it.”

While the term ‘no rules’ is misleading (there was still an HR team after all!), the Netflix culture philosophy was core to their hiring strategy. It took as a given that if you hire people who will put the company’s interests first and who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing.

It also lead to some practices “previously unheard of” in HR.

How Netflix invested in trust and disrupted HR

  • The “unlimited vacation policy”: Replacing a formally tracked vacation policy, Netflix allows salaried employees to take as much vacation time as they like. There are some guidelines: those working in accounting and finance are asked to be in the office during the beginning or end of a quarter. And anyone who wants more than 30 days off in a row should meet with HR.
  • No formal travel or expense policy: rather than paying a travel agent or administrator to book and organise travel plans, Netflix chooses to leave the responsibility to their employees. There is one simple rule: ‘Act in Netflix’s best interests.’ Employees are expected to spend company money as it were their own, looking for opportunities to save when possible.

Anyone in HR knows that juggling multiple balls at once simply comes with the territory. Increasingly, people analytics and a sharper focus on business partnering within the HR function is highlighting the strategic elements of the profession more than ever before.

“Instead of cheerleading,” McCord suggests, “people [in HR] should think of themselves as business people. What’s good for the company? How do we communicate that to employees? How can we help every worker understand what we mean by high performance?”

What you can take from the Netflix ‘trust’ story to improve hiring in 2017:

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Jessica
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Jessica

This is a great article. However, I always do wonder, what is the flip side of this sort of strategy when people abuse it? It would be naïve to suggest that creating such a culture infers that everyone will respect this freedom – how do companies “control” or what are the consequences of employees abusing this? How do you implement that without taking away from the culture?

Mark Shaw
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Mark Shaw

Jessica. My good colleague DI Armbrust from Outcome HR and I can provide you with an answer. In our book The 2% Effect we explain how to successfully design and implement simple rules that work for that vast majority of your workforce AND controls for the small percentage of employees who abuse them.

In my view, any organisation can (and should) follow Netflix’s example of designing policies and practices for the 97% (or 98%) of people who do the right thing.

Shane McCormack
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Shane McCormack

This is fantastic, great for morale and trust is massive! I have one hesitation however – I believe this can and will work in a start up company where it is policy from day one, however when there is a policy in place for decades of fixed contractual obligations, it will be extremely difficult to change. Excellent idea and would be a fantastic company to work for.

More on HRM

Netflix and trust: Why this is the number one hiring trend


As experts project the top hiring trend for the year ahead, one of the world’s most agile companies has valuable lessons.

One of the buzzwords to sweep HR in 2016 (along with “AI” and “analytics”) was trust; the concept that the more power you give people to make their own decisions and own their own actions, the more likely you’ll have staff that take leadership initiative – and don’t pass the buck. It’s also a noteworthy hiring trend. 

A recent survey on the top hiring trend by recruitment consultancy Robert Half shows that 42 per cent of Australian HR managers say they place equal importance on both technical and soft skill capabilities when hiring new candidates. They placed leadership aptitude, communication skills and adaptability as the top three soft skills they looked for in a candidate. What’s more, 82 per cent of talent leaders in Australia believe an employer’s brand has a significant impact on their ability to hire great talent, as revealed in LinkedIn’s Australia Recruiting Trends 2017 report.

Ultimately, is a focus on recruitment the key to ensuring engaged, high performing workforces? And if so, how do you bring a holistic approach to recruitment that is in line with your company’s culture and purpose?

It’s worth revisiting this seminal essay about disruptive HR published at Harvard Business Review by Patty McCord, former chief talent officer at Netflix. Under her leadership, Netflix grew from a startup running a DVD delivery service to a seven billion dollar enterprise; adapting in response to market disruption while innovating new practices and technologies.

Underpinning it all was a daring – now legendary – ‘no rules’ approach to human resources.

According to Kevin Kruse at Forbes, while rules are supposed to protect quality, consistency and profits as a company grows, they often reinforce behaviour that tends to reward average performers and stifle high performers.

This is best expressed by the (infamous in the tech world) Netflix Culture Deck. It’s been touted “one of the most important documents to come out of Silicon Valley” by Facebook COO Sheryl Sandberg and has views in the millions. One of the most significant statements inside?

“Netflix posits that responsible people – the people that every company wants to hire – are not only worthy of freedom, they thrive on it.”

While the term ‘no rules’ is misleading (there was still an HR team after all!), the Netflix culture philosophy was core to their hiring strategy. It took as a given that if you hire people who will put the company’s interests first and who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing.

It also lead to some practices “previously unheard of” in HR.

How Netflix invested in trust and disrupted HR

  • The “unlimited vacation policy”: Replacing a formally tracked vacation policy, Netflix allows salaried employees to take as much vacation time as they like. There are some guidelines: those working in accounting and finance are asked to be in the office during the beginning or end of a quarter. And anyone who wants more than 30 days off in a row should meet with HR.
  • No formal travel or expense policy: rather than paying a travel agent or administrator to book and organise travel plans, Netflix chooses to leave the responsibility to their employees. There is one simple rule: ‘Act in Netflix’s best interests.’ Employees are expected to spend company money as it were their own, looking for opportunities to save when possible.

Anyone in HR knows that juggling multiple balls at once simply comes with the territory. Increasingly, people analytics and a sharper focus on business partnering within the HR function is highlighting the strategic elements of the profession more than ever before.

“Instead of cheerleading,” McCord suggests, “people [in HR] should think of themselves as business people. What’s good for the company? How do we communicate that to employees? How can we help every worker understand what we mean by high performance?”

What you can take from the Netflix ‘trust’ story to improve hiring in 2017:

3
Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
Jessica
Guest
Jessica

This is a great article. However, I always do wonder, what is the flip side of this sort of strategy when people abuse it? It would be naïve to suggest that creating such a culture infers that everyone will respect this freedom – how do companies “control” or what are the consequences of employees abusing this? How do you implement that without taking away from the culture?

Mark Shaw
Guest
Mark Shaw

Jessica. My good colleague DI Armbrust from Outcome HR and I can provide you with an answer. In our book The 2% Effect we explain how to successfully design and implement simple rules that work for that vast majority of your workforce AND controls for the small percentage of employees who abuse them.

In my view, any organisation can (and should) follow Netflix’s example of designing policies and practices for the 97% (or 98%) of people who do the right thing.

Shane McCormack
Guest
Shane McCormack

This is fantastic, great for morale and trust is massive! I have one hesitation however – I believe this can and will work in a start up company where it is policy from day one, however when there is a policy in place for decades of fixed contractual obligations, it will be extremely difficult to change. Excellent idea and would be a fantastic company to work for.

More on HRM