Reinventing HR: The Netflix Case

In the early days of Netflix, Reed Hastings, Co-Founder and CEO, asked Patty McCord (Chief Talent Officer) to write out the company’s core values, which led to  – quoting Sheryl Sandburg, COO of Facebook –  “one of the most important documents ever to come out of Silicon Valley”. 

In this interview series, we will talk with Human Resources leaders about Netflix’s famous innovative HR practices.

Episode 2: A discussion with Heiko Wieprecht, Managing Director at Singularity HR

1. What do you think about offering employees unlimited paid holiday allowance?

I am actually a fan of giving employees as much flexibility and holidays as possible. As long as the performance is there, as long as the work is done and done right. I am fine with employees taking as many holidays as they want. I know some start-ups in Germany which – although do not have a formal unlimited paid vacation policy – are extremely flexible in regards to employees taking long and spontaneous vacation periods. I believe the whole market is moving in this direction, based on the evolution of my interactions with trade unions. Some companies have even already implemented a 4-day work week, and the results seem to be good (i.e. no decrease on productivity). 

2. Rather than submit reports detailing money spent on mileage, meals, hotel rooms, and office supplies, employees are expected to spend money “acting in Netflix´s best interests”. What’s your take on this no limits travel and expense policy?

I believe it´s in principle good to treat your employees as shareholders of the company and have them acting as if the company´s money was also their money. However, from my experience, I know how difficult it is to make this work in practice. Employees might abuse this rule or/and use it to justify questionable expenses. I remember in one of my past assignments how our employer had a reasonable expense policy and relied on employees acting in the best interest for the firm. It didn´t work out so well, including an incident of company card heavy usage in the Red light district in Hamburg. Consequently, we had to dissolve the employment contract with that individual.

3. Netflix chose to ditch formal performance reviews and rely on informal 360-degree reviews. “We asked people to identify things that colleagues should stop, start, or continue.” They also don´t pay performance-based bonuses. What is your opinion about these measures?

This is quite an interesting topic, as I am aware that a number of firms have adopted the continuous feedback process method. I think this is definitely good for many roles. Why? Because sharing feedback on a regular basis improves the immediate performance. On the other hand, I don’t think it makes sense for certain type of roles, like heavily performance-based positions in sales, where a clear target is set, and there are reliable parameters to judge the employee’s performance effectively. Regarding individual “Performance Improvement Plans”, I reckon it´s positive to separate the underperformer from the others and try to solve the situation. Unlike Netflix, I wouldn´t directly let them go with a generous severance package, although that would be the next course of action if the PIP does not work. 

Thank you Heiko for sharing your thoughts. Stay tuned for the next episode! If you have any questions about this series of interviews or you need support hiring, contact Alberto Villar.  

If you enjoyed reading this interview, please also have a look into Episode 1 & Episode 3. 

References:• Reed Hastings & Erin Meyer – “No rules rules: Netflix and the culture of Reinvention” (2020)• Patty McCord – “How Netflix reinvented HR” – Harvard Business Review, January 2014