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 1: A discussion with Iker Zubia Vázquez, CHRO at Azkoyen Group
1. What do you think about offering employees unlimited paid holiday allowance?
I believe some HR practices are successful only in a given moment, in a given atmosphere, in a given environment and very dependant on the situation. Especially the “unlimited holiday“ concept – which might have been successful at Netflix at that time – could turn into a disaster if we apply it to a different firm. We would need to find a similar company in a comparable environment to implement such a non-traditional policy. The legal framework of the country where it´s based obviously needs to be considered. Besides, we need to factor in the maturity stage of the firm – i.e. start-ups may allow for more innovative HR policies than more mature companies. Such a controversial measure worked at that specific time in that specific company & environment, which is not at all an indicator of foreseeable success if applied elsewhere.
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?
This statement reads great on paper! But unfortunately it would be really difficult to manage in the practice. This is another example of a policy which is highly dependant on the regulatory framework of the country. While such an utopic measure might work in a country where it´s easy for companies to let employees go, this would be extremely dangerous to implement in a country like Germany – with high job security – and would most likely lead to trouble. Similarly to the previous topic discussed (holiday allowance), the culture of the firm and the culture of the region where it operates plays also a crucial role in the potential success or failure of such risky measure.
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?
A lot has been written about this subject. I personally think it is positive to reward individuals based on their contribution (rather than performance) and consider that a “coffee for all” policy might actually be unfair and even discriminatory.
As per the removal of formal performance reviews, I am also a fan of continuous feedback and I do think that “the more formal, the worse”. Whenever HR has to intervene and come up with a formal performance-based review system, it indicates that the business manager has failed. Of course, I would need to know the specifics of the situation, but generally this is a policy I can get behind.
Thank you Iker 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 2 & Episode 3.
- 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