The Netflix Employee Value Proposition

When I was preparing for my previous post on Netflix, my attention was drawn to a small part of Reed Hastings’ interview. He said : “We care about great work. This requires thoughtful, mature high-performance employees.” (emphasis is mine).

So I went on a path of discovery to try and find more information about the employee value proposition at Netflix, and along my way came through these pieces :

How Netflix pays its employees is dated back to 2010 but I believe it to be still mostly accurate as I did not find anything at a  later date indicating major change in their pay philosophy. It details the pay policy at the company.

Other companies should have to read this internal Netflix presentation explains the following : “Early on, a lot of it [a specific presentation on employee value proposition from Netflix CEO Reed Hastings] deals with workplace efficiency, and not being afraid to let someone go if they’re not doing their job. The idea is that if someone just wants to do mediocre works, that’s fine, they’ll get a nice severance package. It extends this into an emphasis on effectiveness over effort — the company doesn’t want to necessarily reward people who stay late versus those who don’t, but get the same amount of work done. It then turns to some internal policies including management best practices. And then to retention practices — making sure the company pays the top people a high enough salary that they’ll never want to leave.”

Netflix’ unique culture, beautifully defined, looks at the same presentation but analyses it mostly from the (you guessed it) company culture perspective. On their corporate website, Netflix themselves explain why to work with them in a few bullet points which include in position 3 : “We pay top of market to attract and keep the high performers every company wants”. Simply stated, and, importantly, not placed as the first of the top reasons they want people to join them for.

I understand Netflix pay at the 95th percentile of the market. Of course an organisation that pays at the top of the market will want to ensure a good ROI on its financial investment in its talent. So people who don’t contribute enough are weeded out very regularly.

What I like in the Netflix employee value proposition is that everything is clearly defined : the expectations from the employees (be an outstanding performer), what happens if you don’t meet them (Unlike many companies, we practice “adequate performance gets a generous severance package”) and what happens if you do. There is also a section on the crucial role of the managers in establishing and maintaining the appropriate context for that high performance to take place.

My favourite slide ? Page 23 : ” We’re a team, not a family. We’re like a pro sports team, not a kid’s recreational team. Netflix leaders hire, develop and cut smartly so we have stars in every position”. (emphasis is theirs).

I would like to encourage you to read the presentation, it is 126 pages long but a fast read. And as HR or Compensation manager you will find it compelling. I hope it inspires you to write something equally persuading for your organisation. So here it is – have a good read !Culture

View more presentations from Reed Hastings
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