I am about halfway through a wonderful book: No Rules Rule: Netflix and the Culture of Reinvention, co-written by Reed Hastings, co-founder of Netflix, and Erin Meyer, a professor at INSEAD, one of the world’ top business schools.
The book offers insight into what is behind the wild success Netflix has had. I may offer a more thorough review once I am finished, but I found a few of the facts listed to be fascinating, so I thought I would share them.
The first group of facts deal with feedback, and how at Netflix it is encouraged, almost required, to give any and all types of feedback. Meyer references the results of a survey that found the following:
- 57 percent of respondents claim they would prefer to receive corrective feedback to positive feedback
- 72 percent felt their performance would improve if they received more corrective feedback (I’m not sure why this isn’t 100 percent; do the other 28 percent think they have no room for improvement?)
- 92 percent agreed with the comment, “Negative feedback, if delivered appropriately, improves performance.” (not sure how this is different than the previous bullet point, unless they are making a distinction between corrective and negative feedback, which I have always viewed as the same thing)
So don’t be shy; give corrective feedback when you feel it is appropriate, and be willing to seek such feedback from others.
Netflix has no vacation policy for its employees. It is up to managers to model appropriate vacation behavior. It was noted how challenging this would be in different counties, such as Japan, where:
- the average Japanese worker uses only about seven vacation days per year, and 17 percent take none at all
Netflix also has no travel and expense policy, except for the following five words:
Act in Netflix’s best interest
Executives realize some people may try and cheat such a system, particularly when confronted with the results of the following research study:
- researchers set up a box of newspapers, with the price posted, but no monitoring. If passerby wanted a newspaper, they were supposed to put a coin in a slot at the top of the box. There was also a message reminding people to be honest. The result – two-third of the people who took a paper did not pay.
Knowing this, Netflix does set some context for its employees, telling them to imagine that they will be asked to stand up in front of their boss and explain why they chose to make that purchase. If you can easily explain why the purchase is in the company’s best interest, then no need to ask, go ahead and make the purchase. But the employee is also made aware that purchases are randomly audited, and if the spending is deemed inappropriate, you are fired immediately.
Another section of the book looks at the pay model at Netflix, where they have opted for a system that pays top of market in salary, with no bonus; the bonus is built into the salary. Fun fact here:
- 44 percent of employees leave a job because of more money, the next highest reason was down at 12 percent.
- the average pay raise (in 2018) for an employee who stayed at a firm was about 3 to 5 percent; for those who left for a different firm, the average pay raise was between 10 and 20 percent
The final chapter I’ll highlight is one that deals with Netflix’s goal of being as transparent as possible. At the start of the chapter, Meyer shared some research about secrets:
- the average person keeps 13 secrets, five of which they have never shared with anyone
- there’s a 47 percent chance that your secret involves a violation of trust, a 60 percent chance it involves a lie of a financial impropriety, and a 33 percent chance that it involves theft, some sort of hidden relationship, or unhappiness at work.
I’ve enjoyed the book so far, and Netflix certainly seems like a fascinating place to work, full of highly talented, highly committed employees, in no small part because of the culture it has created.