Some Fun Facts I Learned from Reading a Book about Netflix’s Culture

business, lessons learned, passion, Teaching and Education, technology 3 Minutes

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.

Published by Jim Borden

A 60-something guy trying to figure out the world, and his place in it. Happily married for 40-plus years, three wonderful sons. Accounting teacher, fitness enthusiast, blogger, reader.

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59 thoughts on “Some Fun Facts I Learned from Reading a Book about Netflix’s Culture”

  1. This leaves me wondering, how do you count the secrets others have? If you asked them, wouldn’t they be inclined to lie? Or maybe those with a lot of secrets would decline to participate in such a survey.

    Please don’t criticize me for my questions, above. I hate feedback.

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  2. I don’t understand the statistic about secrets. The average person keeps 13 secrets, five of which they have never shared with anyone.? Does that mean eight of their “secrets” they’ve shared with somebody? How is that a secret?

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    1. I guess some people might define something as a secret that they wouldn’t tell their friends, but they may tell their spouse. I’ve told a few people about my blog, but I’ve tried to keep it a secret from the people of Svalbard, and given that I’ve had no views from that country, I’ve been successful in doing so. 🙂

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      1. Well done! Try not to offend anyone keeping all your secrets. Sounds like a title for your first book: The Shocking Truth—Secrets from the Economics Department. Read Borden’s tell-all book!

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  4. i’m all for feedback, but it is sometimes hard to hear and not as welcome as it seems to be here. the ‘shared secrets’ do seem like an oxymoron. the categories for the type of secrets make sense, as they are generally when someone is doing or has done, something they are not proud of or they feel is wrong or they would be judged negatively for having done so. interesting and not surprising that the biggest raises in pay came to those who left a company for another.

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    1. yes, sometimes the best feedback is the feedback that’s the hardest to hear. and it’s a shame that a person has to leave a company to get a pay raise. that’s specifically what they try to avoid at Netflix, so they always keep tabs on what someone’s market value is, and give pay raises accordingly…

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  7. Interesting book and statistics. I like feedback in all of it’s forms. Criticism, not so much. To me feedback is a form of back-and-forth communication that sadly, is not appreciated by most of us as it can be perceived as criticism. I think that sometimes the distinction between the two is in the intent behind it.

    As to the statistics about secrets, my lips are sealed.

    It will be interesting to hear what else you’ll find in this book.

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    1. good point about feedback vs criticism, and the book does try to make the distinction between negative feedback that can be helpful, and negative feedback that is just mean… and your secrets are safe with me…

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  8. I think Netflix is successful because of its business model not because it found the magic formula for feedback or eliminated its policy manual. The best feedback is setting expectations up front. Giving managers the unfettered power to decide how much time off each employee gets is hard to believe. Firing employees immediately for inappropriate purchases means either there is a very good understanding of what purchases are appropriate (an unwritten policy) or the employees spend a lot of time bugging their manager to preapprove their actions. Last, vague and nonexistent policies seem to conflict with the goal of being as “transparent” as possible, whatever they think that means. But who am I to argue with success and a B school prof.

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    1. it would be interesting to see if other companies could succeed with similar policies, or if Netflix is succeeding in spite of them. It is an interesting book, and Reed Hastings seems like a fascinating individual and a unique style of leader. and Erin Meyer seems to be a well-respected teacher and consultant…

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      1. Having worked in a HR and Legal in a large organization, something tells me there are a lot more “rules” in effect than Netflix wants to admit. I applaud Netflix for accepting the risk of being flexible. Flexibility in employment policies often creates situations that appear to be favoritism, discrimination or just bad management.

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  9. My current boss give only negative feedback and it’s never constructive… just negative. Makes me nuts because I can’t get her to provide me with info that would help me understand her expectations. I’ve asked… I either get ignored, promised a mtg that never happens, or a call that seems to help till I hang up and realize it hasn’t.

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  10. The unlimited vacation policy tends to lead to no vacations taken.
    This policy seems generous but it is onerous.
    Some firms have even begun to pay their employees to take their vacation time, preferably a week or two at a time. It’s cheaper than burn-out and turn-over.
    Americans are workaholics.
    We all keep secrets. If we were perfectly honest with everyone we’d have no friends or a job!
    Who hasn’t thought the boss or owner had a stupid idea, or many? Ever think your spouse must be nuts while having an argument?
    Having the nuclear option hanging over your head when you are deciding whether to get Uber XL or take the airport shuttle must be daunting!

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    1. with the vacations, that’s why they stress the importance of top managment modeling the type of behavior they want with respect to vacations. If they take vacations, then the rest of the employees should feel comfortable doing so. If they don’t take vacations, neither will the people who report to such managers.

      Yes, and keeping things to ourselves is often the right thing to do.

      and the nuclear option is a powerful motivator…

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  12. Those are some pretty interesting insights indeed. And the part about giving critical feedback instead of positive does kind of make sense in a weird way, because when I was in hairdressing school, I realised that the students were more keen on earning a particularly tough mentor’s praise than the kind ones who worked through positive feedback. Weird. Thanks for this post!

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  13. I believe negative feedback and corrective feedback do have some distinctions. The main difference being how it could be communicated. The key point is not about how nicely it is said, but more so on the directness of the feedback. The negative feedback, in my opinion, is more direct while the corrective feedback is more indirect with all the additional euphemism at play. A possible explanation could be that these dedicated workers just want directness, hence interprets the feedback to be more effective (of course, under the assumption that it is communicated in a respectable manner). In an environment like Netflix, it may be that there are strong bonds between workers, thereby workers do not take negative feedback personally. If this is the case, I could see why directness could be beneficial. What do you think?

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    1. your explanation seems to be make sense; it could also be that negative feedback might be viewed as trying to hurt the individual whereas constructive feedback may be meant to be supportive…

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  14. To whom does Netflix give all these surveys? Employees, viewers? I’ve never taken a Netflix survey, and I’m sure I have tons of secrets. Most of them I forget, or worse, I forget they are secrets and accidentally talk about it. So don’t tell me any of your darkest secrets, Jim. They might end up on my blog! 🙂

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    1. These surveys were not done by Netflix; these are just general surveys, most likely from academic researchers. The co-author is an academic, and she brought in such studies when they were relevant to what was going on at Netflix. Most of my life is an open book; I’m not too big on secrets, but I guess like all of us, I’ve got a couple. I’ll be sure not to tell you though 🙂

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  15. The only survey Netflix has asked me about was very short a nano second..thumbs up or down…and really a survey about secrets definitely too much money available for surveys…just saying 🙂 x

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