HR can be innovative.  Lessons from Netflix.

HR can be innovative too

‘Netflix culture’ slideshow has been viewed more than 5 million times on the web. Patty McCord, the then Chief Talent Officer who co-devised the strategy and slide deck, wrote an article for Harvard Business Review explaining what is so revolutionary in their approach. It makes for very interesting reading.

Hire only “A” players and lose the dead weight

McCord describes the origins of her thinking as having stemmed from conversations with employees. One employee used to supervise a 3-man team but following downsizing had ended up doing the work single-handedly again. He realized that he preferred working alone. He’d spent too much time riding herd on his team and fixing their mistakes. “I’ve learned that I’d rather work by myself than with subpar performers,” he said. McCord’s response: hire only “A” players. This, in her book, also means to be willing to let go of people whose skills no longer fit, no matter how valuable their contributions may once have been.

Netflix took a conscious decision to rid their organisation of unnecessary policies and bureaucracy. In McCord’s words, “most companies spend endless time and money writing and enforcing HR policies to deal with problems the other 3% might cause. Instead, we tried really hard to not hire those people, and we let them go if it turned out we’d made a hiring mistake.”

Unlimited holidays and personal responsibility

Probably one of the most dramatic moves Netflix made was to allow unlimited holidays. Rather than spend countless hours tracking and reporting on annual leave time, the company made a choice to remove all tracking altogether. Salaried employees were told to take whatever time they felt was appropriate. Bosses and employees were asked to work it out with one another. And many other companies have followed suit since. There were guidelines to set the expectations, of course: avoid busy times, agree holidays of one month or more with HR separately etc. Knowing how important senior management buy-in is, company leaders were encouraged to perform as role models of the new policy.

When it came to expenses, Netflix asked employees to “spend company money frugally, as if it were their own.” The principle was that giving individuals freedom and setting a clear expectation for acting responsibly, most will reward you by doing just that.

Performance reviews were made a day-to-day part of the job rather than a formality once or twice a year. Colleagues were asked to give feedback on what their coworkers should “stop, start, or continue”. Rather than waste time with Performance Improvement Plans (that rarely achieve any improvement), employees no longer required in the business were given great severance packages reducing chances of law suits and allowing everyone to focus on more positive and productive tasks.

Netflix got rid of bonuses with the view that “if your employees are fully formed adults who put the company first, an annual bonus won’t make them work harder or smarter”.

HR can be innovative too

Patty McCord concludes that during her 30 years in business she has never seen an HR initiative that improved morale. If the stock price is falling or the company’s products aren’t perceived as successful, the morale can’t be upped by throwing a party or offering perks. Instead HR’s role is to make sure all employees know what is expected of them and what their employer considers ‘high performance’. McCord rejected the mainstream approach of applying ‘best practice’ HR policies in favour of innovation – and with great success: During 2013 alone Netflix stock more than tripled, it won three Emmy awards, and its U.S. subscriber base grew to nearly 29 million.

If you want to be an innovative HR manager, get in touch with us to discuss how you could innovate absence management and employee engagement!

ABSENCEHUB.COM