At Netflix, radical transparency and blunted dismissals destabilize ranks

The incident touched a nerve inside the giant video streaming. The reaction of society to the resulting response is the "Netflix method" – a culture in which absolute candor and transparency are among the highest virtues and where open discussion about whether people should be fired and to explain why they are are common rituals.

The executive in question, Jonathan Friedland, "discredited" his misdeed – Netflix jargon for excuses or acts of transparency in front of colleagues – in the hope that this would fail. This is not the case. After anger broke in the ranks, Mr. Hastings fired Mr. Friedland in June and sent an e-mail to the entire company to tell him that he was there. was attacked at his own "privilege".

At the retreat, held at a seaside resort near Los Angeles, Mr. Hastings' voice broke down as he approached the issue again, apologizing for the fact that it had taken him several months to act. Suggesting that this could be a learning experience for the company, he took out a lemon and a knife, cut it and squeezed it into a cup, according to those present.

"When life gives you lemons," he says, taking a blunder on stage, "you make lemonade."

Netflix takes its culture seriously, believing it to be an essential ingredient of the company's success in becoming a true juggernaut with 137 million subscribers worldwide. For many Netflixers, culture, at worst, can also be ruthless, demoralizing and transparent to the point of becoming dysfunctional. The Wall Street Journal has spoken to over 70 current and past employees for this article.

Rapid growth

… and his course has been multiplied by more than 20.

Netflix subscribers have almost quadrupled since 2013 …

Netflix Stock Price Performance

… and his course has been multiplied by more than 20.

Netflix subscribers have almost quadrupled since 2013 …

Netflix Stock Price Performance

… and his course has been multiplied by more than 20.

Netflix subscribers have almost quadrupled since 2013 …

Netflix Stock Price Performance

Netflix subscribers have almost quadrupled since 2013 …

… and his course has been multiplied by more than 20.

Netflix Stock Price Performance

The Netflix method emphasizes "freedom and responsibility", trusting employees to be discreet, whether it's taking a vacation, traveling in business class or spending money for a return home. Virtually all employees can access sensitive information, from the number of registered subscribers in each country to the broadcast audience, to the contract terms of Netflix's production contracts. Senior and senior managers (approximately 500 people) can see the salaries of each employee.

Employees are encouraged to share their comments. Managers must all apply a "maintenance test" to their staff – wondering if they would compete to keep a particular employee – a mantra to dismiss people who do not fit the culture and ensure the survival of the strongest.

Staying true to Hastings' vision, always difficult, is becoming increasingly difficult as a result of the rapid pace of growth and change in society. In a little over a decade, Netflix has gone from mail-based DVD equipment to a global Hollywood player with more than 6,000 full-time and part-time employees, including nearly 2,000 this year.

Scaling

The company has more than doubled its full-time employee base since 2011, moving from a DVD company by mail to a streaming service, to Hollywood's big adventure and global development.

"As you develop a business to become bigger and bigger, how do you develop that type of culture?" Said Colin Estep, a former chief engineer who left voluntarily in 2016. "I do not know if we had a right answer."

Many employees report seeing the goalkeeper's test as a pretext for regular workplace policy, while some executives say they feel the pressure to fire employees or risk being soft. E-mails and post-mortem meetings explaining why people have been fired are perceived by some employees as clumsy and theatrical, while the public can count tens or even hundreds of people.

Richard Siklos, a Netflix spokesperson, said the company was laying off employees solely for performance reasons, not because managers did not like them, and managers are not judged by the number of employees. dismissed persons. "Many more" company recruitment announcements "relate to hiring and promotions rather than people leaving," he said.

"Being part of Netflix is ​​like being part of an Olympic team," the company said in a written statement. "Cutting yourself when it happens is very disappointing, but there is no shame at all. Our former employees receive a generous severance pay and are usually supported by another company. "

Netflix's culture shares traits with other workplaces that encourage openness, such as the Bridgewater Associates hedge fund. Many employees, past and present, attribute this responsibility to building high-performing companies that can make decisions quickly. According to them, this allows agility that has helped to disrupt the global industries of television and cinema.

"It's not that there has been no problem, but this culture of openness and freedom seems to be going well," said Skip Battle, Netflix board member who retired at the end of the year.

Employees Netflix put forward to talk to the Wall Street Journal under the guise of anonymity said that they adhere to the culture and compared it favorably to other companies where they said that There was more concern about the business process and the chain of command than what to do. is the best.

Netflix has also recently released a video on YouTube to adapt the company's culture. "I think we're transparent about a flaw in our culture and that may seem like a scratch," said Walta Nemariam, a talent acquisition employee at Netflix, in the video.

She said that when she came to join Netflix, someone advised her to make sure she has a good savings plan, suggesting that She could be fired. "I was like, wow," she says. She said in the video that Netflix was a good place for her and that the employees are "respectful" even being frank.

People who talk a lot about Netflix's culture say the company's critics include former employees fired for performance reasons and dissatisfied with their personal experiences.

Guardian test

Several former colleagues described Mr. Hastings, in glowing terms, as "without emotion". Over the last 18 months, Mr. Hastings has used the goalkeeper's test multiple times.

Last year, he sacked Neil Hunt, director of long-time products, who helped create the famous Netflix algorithm that organizes programming for viewers. He was one of Netflix's earliest employees and had been a close friend of Mr. Hastings for decades.

Hastings told Hunt that much had changed: Netflix was expanding in Hollywood and abroad, and one of his subordinates, Greg Peters, was now better suited to the job. At his retirement party in July 2017, Mr. Hunt was strangled.

"I would not have chosen to move on at that time, but you have to separate the emotion from the logic," Hunt said in an interview. Now CEO of Curai, a young health care company, he added that his amicable transition had lasted several months.

Hastings' executives take the guardian's test very seriously. At a late spring meeting of Netflix 's public relations officials, one of them said every day that he was going to work he was worried that he was going to be in trouble. to be fired. Karen Barragan, vice president of advertising for the original series, asked how many other people felt this way. A number of hands rose.

"Well, because fear drives you," Barragan said, according to people familiar with the meeting.

In an interview, Ms. Barragan denied making this remark, but confirmed that she had led a discussion aimed at destigmatizing employees' fears. "We are openly discussing issues that can be uncomfortable in other workplaces and we are always trying to address a problem from all sides," she said. "The intention is that we can get better."

When Andrew Parker, PhD in computer science, started Netflix with a group of people a few years ago, he was filled with anxiety.

"We were very concerned: how do I know if I am about to be fired?", He explained to his manager: "It should not be a surprise if you are let go," and that There would be an accumulation over the months of feedback becoming more acute. Parker said he left Netflix voluntarily in August.

"I think some people felt that it was a culture of fear," said Barbie Brewer, a former vice president of talent at Netflix, who left the company. ;last year. "But nowhere in the goalkeeper's test is it said that you have to be perfect. I think as long as you realize, it's not that scary. Mrs. Brewer said that her separation from Netflix was reciprocal. She received severance pay and a six-figure reduction in her salary to access her next job. She said she was fed up with Netflix's heavy workload and constant shifts.

Layoffs may be insensitive, said several former employees. Ernie Tam, who had worked as an engineer at Netflix for six years, was summoned to his manager's office on a Monday morning in 2015. "You are no longer a star artist," said the manager. A human resources representative arrived, discussed Mr. Tam's severance pay and took his laptop. "I just left the office and I never came back," Tam said. "For a period of six years, I've been a featured artist, then suddenly, I was not there anymore." Mr. Tam said that he was surprised, despite the negative reactions of his manager during the previous month, as previous managers had given him time to improve after criticizing him.

Tam said that, despite the shock, he felt lucky to have worked at Netflix, both because of his apprenticeship and his generous salary. "It's hard to find so many smart people working for a company."

A former employee remembers seeing a woman who had been sent away crying while packing her cartons, while the rest of her team walked away from the scene without offering any support. They feared that "help him put a target on their backs," said the employee. "I just could not believe it."

A former vice president of marketing had been working all weekend on a marketing shoot in 2014 to promote the second season of "Orange, it's the new black" in New York. Over the weekend, its chief, marketing director Kelly Bennett, scheduled a meeting on Monday morning, saying his counterpart at the time, Tawni Nazario-Cranz, would move from California to London.

At the meeting at his hotel, Mr. Bennett fired him, telling him that it was not a "cultural crisis". He then "got up and went out," said the former chief executive. "I was stunned."

She turned to Ms. Nazario-Cranz and asked, "What could I have done differently?" She stated that Ms. Nazario-Cranz had told her that she should have fired someone from her team more quickly.

"I was trying to help someone in their careers, and they may have seen this as a sign of weakness on my part," said the former leader. She cried during her six-hour flight to Los Angeles, wondering how she could tell the news to her pregnant wife.

Mr Siklos, spokesman for Netflix, denied that the management was informed that it was too slow to fire anyone. "The former leader in question was clearly informed that he was being fired after a series of conversations because of his personal behavior," he added.

Once people are fired, Netflix believes that the reasons must be explained. Layoff e-mails can reach hundreds of employees in multiple divisions and can be painfully specific. They report the flaws of an employee while inviting more questions and gossip, according to many employees.

In a recent case, Chief Financial Officer, David Wells, sent an email in August to employees to inform him that he had "decided to leave," David Burt, vice president. "It is now clear that David has not been frank with us about a major employee issue that has impacted the company even at the direct request of it," he wrote. in an email.

A person familiar with the case stated that the "employee problem" mentioned in the email involved a delicate health problem and that Mr. Burt had acted to protect the privacy of the person.

Post mortem shooting

Sean Carey, a former vice president of Netflix who was instrumental in building Netflix's streaming library, was in the room for his "You are fired" meeting after 40 to 50 people were murdered the content team. Ted Sarandos, content manager at Netflix, told the team that the company was increasingly interested in the original content and that Mr. Carey was not playing the role of more and more creative, according to those present.

"It was certainly embarrassing for some, but it also corresponded to the culture. Transparency sometimes has a cost, "said Carey, who asked to attend the meeting so his outing would be less painful for his team. "In the end, I felt that it was beneficial."

Usually, the returned person does not attend his own post-mortem discussions. "Such a situation can definitely become a pile," said Jibran Kutik, a product designer who left his post earlier this year. "But from my overall experience, I found them generally useful."

Theoretically, Netflixers should not be caught off guard when they fail the test of maintenance, because of the many comments they receive, ranging from their work ethic to their tone of voice. Once a year, employees are expected to codify their comments for each other through a software tool called "360". Anyone can review any other employee, from administrative assistants to Mr. Hastings himself, and many senior executives choose to do so. share the feedback they receive with all members of their teams.

At team dinners and lunches, there are "real-time 360" series, say executives, where everyone gives their opinion and criticizes others at the table. "It can be intense and embarrassing," said Brandon Welch, Netflix's talented party executive in 2016, adding that the pressure to give and receive feedback was the "most difficult part of the culture."

Happy but fearful

Netflix launches workers at a higher rate than the US average, but its happiness rank is high

Involuntary departure rate

Happy employees,

big American companies

Netflix rejects the idea that its culture is ruthless, noting that the company ranked second on the list of the happiest employees of Comparably, published in October 2018, based on the anonymous comments of employees during the year. last year.

The company said the number of employees voluntarily leaving had remained steady at 4% per year, lower than the average of 13% of US companies cited in a 2017 report from the Society for Human Resource Management. Netflix's layoff rate was slightly higher at 8% last year than the 6% average. Netflix said its total business figure rose to 11 percent a year, which is lower than the annual business turnover of technology companies by 13 percent, according to a 2018 LinkedIn study. .

The streaming service addresses people who want to work at the forefront of media and technology. He pays high wages, sometimes offering more than double the salary for new recruits and giving six-figure increases in one year.

Mr. Welch, former Netflix Talent Officer, said the company's hiring decisions are 50% based on cultural fit and 50% on technical skills, compared to 80% for technical skills of other companies where he exercised.

Talking Netflix

New employees soon learn to speak Netflix. The jargon includes phrases such as "What is your star in the north," "highly aligned, weakly coupled," and "context, not control."

"If you do not use this jargon every day, you will not succeed," said a short-time Netflix programmer.

More than 100 top Netflix executives took a specially designed course for leaders, in which they interpreted the ancient Greek play "Antigone" and heard of Lee Kuan Yew, a benevolent autocrat who turned Singapore into a developed country and who distrusted certain elements of liberal democracies. .

The rapid growth and influx of new cultures from Hollywood to Japan has resulted in an almost constant dialogue about culture, said current and former employees. "The best part was knowing that if someone did not work, we would let them go," said Estep, the former engineer. "The worst was just hearing and talking about culture at this point. To talk about it constantly is simply boring and obnoxious.

Exporting abroad "in the manner of Netflix" has been a challenge. The culture of dismissal has come up against obstacles in some countries, such as the Netherlands, where labor legislation makes it more difficult to dismiss employees for valid reasons.

When the Netflix Singapore office opened in 2016, employees were shocked by the frequency of layoffs. A Korean employee in the Singapore office, who left earlier this year, said the encouraging culture was provoking strong reactions that sometimes reminded her of North Korea, where mothers are forced to criticize their sons in front of the public.

Belle Baldoza, a former public relations manager in Singapore, was in trouble with human resources when she asked her colleagues to work if they wanted to help a receptionist who had been fired during the Chinese New Year. and could not claim severance pay. he was working on a contract basis, people knew of the facts. HR managers told him that such a collection did not fit the "Netflix method" and was "not in the best interests of the company," said the people.

Ms. Baldoza left voluntarily last year, writing in an article in Cosmopolitan that work-related travel has had a negative impact on her personal life. "I became worried and irritable," she wrote.

Salary view

Mr. Hastings' philosophy is to share information within the company in an open and broad way and to involve everyone in discussions about the Netflix journey, from price increases to strategy for China, passing through by the Netflix logo.

Several current and former leaders said the company's decision last year to let managers at the director level see all their employees' salaries was embarrassing – many described the strange feeling of seeing dollar figures. on the heads of their colleagues in the corridors.

Different experiences

The hard but open culture of Netflix can be liberating for some employees and scared for others.

The most common phrases used to describe the job at Netflix on the Glassdoor Review site.

Freedom and

responsibility

"I was not a big fan of that," said Bob Heldt, a former director of engineering who had been released last year. "That's not necessarily the way I wanted to see my peers." Some current executives and former leaders said that it was upsetting the team's dynamics. But others, including Mr. Heldt, became supporters of the initiative after helping underpaid people justify wage increases.

More recently, an effort by Mr. Hastings to allow Netflixers to see the salaries of any other employee, regardless of rank, was completely unsuccessful in a survey of company executives.

Some parts of the culture of "freedom and responsibility" have become unsustainable. In 2015, Netflix announced that it would offer its employees a maternity or paternity leave of up to one year, inviting employees to use discretion to make the most of their benefits. their situation. Following the Netflix initiative, other companies have expanded their own leave policies. But in recent months, after many people interpreted the policy as a full, automatic year, Netflix executives discussed its implementation, people familiar with the situation said. The company is now asking executives to tell their employees that it is common to take between four and eight months, said Netflix executives.

Sometimes transparency has been skeptical when it happened after the fact. Several years ago, Mr. Hastings was "sunshined" at a management meeting that he had authorized the company to donate unusual and significant amounts of money to two senior executives, including Ms. Nazario-Cranz, Talent Director, to help with the purchase of homes. in the Bay Area, people familiar with the issue said.

Several senior management members were dissatisfied with the perceived favoritism and the fact that he had not discussed the handouts at the outset. Mr. Hastings thought that help with home payments would allow "exceptional talents" to focus on the job, said one of the participants. Leaders debated the opportunity to extend housing finance to employees more broadly and decided not to do so, but negative feelings continued to surface.

Ms. Nazario-Cranz quickly found herself in the cultural sights. Hastings had doubts when he found out that the management had asked a part of his team to get their hair done and buy make-up to suit the company before a launch event in Milan a few years ago. Mr. Hastings asked him to "put in the sun" what she did in front of dozens of senior leaders.

Nazario-Cranz argued that if a coach took two men to play golf and spend, it would not have been so controversial. "This has resulted in a gender equity issue," said one participant.

Ms. Nazario-Cranz confirmed the incident in an e-mail and stated that the discussions encouraged by Mr. Hastings had contributed to improving "our collective judgment".

In the end, Mr. Hastings fired Ms. Nazario-Cranz last year, according to people close to the episode. Ms. Nazario-Cranz described her leaving as a mutual, stimulated in part by heart disease and the desire to spend more time with her children. "I love culture; J'ai aidé à le développer », a-t-elle déclaré.

L’incident avec Jonathan Friedland, responsable des communications de M. Hastings, a été l’un des plus grands tests de la culture.

Incident N-word

En février, M. Friedland a convoqué son personnel de publicité d’une soixantaine de personnes pour discuter d’une émission comique spéciale avec Tom Segura sur Netflix, dans laquelle M. Segura a parlé de la nostalgie du temps où l’utilisation du mot «retardé» était acceptable. Cela a suscité la colère de certains téléspectateurs.

M. Friedland, qui a travaillé comme journaliste et rédacteur au Wall Street Journal pendant une décennie jusqu'en 2004, estimait qu'une grande partie de son travail et de celui de son équipe consistait à défendre l'entreprise contre une telle réaction. Comme les autres vétérans de Netflixers, M. Friedland était habitué à une culture qui encourage le franc-parler et la liberté de parole.

Il a estimé que certains membres de son personnel n’avaient pas compris à quel point le mot «retardé» pouvait être blessant. Dans une récente interview avec le Journal, M. Friedland a déclaré que le mot "coup de poing" serait pour les parents d'enfants handicapés, "comme si un Afro-Américain avait entendu le N- mot. ”Mais lors de la réunion, il a utilisé l'épithète complète.

Les plaintes des employés offensés par son utilisation du mot. Il s'est excusé en écrivant à son personnel, a signalé M. Hastings au sujet de l'incident et a passé une heure à en discuter avec un groupe plus vaste de son équipe de relations publiques. M. Friedland s'est ensuite arrangé pour rencontrer deux employés noirs des ressources humaines et a raconté ce qu'il avait dit, en utilisant à nouveau le mot N complet et non l'abréviation.

En avril, le groupe des 90 cadres supérieurs de M. Hastings, appelé E-staff, s’est réuni à l’extérieur à Rio de Janeiro. M. Friedland a "sunshined" l'épisode et a exprimé à nouveau des remords.

Lorsque la controverse n’a pas cessé, un groupe d’employés noirs à Netflix en mai a invité M. Friedland à s’entretenir avec eux et a été bouleversé de ne pas s’être penché sur la question. Les employés ne lui ont pas explicitement demandé de parler de l’incident, selon une liste de questions que le groupe a adressées à M. Friedland, qui a été examinée par le Journal, mais l’a demandé de discuter du «plus grand raté» de son équipe.

M. Friedland "aurait dû être licencié immédiatement, pas des mois plus tard", a déclaré Nishant Bhajaria, un ingénieur qui a démissionné en février. Il a déclaré que, tout en respectant M. Hastings, le PDG n’avait pas appliqué une valeur essentielle du manifeste culturel de Netflix, à savoir «pas de saccades brillantes».

Tara Duncan et Layne Eskridge, deux cadres noirs du bureau de Beverly Hills, sont parties volontairement en juin, ce qui a suscité un débat interne sur le point de savoir si Netflix soutenait la diversité.

Lorsque M. Hastings a entendu parler de la deuxième utilisation de N-word par M. Friedland au cours de la réunion sur les ressources humaines qui avait eu lieu quelques mois auparavant, il est devenu convaincu que le pouvoir exécutif ne pourrait plus être un dirigeant efficace.

M. Friedland était au Japon pour affaires lorsque M. Hastings a appelé pour le licencier. M. Friedland, qui voyageait constamment en tant qu’ambassadeur culturel pour Netflix et s’était rendu dans plus de 20 pays l’année dernière, se sentait pris au dépourvu.

«J’ai certainement commis une erreur et j’ai fait de mon mieux pour y remédier immédiatement après, mais j’ai aussi négligé de garder un œil sur toute blessure qu’il aurait pu causer pendant que je me déplaçais à des millions de kilomètres à l’heure», a-t-il déclaré.

Certaines personnes à l'intérieur et à l'extérieur de Netflix pensaient que le traitement de M. Friedland était dur. M. Welch, l'ancien dirigeant des talents de Netflix, a suggéré qu'il pourrait être injuste de "presque transformer en arme" quelque chose qui a été dit dans l'environnement présumé de sécurité des ressources humaines.

Lorsque la nouvelle de la fusillade a été divulguée dans la presse spécialisée, M. Hastings, irrité par un abus de confiance très peu net envers Netflix, a envoyé un courrier électronique à son équipe de direction indiquant que toute personne ayant divulgué cette information devrait se présenter aux RH.

«Vous obtiendrez une sortie discrète et tranquille, ainsi que notre généreuse indemnité de départ si vous le faites maintenant», a-t-il écrit.

Il a ensuite envoyé une note de service contenant des réflexions introspectives sur le racisme, louant néanmoins M. Friedland pour avoir constitué une «équipe mondiale diversifiée» et «renforcé notre réputation dans le monde entier».

Quelques semaines plus tard, M. Hastings s'est excusé pour ses courriels adressés à ses cadres par la fuite.

"La leçon", a écrit M. Hastings dans une autre note au personnel, "est que des choses folles se produisent dans le brouillard de la guerre."

Write to Shalini Ramachandran à [email protected] et Joe Flint à [email protected]