That's the thesis of Powerful: Building a Culture of Freedom and Responsibility (Silicon Guild, 2018) by Patty McCord, who served as the chief talent officer at Netflix for 14 years. McCord helped create the well-known Netflix Culture Deck, which has been viewed online 15 million times and is considered by some to be a manifesto for how HR should operate in the 21st century. It communicates a less-is-more approach to creating a climate where employees are freed from the burden of excessive processes so they can focus on excelling at their work.
"We experimented with every way we could think of to liberate teams from unnecessary rules and approvals," McCord writes. For example, under her leadership, the media giant was among the first to adopt an unlimited-vacation policy in which people are trusted to take the time they need: no accruals, no maximums or minimums, just a simple request for workers to discuss their needs with their managers. While the policy made no appreciable difference in employees' time-off patterns, "trusting people to be responsible with their time was one of the early steps in giving them back their power," McCord writes.
From there, McCord began throwing conventional practices out the window left and right, ditching standard expense and travel policies, replacing the yearly performance review with frank and frequent check-ins, and even sacrificing the sacred cow of annual budgeting, of which she writes: "I mean, really, we were making it up. Whatever our projections were, we knew they would be wrong in six months, if not three."
Some of the principles underlying her approach to culture include:
Incentives don't work. Traditional thinking about employee engagement is based on the faulty premise that employees need to be incentivized to do their jobs, McCord writes. In reality, people don't require a constant stream of perks and celebrations to contribute because they are inherently motivated to do so—if you create the right conditions for that to happen. That means not only nixing outdated and time-consuming procedures, but also moving away from command-and-control management structures in which employees are told what to do instead of being encouraged to solve problems on their own, she says.
People want to be told the truth. Transparency is tricky, but worth it. A study by the Corporate Executive Board found that companies that fostered honest feedback and open communication produced a return that was 270 percent higher than that of organizations that didn't over a 10-year period. Anonymous surveys, on the other hand, send the message that people should be candid only when their identity is hidden, which McCord believes sows doubt and distrust. She offers the following tips for keeping it real without being disrespectful:
- Make it about the customer and the business. Framing debates in terms of what best serves the company's needs steers employees away from personal attacks and reminds them that they ultimately share the same goal.
- Debate in front of others. When McCord was at Netflix, each month CEO Reed Hastings asked specific employees to argue about differing approaches to product development in front of everyone else. Formalizing debates helps keep people professional and accountable for what they say.
- Admit when you're wrong. When leaders do this, they send a powerful message to their employees that they aren't perfect and don't expect others to be either—which makes people feel safe enough to speak up about their concerns.
Think team rather than family. Traditional leaders often describe their companies as a family, but a better model for 21st century organizations is the team, McCord says. In sports, players are traded all the time, and even coaches are swapped out if they don't perform well. People accept this because they understand the goal is to build the winningest team for fans and communities.
Similarly, employees likely won't view being let go as humiliating or career-ending if you tell them upfront that their job is secure only for as long as their skill set aligns with the company's needs. In fact, by following this approach, McCord was able to remain friendly with many people she let go and even helped them to further their careers elsewhere.
The sports model can inform your compensation philosophy, too. McCord recommends paying your employees based on what they're worth to you as a company and not just market averages—which may mean going above and beyond industry standards to snag a star player.
These days, McCord spends her time coaching other leaders on culture and leadership, drawing on the lessons highlighted in her book. She said one of the hardest aspects of living the Netflix culture that she helped to create was recognizing when it was time that she herself moved on—a decision she doesn't regret. Because even though employment with a single organization rarely lasts a lifetime anymore, learning and growth still can. Powerful.
Christina Folz is the former editor of HR Magazine.