Marco Buscaglia
Marco Buscaglia Aug 21, 2017

A ratings blockbuster: How Netflix streamed employee excellence

Patty McCord has no time to wait for your slow, methodical—she might add “plodding”—approach to change. The author of the upcoming book “Powerful” and former chief talent officer for Netflix says traditional human resources departments and management teams take the work that’s important within the company and slow it down.

“Instead of focusing on the customer, employees end up focusing on the things they need to do—or think they need to do—to keep their jobs,” McCord says.

McCord, who’s a featured speaker at BAI Beacon in Atlanta this October, isn’t too big on the word “empowerment,” either. Sure, she named her book “Powerful,” which sounds similar. But empowerment? That might as well be the title of the next compilation of Dilbert cartoons.

“I have a pretty strong visceral aversion to HR-speak,” she explains. “And my least favorite HR word in the world is ‘empowerment.’ It’s like you’re going to go around with a magic wand and touch people and say, you know, ‘Now you’re empowered to do your best work.’ And the reason we have to do that is that we took all the power away from them.”

Over the last two decades, Netflix has become a dominant tech player—so much so it is the “N” in the quartet of admired “FANG” stocks on the NASDAQ (along with Facebook, Amazon and Google, now Alphabet). What you may not know, though, is that McCord helped build the House CEO Reed Hastings Built through her own disruption blueprint.

Her groundbreaking work centered on treating employees like adults by stripping down unnecessary workplace policies and instituting the “Netflix culture deck”. In 126 slides, it explains how Hastings hires, fires and rewards employees. No less a colleague than Facebook COO Sheryl Sandberg has called it one of the most important documents to come out of the Silicon Valley.

Here McCord offers four actionable insights to help companies turn archaic policies and procedures into the stuff of winning strategies, and build powerful (but not “empowered”) A-list talent.

One: Nix the mixed messages

McCord’s dislike of empowerment has everything to do with context, especially the duality of HR’s true “empowerment” message.

Here’s how she explains it: “Traditional HR is kind of this bipolar world where half the time you're supposed to empower and engage employees. And the other half of the time, you're supposed to worry that they're going to sue you so you end up with this crazy doublespeak in the middle that doesn't make a lot of sense to employees.”

Two: Annul the annual review

McCord contends HR and management should always focus on what makes the business stronger—and to that end, annual reviews fail. 

“It’s this ridiculous document that shuts the company down for a month: a bunch of terms like merit increases and bell curve distribution and ratings and performance bonuses,” she notes. “Then when it comes time to actually do the review, you give the employee a standard raise that doesn’t reflect what they’ve done, or even the metrics you used to determine the raise.”

And then? “You tell them, ‘Hey, I would have loved to have given you more but this is all I could get for you,’” McCord says. “It’s this ridiculous game that wastes everyone’s time.”

Even the intent of the review and raise are becoming more archaic, she adds. “You spend a lot of time figuring out how much you’re going to pay for their previous year of work and while you’re doing it, your employee is going to look for a new job to make more money for the year ahead.”

Three: Freeze “ice cream” incentives—and heat up the raises

To improve on the old-school review, McCord says companies should ask themselves hard questions and ready themselves to implement meaningful answers. Even if it hurts a bit, you need to be honest.

“Take a hard look at what you’re doing,” she advises. “I’m not saying the ice cream sundae bar you provided isn’t a good thing, but not one employee will stay with your company for all the ice cream sundaes if they’re not getting paid. The raise is the incentive to stay with a company. That hasn’t changed.”

Four: Value you visionaries—at every level

McCord says companies should value all their employees and reward those who show skill and vision with a seat at the table when it comes to determining potential products or services. “Set up a team, get their input, give them a goal and then leave them alone,” she says. “That’s how things get done quickly.”

And don’t shy away from involving younger workers—especially if it means throwing out tired millennial stereotypes of entitlement and self-interest.

“I don’t understand the millennial bashing,” she says. “You hire people who can help you achieve your goals or help you come up with some new ones. Traditional companies try to put labels on younger workers: that they won’t be loyal and that they won’t take real ownership of their work because they know they’ll move on in a year, if not sooner.”

The truth may come as a surprise to some in HR, but isn’t exactly a plot twist from a Netflix drama:

“Guess what? Millennials are just people early in their career,” McCord points out. “We were the same way. What do we want? Everything. When did we want it? Now. They’re no different.”

 

Don't miss our fast-paced, immersive conference, BAI Beacon, October 4 - 5, in Atlanta. 

Marco Buscaglia has been writing since the early 1990s, with a focus on topics that include employment, healthcare and small businesses. The former general manager of the Tribune Content Agency, his stories have appeared in the Chicago Tribune, Los Angeles Times and Miami Herald, along with other media outlets. He lives in Chicago.

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