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August 25, 2020
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Marketing Digital
Netflix's organizational culture has been praised in books such as " Corporate Culture " by Jessica Bayón Pérez, "Extreme Teams" by Robert Bruce Shaw, and "Netflix: The Secrets of the Empire's Structure" by Gerardo Molina, because it is considered a fundamental aspect of the company's growth and success.
An organizational culture is the set of values, beliefs, attitudes, principles and expectations of behavior that identify and characterize an organization, as well as the members that comprise it, regardless of their position or management level.
Building an organizational culture is important because it allows you to:
Provide meaning to the identity of your organization's members.
Develop commitment in all areas of action and knowledge.
Channel your team's energies through collaborative work and integration spaces.
Establish positive behaviors with your employees, their treatment of each other and of customers.
Direct workers' actions toward expected results.
Organizational culture and business success
According to Carolyn Taylor in her work “The Culture of Example”, for the culture of an organization to become a stimulus for innovation and business success, it must be based on values such as:
Courage, for decision-making and establishing responsibilities.
Frankness, to generate a climate of trust and collaboration among members.
The pursuit of excellence, to always give an extra effort to achieve the organizational vision.
Curiosity, to investigate the environment in search of new ideas.
In this regard, Jessica Bayón in her book “Business Culture” points out that:
“Organizational culture is important because it constitutes a strength that guides companies towards excellence and success. For this reason, it has ceased to be an insignificant element to become a piece of strategic importance in organizations. In this way, it confers a daily behavior that guides the conduct of the members of an organization. Likewise, this generates a corporate identification that results in the growth and development of a company.”
Netflix's organizational culture
Netflix is a company founded by Reed Hastings and Marc Randolph in 1997 that currently – 2020 – has 182 million customers worldwide (23% more than in 2019).
Its value proposition is a streaming platform where users can watch movies and series online, many of them originally produced, such as House of Cards and Orange is The New Black, both nominated for Emmys and Golden Globes.
Netflix reported a profit of $344 million in the first quarter of 2020. The company's shares have risen 34% so far this year, reaching a historical value of $450.
Its profit margins and its success in the market since 2013 are not the result of isolated strategies; several authors refer in their books – such as those mentioned at the beginning of the article – that it is the effort of an excellent work team aligned thanks to a strong organizational culture .
Although, particularly this year, Netflix's success was also influenced by the increase in consumption of series and films on the platform due to confinement policies, as a consequence of the COVID-19 pandemic.
The beliefs, values, ideas and aspirations that make up Netflix's organizational culture can be seen in the document “Netflix Culture: Freedom & Responsibility” ; created by Reed Hasting and Patty Mccord, Netflix's director of talent, and published for the first time in 2009.
In this document, Netflix points out that what makes its company so special is that:
They encourage independent decision-making in workers
They share information openly, widely and deliberately
They are extraordinarily sincere with each other.
They only keep the people who demonstrate high effectiveness.
Their philosophy is “people over processes” and they have a quality team that works together as a “dream team”. With this approach, they consider themselves a flexible, fun, stimulating, collaborative and successful company.
Additionally, Netflix highlights the following aspects in its organization:
Real values
Unlike corporate value statements that are ignored by talent, Netflix preferred to specify in its organizational culture document “real values” and concrete actions with which people who want to be part of the “dream team” can identify.
In this sense, Netflix workers must possess the following attributes:
Judgment: making wise, long-term decisions despite ambiguity; identifying root causes of problems and looking beyond solutions; thinking strategically; being good at using data to inform intuition.
Communication: Be concise and articulate in speech and writing; listen well and understand before reacting; remain calm in stressful situations to maintain clearer thinking; adapt your communication style to work well with people around the world who may not share your native language; offer honest, helpful, and timely feedback to coworkers.
Curiosity: Learning quickly and enthusiastically; contributing in areas outside of your specialty; making connections that others fail to visualize; seeking to understand the platform's users around the world and how they should be entertained.
Courage: Speaking up when it's best for the company, even if it's uncomfortable; making tough decisions without agonizing; taking smart risks and being open to potential failure; questioning actions inconsistent with company values.
Passion: Inspiring others with their thirst for excellence; caring deeply about their coworkers and Netflix's success; being tenacious and optimistic; being self-assured, yet humble.
Innovation: creating new ideas that are useful; reconceptualizing difficult problems to discover solutions; challenging prevailing assumptions and suggesting better approaches; maintaining agility to minimize complexity and simplify processes; thriving in the face of change.
Inclusion: Collaborating effectively with people from diverse backgrounds and cultures; nurturing and embracing different perspectives to make better decisions; recognizing that we are all biased by prejudice and working to overcome it; intervening if another person is discriminated against.
Dream Team Vision and Sportsmanship
For Netflix, a “dream team” is one in which its members are extraordinary at what they do and highly productive.
Their vision of a dream workplace is not one with a sushi bar, a well-equipped gym, or fancy offices, but one where a “dream team” with shared goals exists, who learn, get their work done quickly, and best of all, have fun in the process.
At the same time, Netflix employees are seen as team members, not as families. Families are held together by unconditional love, despite the bad behavior of their members, whereas on a team, people must strive to be the best: its members care about each other, and they know that they may not be together forever.
For this reason, managers are encouraged to act as coaches with the aim of developing “star players” in each position. The vision of a sports team promotes that people should be players valued for their performance and commitment to the organization’s goals.
This makes the bar high; however, before considering firing a worker, a “Keeper Test” is carried out, in which workers must select which people should stay and which should be fired.
Those who score poorly on the “Keeper Test” are given a generous severance germany whatsapp number package. Based on this dynamic for making such important decisions, Robert Shaw considers Netflix to be an “extreme team.”
Competitive salaries
Netflix says that in order to attract and retain exceptional professionals, it sets salaries that are at the top of the professional market. The company makes high compensation estimates and these are evaluated annually.
However, salary adjustments are not considered “raises”; they avoid the “2% adequate raise, 4% exceptional raise” model, but rather correspond to the market value of some professions, as well as the performance of the person and the shortage of talent in their area.
In this way, while some people's salaries increase due to market conditions and their work history, others may remain stable, year after year, despite doing a great job.
Sense of belonging and responsibility
It is important to Netflix that its employees feel a strong sense of responsibility towards the company, their workplace and their colleagues. This encourages people to think and communicate ideas that contribute to optimising Netflix and its processes.
They use the phrase “picking up the trash” as a metaphor for solving problems: people cannot ignore the trash on the floor, leaving it for someone else to pick up; everyone must lean in to pick up the trash and not assume that “it’s not their job.”
There are no rules for people to take initiatives of this type, but because of the sense of ownership and responsibility that each person has, this behavior should manifest itself naturally.
Freedom in decision making
In its organizational culture document, Netflix notes that:
“Our goal is to inspire people rather than manage them. We trust our teams to do what they believe is best for Netflix, giving them a lot of freedom, power, and information to support their decisions. In turn, this creates a sense of responsibility and self-discipline that drives us to do great work that benefits the company.”
We believe that people thrive on confidence, freedom, and the ability to make a difference. So we encourage freedom and empowerment wherever we can.”
At Netflix, they aim to break away from standard management approaches where employees have no freedom of action in processes, especially in large companies where the business is more complex. This tends to diminish people's passion, cause chaos and misalign teams.
To get things back to normal, companies tend to increase rules and the value system evolves towards compliance as a symbol of reward; as a result, creative thinkers do not question the status quo.
Netflix sees these management models as lacking in adapting to rapid changes in the environment, because their processes are very rigorous in maintaining order and control.
So, to avoid the rigidity of overspecialization, and to avoid the chaos of growth, while retaining freedom, Netflix works to keep its business simple, given its growth ambitions, and to maintain employee excellence. One of its major aims is to work with self-disciplined people who discover and solve problems without being asked to do so.
How does Netflix put this “freedom” into practice?
Almost all documents are completely open for anyone to read and comment on. They note that they have had some leaks, but the value of well-informed employees is worth it.
There are few controls over spending and signing contracts. Each employee is expected to seek advice and use “good judgment” – one of the company’s core values.