Netflix HR Strategy - Brilliance

I was reading through a FastCompany article which was bland but embedded this great slideshow from Netflix.  I love it and believe more companies should look at things this way to be great.  Some points I particularly loved:

1)  Keep only great people who would be difficult to replace - get rid of the rest.

2)  Do not reward hours/effort but rather performance. 

3)  Humility is important for effective teamwork - don’t hire egos and personalities without humility.

4)  High performance employees allows (and requires) less process

5)  Less on the bonus and frills, more just top salary for every employee.

6)  Don’t promote because you need to fill a position but rather because someone is a superstar

Take a look for yourself:

Culture from Reed Hastings

Barnacle Theory

Sometimes the thing that really needs done is counter to the way we believe things should work.  In big companies, people are often not willing to make the drastic changes needed to stop things from going from bad to worse and the lack of action is worse than people know.  I have seen this at several companies I have worked for and with and each time situations get worse because of a lack of action.

An example.  10 people on a team seem to be performing fine.

One day, the team lead quits and complains that he/she feels as if they are carrying the team.  The action that is normally taken is to promote the next in line to leader and try to backfill someone on the team.  If management is worried about the new leader, they will offer them a promotion, more money, or something to "encourage" their new leader.  Unfortunately, when things are bad they often can get worse.  The next leader is also ready to quit after the leader left.  The money and promotion didn't help the conditions of the team.  What could management have done differently?

Enter Barnacle Theory.  Through seeing the above situation happen over and over again - I realized the best action wasn't what was done above.  See, the people weren't just all side by side like above, it is often more like the whole team is swimming.

Only, instead of everyone swimming well, there are a couple great swimmers, a few okay swimmers, and some people drowning.  Those drowning are the people in the project that put the greatest stress on the leaders, and are hanging on to them to keep from drowning themselves.  They are a weight on the leaders, keeping them from swimming well and constantly pulling them down.

Like barnacles around a propeller, these leaders are being weighed down.  The weight of the worst performers on the team is causing them to drown.  Now one leader has quit and told management that they were drowning.  So, what happens?

Most conventional management wisdom is to grab the next guy up and promote them.  But that just puts even more barnacles on that new leader.  If he/she wasn't drowning before, they probably will be now.

My Barnacle theory says the best action to take in these situations is to lay off the lowest few people.  The proposition I will make and have seen many times is that it is often better to lose the bottom few people and to free up the new leader than end up losing another leader when you don't have time to build up succession again.  A team of 7 or 8 people now will perform as well if not better than the team would have with 9 and a drowning leader.  Barnacle theory says:

If the following conditions happen:

1. You lose a key leader
2. That lost key leader cites that the quality of part of the team was a burden on them and a reason they left
3. You don't have a succession plan that allows you to lose more than one leader without major issue.
4. The upcoming leader has already has an issue with the weight of some of their team

If these are true, then you fire or remove from the team one or several of the lowest performers on the team in order to make the team more nimble and prove to the new leader that you are enabling them to be more agile.  Backfill if you can, but clear out the barnacles before the next leader gets pulled under water as well.  Finally, reset project expectations.  Not everything that was to occur before the first leader left can be done.  However it is better than a worse loss of capabilities if you lose several top people.

I have seen the results of not doing Barnacle theory many times.  The worst I have seen is 8 leaders consecutively leave one team of 20 like a chain reaction due to the quality of people on the team.  The remaining 16 people (the original 12 + 4 backfills) now performs at a much lower quality than before the mass exodus occurred.  If management had cleared out barnacles and reset expectations, I know leaders #2, #3, #4 would all have stayed.

If you don't aim to manage great people and aim to instead manage like everyone is on the same plane, you might be risking a mass exodus of talent once it starts.  That is why Barnacle theory may make sense for you.

Why do this?

One day Stephanie and I came to the realization that we were doing things very differently from the rest of the world.  We have built a best-in-class team of people in our company.  Most of the management methodologies and systems out there do not apply to this team.  Many systems that are in place exist for one purpose, to manage mediocrity, whereas our challenge has been to manage greatness.  When you have a group of A+ talent where the B talent is obvious - how do you manage that talent?  How do you hire and when do you fire?  What does it mean to be good in a company and does it shift from one environment to another?  If someone is a A player in a big company, is it possible they are a C in a small company?

We want to share some of our journey - helping explain to people what we have been doing and how we see management shifting in a high-performant team.