On Netflix, radical transparency and sharp shots destabilize the ranks
On Netflix, radical transparency and sharp shots destabilize the ranks
Corporate retirement in July, CEO Reed Hastings broke down in tears when he addressed some 500 executives.
Mr. Hastings had recently fired his communications director for saying "N-word" in all its form. The executive, who is white, tried to emphasize a point during a meeting about offensive words in comedy programming and said the insult was not directed at anyone.
The incident touched a nerve within the video streaming giant. The management by the company of the violent reaction that was generated on the Netflix screen, a culture where radical openness and transparency are among the highest virtues, and where it is openly discussed whether people should be fired and It explains why they were, they are common rituals.
The executive in question, Jonathan Friedland, "knocked down" his mistake, the Netflix jargon for an apology or an act of transparency in front of his colleagues, hoping it would collapse. He did not do it After the anger erupted in the ranks, Mr. Hastings fired Mr. Friedland in June, and he sent an e-mail to the entire company saying that he had come to face his own "privilege".
At the retreat, held at a beachfront resort on the outskirts of Los Angeles, Mr. Hastings's voice broke when he addressed the issue once again, and apologized for taking several months to act. According to the people who attended, suggesting it could be a learning experience for the company, he took out a lemon and a knife, cut the lemon and squeezed it into a cup.
"When life gives you lemons," he said, taking a drink on stage, "you make lemonade."
Netflix takes its culture seriously, believing that it is a crucial ingredient in the company's success in becoming a giant with 137 million global subscribers. For many Netflixers, culture, in the worst case, can also be ruthless, demoralizing and transparent to the point of being dysfunctional. The Wall Street Journal spoke with more than 70 current and former employees for this article.
Rapid growth
... and the price of their shares has multiplied by 20.
Netflix subscales have almost quadrupled since 2013 ...
Netflix performance share price
... and the price of their shares has multiplied by 20.
Netflix subscales have almost quadrupled since 2013 ...
Netflix performance share price
... and the price of their shares has multiplied by 20.
Netflix subscales have almost quadrupled since 2013 ...
Netflix performance share price
Netflix subscales have almost quadrupled since 2013 ...
... and the price of their shares has multiplied by 20.
Netflix performance share price
The Netflix form emphasizes "freedom and responsibility," relying on employees to use discretion, whether to take vacations, fly in business class or spend a Uber trip home. Virtually all employees can access confidential information, from how many subscribers are registered in each country to viewers of programs and contractual terms for Netflix production agreements. Executive executives and superiors, about 500 people, can see the salaries of each employee.
Employees are encouraged to receive direct feedback. All managers are told to apply a "maintenance test" to their staff, wondering if they would fight to keep a particular employee, a mantra to dismiss people who do not fit into the culture and ensure only the strongest survive .
Staying true to Mr. Hastings's vision is always difficult, it is becoming more difficult thanks to the rapid pace of growth and change in the company. In just over a decade, Netflix has gone from being a DVD DVD-by-mail to a global Hollywood powerhouse with more than 6,000 full-time and part-time employees, including nearly 2,000 new ones this year.
Enlarge
The company has more than doubled its full-time employee base since 2011, since it has been transformed from a DVD company by mail into a broadcast service, ventured into Hollywood extensively and expanded globally.
"As you scale up a company to become bigger and bigger, how do you scale that kind of culture?" Said Colin Estep, a former senior engineer who left voluntarily in 2016. "I do not know if we ever had a good response. "
Many employees say they see the guardian test as a disguise for ordinary workplace policy, while some managers say they feel pressured to fire people or run the risk of appearing soft. The emails and postmortem meetings that explain why some employees consider that people were fired are awkward and theatrical when the public can be dozens or even hundreds of people.
Richard Siklos, a spokesman for Netflix, said the company only dismisses employees for performance reasons, not because managers do not like them, and that managers are not judged by the number of people fired. "Much more" of the company's personnel announcements "are about hiring and promotions than about people leaving," he said.
"Being part of Netflix is like being part of an Olympic team," the company said in a written statement. "Cutting, when it happens, is very disappointing, but there's no shame at all, our former employees get a generous separation and are usually hired by another company."
The Netflix culture shares traits with other workplaces that encourage openness, such as the Bridgewater Associates hedge fund. Many current and former employees credit him with keeping the company supplied with high-performing personnel capable of making decisions quickly. This, they say, allows agility that has helped interrupt the global television and film industries.
"It's not that there have not been setbacks, but that culture of openness and freedom seems to be doing quite well," said Skip Battle, a Netflix board member who retires at the end of the year.
Reed Hastings, CEO of Netflix, speaks at the Women in the Workplace Conference of the Wall Street Journal in San Francisco on Tuesday.
Photo:
Andy Davis for the Wall Street Journal
Employees who Netflix proposed to speak with The Wall Street Journal on condition of anonymity said they embrace the culture and compare it favorably with other companies where they say there is more concern about the corporate process and the chain of command than doing what they do. best.
Netflix also posted a YouTube video recently to address the company's culture. "I think we are transparent to a flaw in our culture and that can be seen as a killer," said Walta Nemariam, an employee in the acquisition of Netflix talent, in the video.
She said that when she joined Netflix, someone advised her to make sure she had a good savings plan, suggesting she could be fired. "I was like, 'wow,'" he said. She said that in the video, Netflix has been a good place for her and the employees are "respectful" even when they are sincere.
People who speak highly of the Netflix culture say critics of the company include former employees fired for performance reasons and who are unhappy with their personal experiences.
Proof of the manager
Several former colleagues describe Mr. Hastings, in complementary terms, as "not committed by emotion". In the last year and a half, Mr. Hastings has used the guardian test several times.
Last year, he fired Neil Hunt, the long-time product manager who had helped create the famous Netflix algorithm that organizes programming for viewers. He was one of Netflix's first employees and had been a close friend of Mr. Hastings for decades.
Mr. Hastings told Mr. Hunt that many things had changed, since Netflix expanded in Hollywood and abroad, and one of his subordinates, Greg Peters, was now more suited to the job. At his retirement party in July 2017, Mr. Hunt choked.
Greg Peters, president of Japan on Netflix, during a press conference in 2016.
Photo:
News from Akio Kon / Bloomberg
"I would not have chosen to go forward at that particular moment, but it has to separate the emotion from the logic," Hunt said in an interview. Now CEO of the health technology company Curai, he added that he had a friendly month-long transition.
The ring of senior executives of Mr. Hastings takes the archer's test seriously. At a late spring meeting of Netflix public relations executives, one said that every day he comes to work he is afraid of being fired. Karen Barragán, vice president of advertising for the original series, asked how many other people felt that way. A series of hands went up.
"Well, because fear drives you," said Ms. Barragan, according to people familiar with the meeting.
In an interview, Ms. Barragan denied having made that comment, but confirmed that she led a discussion aimed at destigmatizing employee fears. "We talk openly about issues that may be uncomfortable in other places of work and we try to always address a problem from all sides," he said. "The intention is that we can improve."
When Andrew Parker, who has a Ph.D. in computer science, started working at Netflix with a group of others a couple of years ago, he was full of anxiety.
"It was very much in our minds: How can I know if I'm about to be fired?" He said his manager told him that "it should not be a surprise if they let you go," and that there would be an Accumulation for months of increasingly sharp feedback. Mr. Parker said he left Netflix voluntarily in August.
"I think some people felt it was a culture of fear," said Barbie Brewer, a former vice president of talent at Netflix who left last year. "But nowhere in the guardian's test does it say you have to be perfect, I think as long as you realize that, it's not that scary." Ms. Brewer said her separation with Netflix was mutual. He took a compensation package and a six-figure salary cut to go to his next job. She said she had grown tired of Netflix's heavy workload and constant travel.
Layoffs may be insensitive, several former employees said. Ernie Tam, who had worked as a Netflix engineer for six years, was called to his manager's office on a Monday morning in 2015. "You are no longer a star player," the manager said. A human resources representative came in, discussed Mr. Tam's dismissal package and took his laptop. "I just left the office and never came back," said Tam. "For a period of six years, I was a star actor, and suddenly I was not." Mr. Tam said he was surprised, despite receiving negative comments from his manager during the previous month, because previous managers had given him time to improve after criticizing him.
Mr. Tam said that, despite the shock, he feels fortunate to have worked at Netflix, both for what he learned and for the generous salary. "It's hard to find so many smart people working for just one company."
A former employee remembers seeing a woman who had just been fired crying, packing her boxes, while the rest of her team moved away from the scene without offering any support. They feared that "help her to put a goal in the back", said the employee. "I just could not believe it."
A former vice president of marketing had been working all weekend in a marketing session in 2014 to promote the second season of "Orange Is the New Black" in New York City. Over the weekend, his boss, marketing director Kelly Bennett, scheduled a meeting Monday morning and said he and then talent director Tawni Nazario-Cranz would stop on their way from California to London.
At the meeting at her hotel, Mr. Bennett dismissed her, telling her that it was not a "cultural attack". Then "he got up and left," said the former executive. "I was stupefied."
He went to Mrs. Nazario-Cranz and asked: "What could I have done differently?" He said that Ms. Nazario-Cranz told him that he should have fired someone from his team faster.
"I was trying to help someone in his career, and maybe they saw that as a sign of weakness on my part," the former executive said. He cried all the way home on his six-hour flight to Los Angeles, wondering how he would break the news to his pregnant wife.
Mr. Siklos, the Netflix spokesman, denied that the executive was told he was too slow to fire someone. "The former executive in question was clearly told that they were being fired, after a series of conversations, due to his personal behavior," he added.
Once people are fired, Netflix believes in explaining the reasons. Emails about layoffs can reach hundreds of employees in multiple divisions and can be painfully specific, pointing out an employee's failures and inviting more questions and gossip, many employees say.
The Netflix logo is seen in the Hollywood office.
Photo:
Lucy Nicholson / Reuters
In a recent case, Finance Director David Wells sent an email to employees in August saying he "decided to leave" David Burt, a vice president. "It is now clear that David was not sincere with us in relation to a major employee problem that affected the business, even when directly asked," he wrote in the email.
A person familiar with the case said that the "employee problem" referred to in the email involved a sensitive medical condition and that Mr. Burt had acted to protect the privacy and confidentiality of the person.
Postmortem dismissal
Sean Carey, a former vice president of Netflix who was instrumental in helping build the Netflix streaming library, was in the room for his postmortem "You're fired" meeting in front of some 40 to 50 people on the content team. Ted Sarandos, Netflix's content director, explained to the team that the company's focus was changing to the original content and that Mr. Carey was not suited for the increasingly creative role, according to the people who attended.
"Undoubtedly, it was uncomfortable for some, but it was also consistent with the culture, sometimes there is a cost for transparency," said Carey, who said he asked to attend the meeting so that his departure is less damaging to his team. "In the end, I felt it was beneficial."
Actor Gaten Matarazzo, Netflix content director Ted Sarandos and actor Joe Keery attend Netflix's "Stranger Things 2" in 2017.
Photo:
Valerie Macon / Agence France-Presse / Getty Images
In general, the fired person does not attend their own postmortem discussions. "Anything like that can definitely become a pile," said Jibran Kutik, a product designer who left earlier this year. "But in my experience in general, I found them useful in general."
Theoretically, Netflixers should not be caught off guard when they fail the guardians' test, due to the large number of comments they receive from their work ethic and tone of voice. Once a year, employees are expected to code their comments to each other through a software tool called "360". Anyone can review any other employee, from administrative assistants to Mr. Hastings himself, and many high-level executives choose to share the comments they receive with everyone on their teams.
In some dinners and team lunches, there are rounds of "360 in real time," executives say, where everyone goes and makes comments and criticisms of others at the table. "It can be intense and uncomfortable," said Brandon Welch, a talent executive at Netflix who left in 2016, adding that the pressure to give and receive comments was the "hardest part of the culture."
Happy, but fearful
Netflix dismisses workers at a rate higher than the US average. UU., But occupies a high place in the happiness of employees
Involuntary exit rate
The happiest employees,
large American corporations
Netflix rejects the idea that its culture is irresponsible, noting that the company ranked second on Comparably's "Happy Employees" list, published in October 2018, which was based on anonymous employee comments during the last year.
The company said that the number of employees who leave voluntarily has remained stable at 4% per annum, below the 13% average for US companies cited in a 2017 report by the Society for Human Resource Management. Netflix's layoff rate was slightly higher, with 8% last year compared to the 6% average. Netflix said its total revenue reaches 11% per year, which is below 13% per year for technology companies, according to a study conducted in 2018 by LinkedIn.
The broadcast service attracts people who want to work at the forefront of media and technology. Pay the rich salaries, sometimes offering more than double the pay for new recruits and giving six-figure increases in a year.
Welch, the former talent executive at Netflix, said the company's hiring decisions are based on 50% cultural proficiency and 50% physical skills, compared to 80% hard skills at other companies in the who has worked.
Speaking Netflix
New employees soon learn to talk Netflix. The jargon includes phrases like "What is your north star", "highly aligned, weakly coupled" and "context, not control"?
"If you do not use that jargon on a daily basis, you will not be successful," said a short Netflix time.
More than 100 top Netflix executives have taken a specially designed leadership course, in which executives interpreted the ancient Greek play "Antigone" and read about Lee Kuan Yew, a benevolent autocrat who turned Singapore into a developed nation and distrusted some elements of the liberal democracies. .
The Netflix glossary
This is what you can hear in the corridors of Netflix and in meetings.
- Explosion radius: How far something goes in the company when you say it to someone else, such as "I am a senior person in the company and my explosion radius is greater than others and it lasts longer."
- Meme: The "meme" of someone on Netflix is their current position in the eyes of their bosses. If the "meme" in you is that your boss's boss does not like your tone or attitude, if you do not change quickly, that could mean you're out.
- Where is your northern star? A phrase widely used in Netflix internal meetings to ask people to define their most important business objectives.
- The context does not control: A phrase used by Netflix to describe how executives should manage their teams. The idea is that managers should give their employees the right context to make decisions for themselves instead of micromanage and try to control decision making.
- Highly aligned, freely coupled The adjectives used by Netflix to describe their organization as the opposite of a top-down company. The teams must know the general objectives of the company and work to achieve them without the need for too many approvals.
The rapid growth and influx of new cultures, from Hollywood to Japan, has led to an almost constant conversation about culture, say current and former employees. "The best thing was to know that if someone is not exercising, let's go," said Estep, the former engineer. "The worst thing of all was having to listen and talk a lot about culture. To talk about it constantly is simply annoying and unpleasant. "
Exporting the "Netflix form" abroad has been a challenge. The culture of dismissal met with obstacles in some countries such as the Netherlands, where labor laws make the firing of employees more difficult.
When the Netflix office was opened in Singapore in 2016, employees said they were surprised by the frequency of layoffs. A Korean employee who retired this year from the Singapore office said the culture that encouraged harsh comments sometimes reminded her of North Korea, where mothers are forced to criticize their children in front of the public.
Belle Baldoza, a former public relations manager in Singapore, had problems with human resources when she asked her co-workers if they wanted to participate to help a receptionist who was fired during the Chinese New Year and was not eligible for separation because she worked in the contract, said people familiar with the incident. Human resources officials told him that such a collection was not the "Netflix way" and that "it was not the best thing for the business," people said.
Ms. Baldoza left voluntarily last year, writing in an article in Cosmopolitan that constant travel related to work made a dent in her personal life. "I got anxious and irritable," he wrote.
View of salaries
Mr. Hastings' philosophy has been to share the company's information in an open and wide-ranging manner, and to involve everyone in the discussions on Netflix's path, from the price increases to its strategy in China and the appearance of the Netflix logo. .
Several current and former executives said that the company's decision last year to allow executives at the director and superior level to see that the salaries of all employees were becoming uncomfortable, several described the strange feeling of seeing figures in dollars on the heads of their colleagues in the corridors.
Different experiences
The open but tough culture of Netflix can be liberating for some employees and induce fear of others.
Most common phrases used to describe work on Netflix at the Glassdoor review site
Freedom and
responsibility
"I was not a big fan of that," said Bob Heldt, a former engineering director who was fired last year. "It's not necessarily how I wanted to see my teammates." Some current and previous executives said that it bothered the dynamics of the team. But others, including Mr. Heldt, became supporters of the initiative after it helped people who were poorly paid to defend their case.
A more recent effort by Mr. Hastings to allow Netflixers to see the salaries of any other employee, regardless of rank, was defeated in a survey of company executives.
Some parts of the culture of "freedom and responsibility" have become unsustainable. Netflix announced in 2015 that it would offer its employees a maternity or paternity leave of up to one year, trusting that employees use their criteria to make the most of it. Following the example of Netflix, other companies expanded their own permit policies. But in recent months, after many people interpreted the policy as an automatic full year, Netflix executives discussed how to control it, people familiar with the situation said. The company now instructs managers to tell their employees that it's common to take between four and eight months, Netflix executives said.
Sometimes, transparency has met with skepticism when it comes after the fact. Several years ago, Mr. Hastings sunbathed at an executive meeting that had authorized the company to give significant and unusual sums to a couple of senior executives, including Ms. Nazario-Cranz, the talent director, to help buy houses. in the Bay Area, people familiar with the matter said.
Several senior executives were angry at the perceived favoritism and that he had not discussed the brochures in the first place. Mr. Hastings believed that helping with the house payments would allow "exceptional talent" to focus on the work, said one of the attendees. Executives debated whether to extend financial aid to the home to employees more broadly and decided not to do so, but negative feelings continued to infiltrate.
Mrs. Nazario-Cranz soon found herself again in the cultural sight. Mr. Hastings hesitated when he discovered that the executive had taken part of her team to fix her hair and bought makeup on the company's dime before a launch event in Milan a few years ago. Mr. Hastings asked in the sunshine what he did in front of dozens of top executives.
Ms. Nazario-Cranz argued that if a manager took two men out of a round of golf and paid for the start, it would not have been so controversial. "It became a gender equity issue," said one assistant.
Ms. Nazario-Cranz confirmed the incident in an email and said that the discussions encouraged by Mr. Hastings helped to improve "our collective judgment".
Ultimately, Mr. Hastings fired Ms. Nazario-Cranz last year, say people familiar with the episode. Ms. Nazario-Cranz described their departure as mutual, driven in part by a heart condition and the desire to spend more time with their children. "I love culture; I helped develop it, "he said.
The incident with Jonathan Friedland, director of communications for Mr. Hastings, was one of the most important tests of culture.
Incident of the word N
Mr. Friedland met his publicity staff of approximately 60 people in February to discuss a special Tom Segura comedy on Netflix in which Mr. Segura spoke of nostalgia for a moment when using the word "retard" was acceptable. . That provoked the wrath of some spectators.
Mr. Friedland, who worked as a reporter and editor in The Wall Street Journal for a decade until 2004, believed that a large part of his and his team's work was to defend the company against such a negative reaction. Al igual que otros Netflixers veteranos, el Sr. Friedland estaba acostumbrado a una cultura que fomenta la franqueza y el hablar libremente.
Sintió que algunos miembros de su personal no apreciaban lo hiriente que podía ser la palabra "retrasado". Para explicar su punto de vista, el Sr. Friedland dijo en una entrevista reciente con el Journal, que les dijo que la palabra sería un "puñetazo" para los padres de niños con discapacidades diferentes, "como si una persona afroamericana hubiera escuchado la noticia". palabra. ”Pero en la reunión, usó el epíteto completo.
Reclamaciones presentadas por empleados ofendidos por el uso de la palabra. Se disculpó por escrito a su personal, señaló al Sr. Hastings sobre el incidente y pasó una hora discutiéndolo con un grupo más amplio de su equipo de relaciones públicas. El Sr. Friedland luego se reunió con dos empleados negros en recursos humanos y relató lo que había dicho, nuevamente usando la palabra N completa y no la abreviatura.
Jonathan Friedland, ex director de comunicaciones de Netflix.
Photo:
Pedro Sanchez Munioz / Notimex / ZUMA Press
En abril, el anillo de Hastings de los 90 principales ejecutivos de nivel VP y superior, conocido como E-staff, se reunió en un sitio externo en Río de Janeiro. El Sr. Friedland "asoló" el episodio y expresó su remordimiento de nuevo.
Cuando la controversia no se desbordó, un grupo de empleados negros en Netflix en mayo invitó al Sr. Friedland a hablar con ellos y se molestó cuando no abordó el asunto. Los empleados no le pidieron explícitamente que hablara sobre el incidente, de acuerdo con una lista de preguntas que el grupo envió al Sr. Friedland, que fue revisada por el Diario, pero le pidió que hablara de la "mayor falla" de su equipo.
Friedland "debería haber sido despedido de inmediato, no meses después", dijo Nishant Bhajaria, un ingeniero que renunció en febrero. Dijo que si bien respeta al Sr. Hastings, el CEO no aplicó un valor clave en el manifiesto cultural de Netflix: "no hay idiotas brillantes".
Dos destacados ejecutivos negros en la oficina de Beverly Hills, Tara Duncan y Layne Eskridge, se retiraron voluntariamente en junio, lo que provocó más conversaciones internas sobre si Netflix estaba apoyando la diversidad.
Cuando el Sr. Hastings se enteró del segundo uso que hizo Friedland de la palabra N en la reunión de Recursos Humanos de meses anteriores, se convenció de que el ejecutivo ya no podía ser un líder eficaz.
El Sr. Friedland estaba en Japón por negocios cuando el Sr. Hastings lo llamó para despedirlo. Friedland, quien viajaba constantemente como embajador cultural de Netflix y visitó más de 20 países el año pasado, se sintió sorprendido.
"Definitivamente cometí un error e hice todo lo posible por solucionarlo inmediatamente después, pero también me olvidé de vigilar cualquier dolor persistente que pudiera haber causado cuando me movía a un millón de millas por hora", dijo.
Algunas personas dentro y fuera de Netflix pensaron que el trato del Sr. Friedland fue duro. Welch, el ex ejecutivo de talento de Netflix, sugirió que podría ser injusto "casi armar" algo que se dijo en el entorno de Recursos Humanos presuntamente seguro.
Cuando las noticias sobre el despido se filtraron a la prensa comercial, el Sr. Hastings, irritado por una falta de confianza muy distinta de Netflix, disparó un correo electrónico a su personal ejecutivo diciendo que quien lo filtró debe informarse al Departamento de Recursos Humanos.
"Obtendrá una salida discreta y tranquila, y nuestro generoso paquete de despido si lo hace ahora", escribió.
Luego envió el memorando de toda la compañía con las reflexiones introspectivas sobre el racismo, elogiando al Sr. Friedland, no obstante, por construir un "equipo global diverso" y "fortalecer nuestra reputación en todo el mundo".
Unas semanas más tarde, el Sr. Hastings se disculpó por sus correos electrónicos que aglomeraban a sus ejecutivos por la filtración.
"La lección", escribió el Sr. Hastings en otra nota al personal, "es que en la niebla de la guerra ocurren cosas locas".
Write to Shalini Ramachandran en shalini.ramachandran@wsj.com y Joe Flint en joe.flint@wsj.com
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