One of the best case studies of using values to develop mojo that I’ve come across recently is from Netflix, which I’ve also just posted on at the Moon Shots community ning.
Netflix’s culture is clearly based around their values – and I like the way that these clearly do reflect their mojo and organisational capability (even if they’ve chosen to only articulate these through their values).
For me, the company’s mojo (the type of company they are) is about being:
- Manic about high performance
- A pro-team with stunning colleagues
- Creative-inventive.
And I’d suggest its organisational capabilities (the things they do really well, that help them compete) are:
- Providing employees with freedom
- Avoiding complexity.
Importantly, I think, the values are expressed as the behaviours that are particularly valued in fellow employees (“values are what we value”). And they’re not dressed up as things that everyone is supposed to internalise and make part of who they are. I just think this makes it easier to talk about them and clarify the organisation’s expectations.
And the values aren’t just nice sounding statements - they’re also central to recruitment; performance management (“the keeper test”); reward (“adequate performance gets a generous severance package”); development (“we don’t try to do it”); promotion (“if manager would promote employee to keep them if employee were thinking of leaving, manage should promote now, and not wait”); exit (“Netflix doesn’t have to be for life”) and other HR processes. I particularly like the fact that their values are central to their recruitment processes, to ensure they only take people on if they do live the company’s values (and they don’t therefore need to ask anyone to change these).
And in addition, the values are clearly seen as important – in that people will question others if they act inconsistently with the values.
But I still think the company’s mojo and capabilities provide a better description for understanding what the company is about, and providing a basis for aligning its HR processes in the way I’ve described above.
While I’m addressing the presentation, I should also mention that I do have some issues with the company’s approach.
For example, they suggest that having 10 people interview each candidate is a ‘bad’ process – something they want to avoid to minimise complexity.
Well, maybe. I mean, while having even 2 or 3 people interview the same candidate can be a bad process if there’s no agreed job description, communication between interviewers etc, having 10 people interview can be a good process as well – Google is a prime example. And given that recruiting high performers is such a critical aspect of Netflix’s strategy, I would suggest that they shouldn’t dismiss the approach as easily as they seem to have done.
(Perhaps it’s because they know they can fire the wrong employees easily enough – although this is going to be expensive, and isn’t going to help them form productive teams.)
In addition, I can see that the company might regret its decision not to use variable pay. Providing a base which reflects and outperforms the market makes sense, but what about the person who is significantly ‘overpaid’ – what incentive do they have to perform as well as they can?
But in the main, I think it’s a fantastic example of so many things I support – particularly a really clear mojo, and the development of best fit (vs simply best practice) HR processes that support this positioning.
For more information, go over to Moon Shots and take a look there too.
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I like how they define their values as the things they would see in an ideal employee or co-worker. I agree that it makes it easier to talk about and when employees do talk about - the values are then reinforced. values must be internalized, but its useless if its not externalized or lived out.
ReplyDeleteThey might not be getting the most out of every employee without a performance-based incentive/pay, aside from the stock options. I think they want to stay away from this since it adds to the complexity - you have to keep track of metrics, setup weekly reviews, benchmarks etc...
On the other hand, I was thinking that the above-market pay combined with their comp. review serves as an incentive. Isn't incentive enough if a company pays you the most competitive salary in the market? Especially if you are aware that they would let go of employees who are not "superstars"?
Travis, you make some good points, and I particularly note your challenge on increasing complexity - which is certainly true.
ReplyDeleteI wouldn't want Netflix to lose their mojo - so I withdraw the point. I'll agree with you and them, they should keep it simple and keep comp focused on high base pay.
(There are some good tips on doing this in a World at Work book, High Performance Pay).