Netflix may have the most unique company culture of all the technology employers. Here is everything you need to know about their work philosophy and compensation.
Patty McCord, the former Chief Talent Officer of Netflix, is partially credited for developing a revolutionary talent strategy that went viral when this deck was shared publicly. This strategy shaped Netflix culture, and resulted in a high performance environment where effective contribution is rewarded, and outdated skill sets are respectfully eliminated.
Netflix’s philosophy focuses on harnessing inspiration, prioritizing excellent performance and emphasizing transparency. Some find the company philosophy intimidating. Yet, Netflix’s track record of success (the stock price tripled in 2013 and they currently have over 190 million paid subscribers worldwide) indicates the efficacy of these seven aspects of their culture:
- Values are what we value
- High performance
- Freedom and responsibility
- Context, not control
- Highly aligned, loosely coupled
- Pay top of market
- Promotions and development
Dream Team Philosophy
We’re a team, not a family
Netflix is not reminiscent of a little league team where everyone gets a participation trophy. On the contrary, they adopted a culture based on radical candor and habitual excellence. Their philosophy is built on the understanding that the organization operates as a high performing sports team, not a family. Families make exceptions for poor performance and exhibit unconditional love when it may not be warranted. Successful sports teams require optimal performance and execution at all times. On a sports team, all players understand a position is never guaranteed, and performance dictates one's path forward.
A dream team... is one in which all of your colleagues are extraordinary at what they do and are highly effective collaborators.
At Netflix, employees must be high performers at all times. To ensure this approach is successful, Netflix uses weekly one on one meetings to give candid feedback as soon as possible, and the Keeper Test, which regularly asks Managers which of their teammates they would fight to keep if they knew the employee was poised to leave the company.
Weekly one on one meetings with Managers eliminated the need for performance reviews. Netflix simply does not conduct formal reviews, annually or otherwise. They posit that real time feedback is significantly more effective than an annual review to determine a performance bonus. Plus, the frequency of feedback ensures there are no surprises for employees at any point.
Mediocrity has no place at Netflix. In fact, adequate performance gets a generous severance package. If an employee does not pass the Keeper Test, they are offered a generous severance package, and respectfully asked to move on to their next opportunity. Although this sounds harsh, it is akin to the methods used to build winning sports teams.
Netflix does acknowledge that the sports team analogy is not perfect, and a corporate environment does have its differences. For instance, a sports team has a limited number of positions, and teammates typically compete amongst themselves for a position. Whereas, in a corporate environment, more employees (or team members) enables the team to complete a greater quantity of work or outputs, which has a positive result on outcomes and accomplishments. A “cut-throat” or “dog-eat-dog” environment is not the goal, but a focus on personal best is imperative.
Finally, Netflix employs a “no brilliant jerks” policy stating, “On a dream team, there are no “brilliant jerks.” The cost to teamwork is just too high. Our view is that brilliant people are also capable of decent human interactions, and we insist upon that”. Many tech companies have some variation of this statement in their corporate philosophy. However, Netflix asserts that it is woven into the fabric of their corporate culture.
Netflix’s compensation strategy is unique in that it does not use a leveling system and salary bands to determine fair market value for a particular role. Netflix will pay top of an employee’s personal market for a role. This means, they use market data to determine what the maximum rate is for that skill set, and offer top pay to the candidate. Typically, they calibrate once per year. With this approach, one employee’s compensation could climb quickly, while another with a different skill set may remain stagnant. The labor market decides.
Although not specifically highlighted, transparency appears to be a common theme throughout Netflix’s culture. Several published accounts state employees are (occasionally) encouraged to interview outside the company. Where most companies liken taking an outside Recruiter’s call to betrayal, Netflix Managers seem to want to know what competitors are paying, and promote the exchange of information.
Another interesting aspect of their compensation strategy allows employees to choose how much of their compensation is paid in cash versus stock options. Netflix assumes candidates will have an educated understanding of the risks and rewards associated with various compensation compositions, and allows individuals to decide according to their needs and comfort with risk. Additionally, the 10-year stock options are fully vested, and you keep them even if you leave Netflix. No golden handcuffs here!
On trend, Netflix strikes again, and stands out in a sea of corporate bureaucracy by eliminating a leveling system to determine an employee’s scope, responsibility and salary band. For individual contributors, there is only one level: Senior. Under this structure, one’s title is unlikely to change during their time at the company, but it does not mean that their career will remain stagnant. As previously stated, Netflix expects excellence, and top performance is rewarded with expanded responsibilities and compensation increases to match. This approach is meant to eliminate a lot of corporate chatter associated with ambiguous discussions around level, and why one person qualifies for a particular level, and why another does not.
Levels for leadership roles are more structured. There are four types:
Career progression from one leadership level to the next is unclear. However, it’s publicly notated that all employees in leadership positions have access to compensation data on all other colleagues. It’s a bold approach, but consistent with their emphasis on transparency.
Trendy benefits synonymous with bay area start-ups are not the norm at Netflix. Although there are several fun aspects to their benefits such as posh offices and well-stocked break rooms, Netflix focuses more on flexibility than fun. Essentially, Netflix culture believes in paying people well, and offers them the autonomy to make their own decisions about what is important to them, which is evident in the benefits they offer.
Netflix offers a non-negotiable flat sum for healthcare costs. Regardless of one’s personal situation, all employees are allotted $15,000 annually to cover health care expenses (medical, dental and vision premiums). If any portion of that sum is not used, the employee can collect up to $5,000 back. Employees may choose from four different plans supported by Kaiser, Anthem or Collective Health. Additionally, there is an option to contribute to a Health Savings Account or Flexible Spending Account.
The 401K savings plan is administered by Fidelity. The plan is straight-forward, and simply matches employee contributions up to 4%
Stock Options | Employee Stock Purchase Price
As previously stated, employees may choose any combination of cash and stock options to comprise their compensation structure. If they choose a portion to be paid in stock there are two options: free stock options equal to five percent of the annual salary or supplement options, which allocate a portion of one’s salary (amount up to the employee) to purchase more options.
It’s important to note that Netflix offers stock options, while many other technology companies offer restricted stock units (RSUs). Options are not stocks. They are the option to buy stocks at a specific price. In this case, the Employee Stock Purchase Price, which is 40 percent less than the closing stock price on your grant day. (Grant days are the first trading day of the month).
Netflix led the charge for the unlimited PTO trend years ago, and still upholds the same policy. Technically, there is no policy. Vacation days are not tracked, and time off is only discussed between an employee and their Manager. Everyone is encouraged to take time off to recharge, relax and probably watch a bit of Netflix.
Flexible Work Hours
There are no set work hours, and employees are encouraged to work a schedule that blends with their lifestyle. Their focus on superb performance doesn’t necessarily fit within a 9-5 box, and their people work when it best suits them.
Netflix offers a generous parental leave benefit that allows new parents to take as much time as they need to bond with their new baby. Employees have been known to take anywhere from four to eight months to prepare and care for the newest family member. They also offer a family forming benefit, which helps to subsidize the cost of fertility treatments, surrogacy or adoption. This benefit is available to employees and their partners.
Why waste valuable time commuting? Netflix offers a shuttle and ride share program that allows employees to use valuable commute time to work. They subsidize the cost of rise share services to and from the office.
There is an abundance of food at Netflix offices! Complimentary breakfast and lunch is served Monday through Friday, and office kitchens are kept stocked with a bountiful variety of snacks to fuel teams throughout the day.
It’s important for some people to give back to their communities in the form of monetary donations, and Netflix supports these contributions. They will match employee’s charitable contributions up to $10,000 annually.
While Netflix’s unique culture may not be suitable for everyone, they’ve managed to create an intriguing environment focused on producing successful outcomes by harnessing inspiration, prioritizing excellent performance and emphasizing transparency. Netflix cites the words of Antoine de Saint-Exupery, the author of the The Little Prince as the inspiration for their company culture and philosophy:
"If you want to build a ship, don't drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea."
Interviewing at Netflix? Check out our salary data to guide discussions around compensation with your recruiter. Good luck!