Netflix: Does its 'keeper test' recruitment approach work?

Netflix's former chief talent officer Patty McCord helped to devise its so-called 'keeper test' approach to hiring, firing and rewarding employees. McCord presents it as a meritocratic process, but some have argued it creates a culture of fear.

If you tried to resign, how hard would your boss try to keep you? If any of the people in your team told you they were leaving, how far would you go to stop them?

These are some of the questions that managers at Netflix ask themselves on a regular basis.

It’s called the "keeper test" and it is a central element of Netflix’s culture deck, a document devised by Patty McCord, the company’s former chief talent officer, and its chief executive, Reed Hastings, to codify the tech company’s approach.

Sheryl Sandberg has said that the deck, which was published online in 2004, "may well be the most important document to come out of Silicon Valley". Depending on whom you believe, it’s either a simple way to check you have the right people or it’s the reason "anxiety fills the hallways" at Netflix offices around the world.

The wrong approach

McCord believes most people approach talent in the wrong way. Instead of starting with job descriptions, she suggests leaders think about what their team would look like if it were doing amazing work ("amazing, not better," she stresses) in six months to a year.

She tells people to imagine a film of it and think about what would be different. Would the team see clients more often? Or have fewer meetings? The next step is to look at the existing team and ask whether – now you know what you want to achieve – you would hire them again. If so, what do you need to do to make them excellent?

"When you focus on the problem you’re trying to solve, instead of the person you’re trying to hire, then you’re much more likely to do a couple of things," McCord explains.

"First, get the right kind of talent in your group to make things happen in your time-frame. Second, you can be really honest with the rest of the team about what you perceive the gaps to be. Third, you can be open to lots of different ways to solve that problem."

It’s an approach that Magnus Djaba, global president of Saatchi & Saatchi and chief executive of Saatchi & Saatchi London, can see the merit in.

"From a creative agency point of view, if people want to change the output, they change the people," Djaba says. "But if you want to change the work, you have to change the processes, then find the right people."

Empowering working practices

Netflix staff who achieve "sustained A-level performance despite minimal effort" receive more responsibility and "great pay". McCord insists people should be empowered to work where and when they want.

"I get asked to talk about the future of work a lot," she says. "I don’t want to talk about the future of work. I want to talk about now. People become cynical because they’re like ‘why should I live in this rigid, old-fashioned system at work that doesn’t have anything to do with the rest of my life? Why should I ask permission from someone in finance to spend money when I can buy a car on my cell phone?’"

"Why do we assume that IQ drops as seniority drops? Well, the smart people were at the bottom once and they were smart then, too" 

Netflix offers a generous severance package to employees who are judged to be offering only "sustained B-level performance", even if they work hard. It’s cut-throat – little allowance is given to people going through personal issues.

Moreover, despite the culture deck stating that Netflix does not require long hours, a glance at Glassdoor shows it is not immune to presenteeism. In addition, its much-lauded unlimited vacation – "there is no clothing policy but people don’t come to work naked" – is said, in practice, to result in people taking fewer holidays, not more.

McCord insists exit conversations while she was at Netflix were not "full of tears and weeping" but she has described how people have cried during them in the past. It is also possible that she underestimated the impact of the constant threat of losing your job.

"The policy creates an enduring daily anxiety riddled with stress and fear," Bruce Daisley, European vice-president at Twitter and author of The Joy of Work, says. "A daily routine living on adrenaline and cortisol is the route to burn out and can be triggering for those inclined to mentalhealth issues."

McCord found herself on the other end of one of these frank conversations in late 2012. Her departure has been linked to Netflix’s bodged attempt to split its DVD rental service and streaming subscriptions – a rare misstep that angered customers in 2011. But McCord attributes it to Netflix "morphing into a content-focused company". A pragmatic and logical thinker, she says her strength and experience were in technology, not schmoozing in Hollywood.

Consolidating change

Netflix consolidated this transition last month when its Alfonso Cuarón-directed film Roma picked up 10 Academy Awards nominations, including Best Picture and Best Director. "Roma is a classic example of how that culture has permeated and expanded," McCord says, without a trace of bitterness for the culture she created that spat her out. "Which is why they gave that director tonnes of permission to create the story that he wanted to create. Hire people who have a track record of doing fabulous work, and are adults, and give them a lot of freedom."

She adds: "People perform to your expectations of them. If you expect mediocrity, that’s what you’ll get. If you expect excellence, you’ll be surprised what you get even from mediocre people. I found that over and over to be true.

"Why do we assume that IQ drops as seniority drops? Well, the smart people were at the bottom once and they were smart then, too, that’s how they got to the top. You really have to change your mindset and say, ‘They’re all adults. They’re all smart. They all want to go home at the end of the day and feel like they put in a good day’s work and accomplished something.’"

Today, McCord offers frank advice to companies worldwide. She recalls working with an Australian bank that was aiming to become a mobile-first company. When she asked how many layers the bank’s engineers would have to go through if they came up with a new idea that they believed their customers would love, she was told the answer was 35.

"Then you wonder, why aren’t they creative?" she says with a laugh. "They’re just weary. I know it seems simplistic and it’s very difficult to change cultures. But that’s how we did it."

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