Netflix loves to tout its culture of avoiding rules and minimizing corporate red tape. But of course, the company does have operating guidelines, famously detailed in the Netflix Culture document posted on its website. Co-founder Reed Hastings even wrote a 2020 book elaborating on the principles, titled “No Rules Rules: Netflix and the Culture of Reinvention.”
Now Netflix is publishing an update to its corporate culture memo for the first time in nearly five years, a copy of which Variety obtained exclusively ahead of its release Thursday. The last major update was in 2017, when it distilled Hastings’ original 125-slide presentation from 2009 (which has been viewed more than 21 million times).
The core principles of the Netflix Culture memo, including empowering employee decision-making, requiring candid feedback and terminating staffers who aren’t up to “dream team” snuff, remain intact. But there are some key changes. For starters, the document has a new title: “Netflix Culture — Seeking Excellence” (previously it was simply called “Netflix Culture”).
More significantly, the document adds a new directive for employees to act with fiscal responsibility — a change that comes as Netflix in Q1 saw its first decline in subscribers in more than a decade. The updated Netflix Culture memo also includes a new section called “Artistic Expression,” explaining that the streamer will not “censor specific artists or voices” even if employees consider the content “harmful,” and bluntly states, “If you’d find it hard to support our content breadth, Netflix may not be the best place for you.”
The Artistic Expression portion of the Netflix Culture document appears in large part a response to the controversy over Dave Chappelle’s “The Closer” that embroiled Netflix last fall over what critics said were his transphobic and homophobic comments in the stand-up special. Co-CEO Ted Sarandos defended the company’s decision to keep the Chappelle special on the service, triggering a large employee walkout in protest.
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“Entertaining the world is an amazing opportunity and also a challenge because viewers have very different tastes and points of view. So we offer a wide variety of TV shows and movies, some of which can be provocative,” the new section reads. It goes on to say, “we support the artistic expression of the creators we choose to work with” and that “we let viewers decide what’s appropriate for them, versus having Netflix censor specific artists or voices.”
Some Netflixers “may need to work on titles you perceive to be harmful,” the updated culture memo says, adding that if someone has trouble accepting that they may not be a good fit.
On the belt-tightening front, in the “Valued Behaviors” section (previously called “Real Values”), there’s a new entry under the “Judgment” heading: “You spend our members’ money wisely.”
While that’s new to the Netflix Culture memo, company execs have used similar verbiage in the past — including in the April 2018 quarterly letter to shareholders, which said about its revenue gains, “Our job is to spend this money wisely to increase our members’ delight.”
That said, there other changes to the culture document that indicate Netflix wants to make it clear that employees don’t have carte blanche with regard to spending the company’s money. For instance, this passage in the document has been eliminated: “There are virtually no spending controls and few contract signing controls. Each employee is expected to seek advice and perspective as appropriate. ‘Use good judgment’ is our core precept.”
The update also cuts out the following section: “Note that if our company experienced financial difficulty, we wouldn’t ask our employees to accept less pay. A sports team with a losing record still pays top of personal market for the players they hope will get them back into a winning position. On the other hand, if the company does well, our broadly distributed stock options become quite valuable.”
In addition to the Artistic Expression verbiage, the memo adds three other new sections: “Ethical Expectations” (which says in part, “we act honorably, even when no one is looking” and “We expect all employees to protect confidential company information, whether or not it is marked ‘confidential’”); “Representation Matters” (“Our members want to see a variety of stories and people on screen — and our company and leadership should reflect that diversity”); and “Employees Direct Our Philanthropy” (documenting that when an employee donates to a charity, Netflix donates double that amount to the same group).
The addition of the Ethical Expectations section comes after Netflix in October said it fired an employee who admitted they downloaded internal data and shared it outside the company. The info, which was leaked to Bloomberg, included Netflix financial data for “Squid Game” and Chappelle’s “The Closer,” apparently an effort by an irate staffer to highlight that the streamer paid more for Chappelle’s controversial content than the top-performing South Korean thriller.
Even with the addition of the four new sections, the updated Netflix Culture memo is shorter than the prior version: It now clocks in at about 4,070 words, down 6% compared with 4,340 previously.
According to Netflix, everyone in the company was able to view and comment on proposed updates to the culture memo in a shared document. Thousands of employees participated in process, which took place over six months.
The wording of Netflix’s notorious “keeper test” is mostly the same: “To strengthen our dream team, our managers use a ‘keeper test’ for each of their people: If a team member was leaving for a similar role at another company, would the manager try to keep them?” The document still notes that employees who fail the keeper test “are given a generous severance package so we can find someone even better for that position”; however, the updated version has dropped this footnote: “We generally offer a minimum of four months of full pay as a severance package, giving our ex-teammates time to find a new company.”
Some material edited out of the Netflix Culture memo is stuff that was awkwardly phrased. For example, these two sentences have been cut from the discussion of the keeper test: “Getting cut from our team is very disappointing, but there is no shame” and “We suck compared to how great we want to become.”
Also deleted is this cringey observation, which was meant to underscore the point that a company doesn’t need rules covering everything: “[W]e also don’t have a clothing policy, yet no one has come to work naked… Most people understand the benefits of wearing clothes at work.”
In addition, Netflix revised a part of the “Freedom and Responsibility” section that previously said, “On rare occasions, freedom is abused. We had one senior employee who organized kickbacks on IT contracts for example.” In the new version, this now reads, “Over the years, some employees have taken advantage of this freedom in various unfortunate ways.”
And this paragraph, which name-dropped Apple co-founder Steve Jobs, has been cut:
We don’t buy into the lore of senior leaders, who are so involved in the details that their product or service becomes amazing. The legend of Steve Jobs was that his micromanagement made the iPhone a great product. Others take it to new extremes, proudly calling themselves nano-managers. The heads of major networks and studios sometimes make many decisions in the creative process of their content. We do not emulate these top-down models because we believe we are most effective and innovative when employees throughout the company make and own decisions.
Meanwhile, Netflix’s values section has removed the “Impact” heading. Netflix said that was removed because it’s not technically a behavior. The section had these bullet points:
- You accomplish amazing amounts of important work
- You demonstrate consistently strong performance so colleagues can rely upon you
- You make your colleagues better
- You focus on results over process
Two of those principles are echoed elsewhere in the document, where it says, “You make time to help colleagues across Netflix succeed” and “our core philosophy is people over process.”
Finally, here are some other edits worth noting in the Valued Behaviors section:
- New entry under “Integrity”: “You act with good intent and trust your colleagues to do the same”
- New entry under “Selflessness”: “You debate ideas openly, and help implement whatever decision is made even when you disagree”
- New entry under “Passion”: “You are proud to entertain the world”
- Modified in “Innovation”: “You thrive on change” is now “You are flexible and thrive in a constantly evolving organization”
- Cut from “Curiosity”: “You contribute effectively outside of your specialty”
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