“Netflix is different. We have a culture where No Rules Rules”. This is how Netflix CEO Reed Hastings describes the company's philosophy, which has completely shaken up the whole world of business entrepreneurs and start-ups. In a global landscape where large companies are implementing increasingly strict regulations and rigidly organised management teams, it seems almost unthinkable for the market giant to attribute its success to a complete lack of rules and control systems.
The corporate culture at Netflix is highly unusual, and is sometimes even seen as ruthless towards its employees. On the one hand, having no rules within an organisation means that there is no need for management to approve projects, even those that cost staggering amounts of money, that there is no set holiday policy, and that employees can decide how to spend company money. On the other hand, the infamous Netflix Culture Deck also states that “adequate performance gets a generous severance”, meaning that if employees do not consistently maintain an excellent level of performance, the company has the right to fire them immediately, albeit with a very fair financial handshake.
So, Netflix’s culture may seem like a kind of paradise for employees, where workers who perform well can take time off whenever they need, where they have the freedom to make decisions on their own, and where they earn very competitive salaries. Yet the criteria that determine employee performance also render the policy a very controversial one. Netflix employees have more freedom and flexibility in their work, but they also have more responsibility and run a higher risk of failure. It is no coincidence that this culture has been described as ‘Darwinian’, since it rewards the best employees and quickly gets rid of those who do not meet their targets.
The main criticisms of this model are that it can be stressful for employees and creates a competitive and uncooperative working environment, and that the system of rapid dismissal fosters a climate of fear and insecurity among workers. Erin Meyer, co-author of the book, argues that Netflix’s method violates the so-called ‘psychological safety’ principle put forward by Harvard Business School professor Amy Edmondson, according to which employers need to create a safe atmosphere for employees if they want to encourage innovation in the company.
Yet, against all the odds, Netflix’s culture seems to be working. According to its supporters, which include CEO Reed Hastings, the company’s corporate culture of freedom and accountability is a key factor in its ability to innovate quickly and adapt to changing market needs. Giving employees complete freedom, however, requires careful planning, and is not a viable solution for all companies.
