Netflix has a notorious ‘firing culture.’ Here’s how they made it work

I saw a few teams late to deliver again and again, and I realized that it wasn’t because people weren’t working hard; they were working their asses off. They just didn’t know what they were doing.

The following is an edited excerpt from Powerful: Building a Culture of Freedom and Responsibility by Patty McCord. The excerpt was provided by Silicon Guild Publishing. You can buy a copy here.

The conventional wisdom is that a company should put an employee it’s thinking of saying goodbye to on a PIP (performance improvement plan). The way PIPs are often carried out is particularly cruel, because they’re really all about proving someone is incompetent.

Often, the problem isn’t even that a person is not a high performer or doesn’t have the potential to be a high performer in another job at another company. Often, there is nothing wrong with the way they work or the effort they’re putting in or the way they are interacting with colleagues or their boss. They might be fabulous. They’re just not right for their job as it is evolving, or they won’t be high performing in the next job you need done. And there’s no reason to put people who simply don’t have the skills you need on a performance improvement plan.

I also came to realize that when you hire someone and it turns out that they can’t do the job, the problem is with the hiring process, not the individual. You simply hired the wrong person. It’s not their fault! So you shouldn’t make them feel like it is. If we think this way about who needs to move on, we can have a more honest conversation with people that’s not about casting aspersions on them.

There is no need to essentialize them as a failure. We should simply be pointing out that they’re not a good match for what we need. It’s not personal and it’s not about failure. It’s about aligning skills and know-how with the team objectives. That doesn’t mean that people won’t be disappointed or sad or unhappy or upset. I’ve wept through as many goodbyes as anybody else. But ultimately, people understand, and they appreciate that you’re not lying to them. For much of my career in human resources, I spent lots of time on PIPs. I do think that they have the potential to work well, about which more in a bit.

But when I started working closely with programming teams at Netflix, I came to understand that sometimes it’s in everyone’s interest for people to move on to a new job quickly rather than keep trying to improve their performance. I saw a few teams late to deliver again and again, and I realized that it wasn’t because people weren’t working hard; they were working their asses off. They just didn’t know what they were doing! Yes, sometimes managers and colleagues can teach people, but often it’s vital to efficiently find people who can do the work now. And prolonging efforts to help people improve often simply impedes them from making true progress – at another firm.

Everyone loves them? Doesn’t matter

One of the teams at Netflix hired a guy that everyone loved. I was pretty sure after interviewing him that we should keep looking for a more qualified person. But the team said, “No! We’ll teach him; we’ll get him up to speed.” I said, “Maybe, but you’ll get him up to speed for what we need now, not six months from now.” They insisted. Six months later, the poor guy was even further behind the curve and his team was totally frustrated and also crazy busy making up for his shortfall. Meanwhile, I was able to call the HR person at Apple, whom I knew pretty well, and recommend him, and he had a great new job there even before he left. He came into my cubicle on his last day and gave me a big flowering bush, God love him.

We should not make false promises of job security. I was consulting to a CEO and he asked me, “What should I do about our call center people? We’ve moved the rest of the company into a new building, and I don’t think we want to bring our call center people into the space. I think it might be best to outsource that work now.” I asked him, “Why have you been lying to them?” He said, “What are you talking about? I would never do that! Never in a million years!” So I asked him, “Is it true that you said that everybody who comes to work for you will have a future in the company, that their career with the company will continue as long as they’re willing to contribute?” He said, “Yeah, I said that, but that was a few years ago!” And I said, “Well, your recruiters are quoting you and still saying it every day.” False promises will only lead to people feeling betrayed.

People often come up to me after a talk to ask for career guidance. I tell them, “You want to be a lifelong learner; you want to always be acquiring new skills and having new experiences, and that doesn’t have to be at the same company. The fact is that sometimes you’re hired by a company to do something, and then you do it and it’s done. If I hire people to rebuild my garage [and] they’re done, I don’t need them to rebuild the back of my house.”

My algorithm

I tell managers to use a simple rule when evaluating their teams, which I call an algorithm because engineers love the word, and I love engineers: Is what this person loves to do, that they’re extraordinarily good at doing, something we need someone to be great at? This way of thinking is just like reasoning about any other business activity. It’s based on critical thinking and it takes the emotion out of the decision. Employees can also use the algorithm to assess whether they should stay at a company or start looking for a new job that will be a better fit.

Another good thing about it is that it helps hiring managers to appreciate what a person’s talents and passions are, rather than fixating on what they can’t do, and to assist them in finding a better fit in a next job.

Another crazy traditional HR rule is that managers should not give references to people who are fired. This too is out of fear of being sued. But you can be open with people about what sort of reference you’ll be able to give and let them decide. I used to sit down with my soon-to-be-ex-employees and say, “OK, we’ve established the fact that you’re not a team leader” – for example – “but that’s OK, you’re a really talented engineer. I’ll be happy to be a reference for your technical acumen, but I’m not a good choice if you need praise about your management skills.”