My attention was caught by an article in the first issue of Harvard Business Review for 2014, ‘How Netflix reinvented HR’ by Patty McCord who is Chief Talent Officer at Netflix.

 

She has firm views on company culture and talent management which resonated with me. Netflix is a very successful company – during 2013 alone its stock more than tripled, it won three Emmy awards, and its U.S. subscriber base grew to nearly 29 million – but what’s really clever about them is that the people management policies are based on common sense.

 

The most basic element of Netflix’s talent management is hire only “A” players. This is the best thing you can do for your employees – hire excellent colleagues, this trumps everything else, a perk better than table football or free fruit. It’s obvious – we are all happier and more productive when we work alongside other skilled and competent employees, it makes working life better for all of us.

 

McCord’s philosophy is that people in HR should think of themselves as business people. Ask yourself: “What’s good for the company? How do we com¬municate that to employees? How can we help every worker understand what we mean by high performance?”

 

Hire the best people you can, the A-team. Hire workers who are fully formed adults who can shoulder responsibility, who can take ownership of their roles and produce creative and innovative solutions, people who want to be star performers, who will put the company’s interests first. These are people who can be managed with honest communication, logic and common sense rather than formal policies.

 

If you have the right people in post the majority of them will do the right thing. There’s not much mileage in all the time and effort writing HR policies and staff handbooks for the small percentage of staff who you should not have taken on in the first place. I think HR spends too much time on the under-performing 10% of employees, whereas we should focus on what the business does well and doing more of it.

 

Honest communication – this means you have to be honest with staff when things change. When the company or production methods or the market change you may find you need different skills and that you have some employees, competent people who did good and valuable work, but whose skills no longer fit the fill. Deal with them honestly and fairly and give them a generous package when you have to let them go.

 

Senior managers and HR, in particular, always say that “people are our greatest asset” but not many companies act as though they really mean it. Treat your employees with respect, they are your colleagues so be a role model for appropriate behaviours and put the emphasis on team building. Ensure you provide clarity around targets and priorities, let them know what you expect and why, what the rewards will be, give honest feedback with the emphasis on what is working well and where to make changes, and give recognition for a job well done.

 

Don’t build a bureaucracy around performance management. For A-team employees the real motivators are likely to be found in achievement, recognition, the inherent value of the work to the individual, responsibility, opportunities for development and advancement. Spend time with staff, show support and invite participation. Inspire them. Sell your strategy for the way forward, paint the big picture. Listen to what they want and help them to understand what the future looks like and what their part in it will be. Show how you can help them achieve their goals. They will stay longer if you can harness their active engagement and commitment.

 

Like McCord I’d advocate an informal 360 process, you should focus on strengths and what can be built on them, tools such as Strengthscope or the Reflected Best Self exercise can really help employees identify where they can add value and grow in their roles. Be honest about performance, their performance and the company performance – what does the company need, what does success look like, how can you help every member of staff understand what high performance means?

 

Your managers should be spending their time on team building, aligning real time practice with stated values, working towards the future and building skills that will allow the organisation to thrive and innovate and grow. Encourage managers to talk to their teams about performance and aspirations as a matter of course, proactive career management throughout the organisation. The emphasis is on working hard to do the right things and making yourself a valuable corporate resource.

 

Bear in mind that things change, and you don’t want chained to the corporate kennel people who would rather be elsewhere or who are no longer a good fit with your goals, so don’t be afraid to let someone go if they are not right for the job or the organisation. Your corporate HR policies and practices need to be grounded in common sense and practical manpower management.

 

I have always championed the policy that employees should be allowed to take as much holiday as they like, provided they get the job done and their colleagues know where they are. Good people want to do what is best for the company, they won’t take advantage, they’ll appreciate that you trust them to use their sense and discretion around things like annual leave and travel expenses. Allow them make the arrangements they judge best for achieving the results that let them fulfil their obligations and achieve the company’s strategic objectives and targets. 

 

Try to give employees some choice and discretion around compensation and working practices too. Pay competitive salaries and encourage your people to benchmark their worth in the wider marketplace. Treat people like adults, offer stock options as a trade off against salary, and let the options vest immediately so employees can make their own decisions about what they hold and for how long.

 

Netflix doesn’t have a bonus scheme as McCord says “If your employees are fully formed adults who put the company first, an annual bonus won’t make them work harder or smarter”.

 

McCord also tells us that in thirty years she has never seen an HR initiative the improved morale. What you need to do is build alignment around success and motivation by showing your people how they fit into the bigger strategy of the organisation. Smart companies nurture a culture and environment where talent can flourish and fulfil their potential.

 

Focus on what the company needs and how to communicate that to the employees in meaningful terms that talk to them about how the company is doing and what behaviours drive success. 

 

In essence it boils downs to HR professionals thinking like business people. Success depends on having a genuine feeling for culture, employer branding, learning motivation, reward and all the things that make an organisation tick. HR policies and practices should facilitate corporate growth, minimise “rules” and cultivate flexibility to encourage solid loyalty and engagement, thus creating long-term talent retention.