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Info You Can Use: Netflix HR Policies and the Arts

Apparently Netflix Powerpoint presentation on human resources has been getting a lot of views this last month. I remember being able to read the accompanying article on Harvard Business Review at one time, but it seems to be protected by a registration requirement now.

The Powerpoint presentation can be viewed however and has some interesting lessons about employee relations for non-profit arts organizations. I will state outright that probably the biggest hurdle for arts organizations will be paying top dollar for top talent since the arts are often limited in their earning ability. However, given that arts people are often motivated by psychic income rather than monetary income, some of Netflix basic philosophy may apply.

Or perhaps having highly talented people working for you and following their ideas about jettisoning process and procedure can help you identify income streams needed to provide appropriate remuneration.

There are 126 slides so I can’t really summarize the whole presentation, but I wanted to talk about a few that stuck out.

Slides 4-18 talk about the values of Netflix making it clear that their view is that the true values of any company aren’t what they say they value on paper, but what employee activities are actually rewarded. A company says they value integrity, but punish a whistleblower, then that is not a true company value.

This is something to think about when writing your organizational values and mission statement. It almost seems best to be like the college campus that only puts in sidewalks when they see where the students walk to get between buildings. It might be best to enumerate the values you do exhibit rather than the ones you aspire to–and then revise as you evince more constructive behavior.

The thing about Netflix HR policy that most companies might have a hard time implementing is in slide 22. “Adequate performance gets a generous severance package.” They want people who are performing at their best and give those who aren’t the boot, but in the nicest way possible.

In the article which is now behind a registration system, they talk about a woman who was a great producer, but as technological advances left her behind, she couldn’t conform so they sat her down. They make it sound like she was relived to be let go (and maybe the severance package is just that good).

It seems a little cold hearted, but it does show they are in earnest when they claim a commitment to only working with the top talent they can find. In the slides that follow, they talk more about that, saying they use the metric of who would they fight to keep if the person was being hired away. You keep those you would fight for and give severance to everyone else.

To be fair, they say the approach should go the other way (slide 27) and that every employee should periodically ask what their manager would do to keep them on if they gave their two weeks. Later in the slides, they say that interviewing with other firms while working for Netflix is not a sign of disloyalty, but a good way to discover your market value, just make sure you don’t reveal any corporate secrets. (slide 108)

In slide 38, they admit working for them is not for everyone. They focus on results, so you don’t get an A for effort.

Where things get interesting is around slide 43. This is where they talk about why they are so focused on only keeping the most talented people. They note how companies often start curtailing freedom as they get bigger and more complex. Companies will add processes, but Netflix says that is only a short term solution because they lose their ability to be flexible (slide 51-61) in the face of change.

The solution is to increase the level of talent in your organization faster than complexity, that way you have self-disciplined, creative people working for you who don’t require tons of processes to keep them reined in.

This is the part I felt was most applicable to the arts. The conversation these days focuses on how inflexible arts organizations are at responding to the changing operating environment. Yet we have some of the most talented, creative people working for us. Small arts groups are nimble, but as they grow and become established, they generally seem to become less flexible. The size and desire for job stability by the employees has frequently been identified as prime culprits.

But according to Netflix you can have growth, organizational flexibility and job stability, so perhaps it is the processes that are to blame.

The next slide was the one that intrigued me most:

not so creative

 

That last line implying it is better to be flexible enough to recover from a problem rather than having rules to prevent them really caught me off guard. And in the slides that follow (63-71) they give examples of good and bad processes and discuss how their famous “take whatever vacation time you want” policy came into being. (Slide 67 is essentially the thesis)

But the idea that it is better for creative environments to take errors in stride and move past them echoes the oft expressed idea that artists and arts organizations shouldn’t fear making mistakes and taking risks because it is integral to self-development.

There are some interesting slides on employee relations, providing context rather than attempting to control (81-87). I don’t want to get into summarizing that because I wanted to tackle their compensation policy.

Their philosophy is that the compensation for each person is individual and they should be paying top market price for that person. And that they shouldn’t wait until an annual review to award an increase in compensation if they realize they are not paying top dollar, they should do so immediately.

Compensation is not dependent on Netflix success.  (96-104) They are against giving raises based on job title (what are all other marketing directors getting? Not all people with that title are of the same quality), or giving across the board percentage raises, or practicing internal parity (everyone in the department/seniority get paid the same).

For Netflix, monetary compensation is everything. I imagine that is because they are hiring people who are both very talented and motivated by the idea monetary compensation is everything.

For arts organizations, it is probably possible with some thought to find non-monetary rewards that motivate employees along the same philosophical lines utilized by Netflix. Perhaps flex time, access to facilities and supplies to exercise their creativity, use of organization owned housing for out of town guests at Christmas, etc.

Given the idea that compensation level is personal to each individual, the opportunities provided to each person may be different. An administrator and a receptionist may end up making the same salary because the administrator values being able to use the ceramic studio to create works they can sell over being paid more.

If you subscribe to their philosophy that A level results for B level effort gains you greater responsibility and compensation that will allow you to grow within the company, then a receptionist who has made great contributions could be promoted to the marketing department.

But then you potentially run into the area that takes the most courage–letting go of a mediocre producer in the marketing department. If there are a couple of stars in the marketing department who have the potential of heading up a new endeavor that will earn more revenue, that’s great, shuffle them off to better things. But you might as easily need to let someone go to get the best talent into marketing.

Netflix philosophy assumes everyone working for them is motivated to advance. I don’t recall if they covered this in the slides or the article, but I suspect if someone declined to be promoted, they might be viewed as too timid for the company’s ambitions and content to invest B effort to generate A work.

This may be just as true for an employee of an arts organization, but much more difficult to discern because the person could value the work/life balance afforded by their position so they can spend time with family or artistic pursuits. You might never find someone who can produce as well as they can working 25 hours a week and they may stick with you for the next 10 years. It can be tougher to discern in the arts and tougher to find the resolve to cut mediocre people loose.

But I suppose allowing for employee work-life balance is why Netflix has the very liberal “no-vacation policy” vacation policy. They probably understand that those needs are just as individual as compensation.

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Caring, Rather Than Money, Makes The World Go Round

There was a Slate article today covering research on motivating employees that seemed well-aligned with the non-profit work environment. The research essentially verifies the importance of providing recognition and a sense of meaning to employees.

Researchers found that small gifts, rather than money, motivated people to work harder. They told one group of workers they would receive 7 euros more in pay than they had been promised when they were recruited. Another group was given a gift wrapped water bottle worth 7 euros and the control group was given no bonus. The cash bonus didn’t inspire any improvement, but those receiving the bottle were 25% more productive than those in the other two groups. The article notes that this increase in productivity more than paid for the 7 euro expenditure.

(my emphasis)

It’s not that the workers particularly loved their bottles—in fact, in a separate experiment in which catalogers were offered the choice between a bottle versus 7 euros, 80 percent took the cash (and still worked a lot harder). Rather, it was the thought that counted, and simply handing out a few more euros hardly takes much thought. Even offering the option of a gift showed that the employer cared.

An intriguing final version of the experiment underscored the importance, in the eyes of the employees, of the thought and effort bosses put into their gifts. This time, the cash was delivered as a 5-euro note folded into an origami shirt and a 2-euro coin with a smiley face painted on it. The origami money-gift generated the highest increase in productivity of all…

The study isn’t without its limitations. It’s hard to imagine that the average Wall Street trader would work harder for a pink Cadillac than a six-figure bonus. The motivational effects of cash surely become more important when the stakes get higher, and gifts probably work best when tailored to the particular set of employees. That’s how you really show you care.

And that, more than gifts versus cash, is really the study’s takeaway. Many employees toiling away in stores, factories, and cubicles are desperate for a sense of meaning in their work lives. Even the smallest gesture of kindness that shows they’re part of an organization that actually cares can give them purpose—and that leads to motivation.

It is widely recognized that people who work in non-profits do so because they valued the purpose and meaning they find in their work. Invoking the obvious disclaimer that it shouldn’t be a substitute for paying people a living wage, a boss providing some validation that what motivates that employee is valued and recognized can keep that person energized.

It probably isn’t a coincidence that the gifts that exhibited the most effort on the bosses’ part elicited the strongest effort on the employees’ part. For all the technology that may separate us, the work environment is still a communal experience and each person wants to know that the others are expending effort and thought on their behalf.

In many respects, this goes back to the post I made last week about the early warning signs that things are amiss with your company. When the board, upper management and lower echelons are each convinced the others are invested and working hard to keep the organization viable, that knowledge permeates that whole organization without anyone giving voice to that fact.

And the absence of that unity will begin to manifest itself in some intangible way as well.

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What If They Don’t Want To Be An Executive Director?

On the Harvard Business Review blog site, Anne Kreamer asks “What If You Don’t Want to Be a Manager?” (h/t Daniel Pink) where she talks a little about the alienation one might feel moving from being a producer of material to a manager. While she talks about an experience in a corporate environment, it was easy to see the same situation cropping up in the arts when someone moves from creating content to producing revenue reports and reviewing labor laws.

One of the options Kreamer suggests, other than leaving the company and striking out on your own, revolves around changing the existing work environment. It was her last two sentences that resonated with me (thus my emphasis).

This is something more companies need to address. To remain globally competitive, organizations need to devise innovative ways to encourage and reward creativity. The unorthodox titles embraced by start-ups — directors of fun, ministers of information — can seem ridiculous, but the emphasis on improvising new ways of doing business is important. Furthermore, research conducted by Office Team found that 76% of employees did not want their boss’s job. If employees are no longer responding to the old carrots, it’s time for companies to establish new means of rewarding talent.

This reminded me of the Daring to Lead and Ready to Lead reports I had written on in the past that reported young arts leaders were chomping at the bit to gain greater responsibility in their arts organization, but didn’t necessarily want to assume an executive role.

It got me to thinking that while there is a lot of discussion about exploring new business models for arts organizations like the B Corporation and L3C, maybe there needs to be a corresponding discussion about changing arts job descriptions so that people actually want to assume the roles.

Two issues that seem to rise to the top for executive directors is work-life balance and that the position seems 75% about fundraising and increasing. It may be time to institutionalize the idea that marketing and development aren’t the sole province of those departments by spreading the responsibility around in job descriptions.

I have read a lot of criticism of Michael Kaiser’s ideas, but I have never seen anyone say he is wrong when he advocates for paying attention to the interests of potential donors and connecting them with your corresponding needs rather than viewing them as the source of a lot of money to answer the need you have prioritized.

With the proper training and expectations declared at the outset, marketing, education and artistic staff could take a more proactive role in identifying, engaging and meeting with donors than they do at present. Hopefully freeing the executive director to balance their personal and professional lives, improve their job satisfaction, connect back with the parts of the organization that excite them, and perhaps encourage others to crave their position.

The same can obviously be done with marketing where development, education and artistic, etc. are more active in expressing and advancing the organizational message.

I think people are already cognizant of this interdependent need based on a Twitter exchange between Adam Thurman, Howard Sherman and others this past September.

devmarketing1
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Passion About Your Work Is Hard Work

Apropos of my post a few weeks back about people thinking creativity as a lightning strike gift rather than a process of work over time is a piece on Harvard Business Review blog site in which the author, Cal Newport, makes a similar observation about the idea one should follow their passion when looking for a job.

Newport notes that following ones passion has become common career advice and includes a Google N-Gram charting the explosive rise of the phrase in print use during the 2000s.

“Why is this a problem? This simple phrase, “follow your passion,” turns out to be surprisingly pernicious…The verb “follow” implies that you start by identifying a passion and then match this preexisting calling to a job. Because the passion precedes the job, it stands to reason that you should love your work from the very first day.

It’s this final implication that causes damage. When I studied people who love what they do for a living, I found that in most cases their passion developed slowly, often over unexpected and complicated paths. It’s rare, for example, to find someone who loves their career before they’ve become very good at it — expertise generates many different engaging traits, such as respect, impact, autonomy — and the process of becoming good can be frustrating and take years.

The early stages of a fantastic career might not feel fantastic at all, a reality that clashes with the fantasy world implied by the advice to “follow your passion” — an alternate universe where there’s a perfect job waiting for you, one that you’ll love right away once you discover it. It shouldn’t be surprising that members of Generation Y demand a lot from their working life right away and are frequently disappointed about what they experience instead.”

The arts career path has long had a “paying your dues” period of near slavery labor for low or no pay internship followed by successfully transitioning to a near poverty level pay. I joke, but only because I don’t want to confuse the poor treatment many entry level people are subject to with the genuine need to actually go through an unsatisfying process of improving your abilities.

The dream of being discovered and making it big is what causes many to pursue a career in the arts. The fact that there are some who can make it big with no apparent effort is something of a plague on the arts industry.

Still for many people, this dues paying process gives people a realistic view of what is expected in the arts career path and they choose to leave it.

Pursuing an arts career with its abysmal pay can be something of a blessing in disguise as part of the dues paying process. The fact we have the stereotype of the actor who waits tables shows that many creative types are picking up other skills in the process of pursuing the dream.

Of course, the benefit of this all hinges on heeding the advice of our grandparents to do everything we do well. It is easy to fall into the practice of not taking a job seriously figuring your effort doesn’t matter since you will be gone soon enough. Then when you revise your career plans, you may suddenly find that as a result of your inattentiveness no one will credit you as having paid some dues.

One of my first jobs was doing yard work which involved everything from mowing and weeding to mucking out horse stalls and polishing brass and bronze pots. I don’t think it directly prepared me for a job in the arts, (though I did end up driving a farm tractor a lot the rural arts center I worked at), it probably instilled a work ethic, taught me about a lot uncommon practices like beekeeping and gave me many problem solving abilities. (Like the time I set fire to the…erm, well I have said too much already.)

Cal Newport calls for career advice to reference the inevitable sour period before you feel inspired by your work.

In some respects, I think the arts are blessed with the stereotype of the wait staff who wants to act. Even though no one believes they will ever have to work in a restaurant to support themselves, that waiter is in our collective unconscious and can’t be exorcised. Part of us always knows that possibility exists. Some may even be motivated to pursue excellence to ensure it doesn’t happen to them.

Still more discussion of that metaphorical waiter needs to happen to make people aware that the pursuit of their passion may not come easily or as directly as they imagine.

Many performing artists would acknowledge their awareness that the pursuit doesn’t come easily since many of them start working hard at eight or nine years old. The problem is that “practice hard to be a success” has been used to motivate them for all those years and it is not a foregone conclusion, especially in relation to orchestras these days.

Arts and culture industries needs to emphasize the fact that the path to success may not be as direct as it has been represented to encourage people to think about and be open to alternative routes.

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