- Netflix built a corporate culture around lofty tenents like "freedom and responsibility," and "honesty."
- As an example, after firing an employee, the streaming company explains its reasons for letting the person go in an email to the employee's department (or departments), which could be hundreds of people.
- Cofounder and co-CEO Reed Hastings explained the philosophy behind those emails, and the company's culture of transparency, in his new book with Erin Meyer, "No Rules Rules: Netflix and the Culture of Reinvention."
- Hastings also published an abridged version of a post-firing email in the book.
- Visit Business Insider's homepage for more stories.
Shows like "House of Cards" and "Stranger Things" made Netflix a household name, but its corporate culture, built around "freedom and responsibility," made the company the talk of business world when it first shared its cultural philosophy in 2009.
One tenet of Netflix's culture is open and honest feedback.
"In the tension between honesty and kindness, we lean into honesty," Netflix's current culture memo says.
It's a practice cofounder Reed Hastings came to value in the 1990s through marriage counseling, which showed him the benefits of being forthright in both personal and professional relationships, the co-CEO reveals in his new book with Erin Meyer, "No Rules Rules: Netflix and the Culture of Reinvention," which was released on September 8.
"I began encouraging everyone to say exactly what they really thought," Hastings wrote, "but with positive intent — not to attack or injure anyone, but to get feelings, opinions, and feedback out onto the table, where they could be dealt with."
Case in point: After firing an employee, Netflix explains its reasons for letting the person go in an email to the employee's department (or departments), which could be hundreds of people.
Some managers Business Insider spoke with earlier this year said that they struggled with writing these emails, and how much to detail to include. One former staffer, who had written multiple "postmortem" emails, said he often tried to be generous about the reasons employees were fired, but was encouraged by human resources to be forthright.
"What was sometimes cause for debate in the company is how detailed some of those should be," the source said.
Hastings shared his point of view in the book: When it comes to professional matters, "tell the whole truth," Hastings said. "Spinning the truth is one of the most common ways leaders erode trust. I can't say this clearly enough: don't do this."
If a staffer is departing or taking time off for personal reasons — Hastings uses an example of an executive who entered rehab — it's enough to say "personal reasons." But for performance-related issues in the workplace, he said transparency is best.
"When someone is let go, everyone wants to understand why," he wrote. "What happened will eventually come out. But if you explain plainly and honestly why you've fired someone, gossip ceases and trust increases."
Hastings shared an example of a Netflix vice president who was dismissed for lacking transparency in his own communication. The VP's boss struggled with what to tell the staff, but ultimately sent a version of this email to those who worked with the exec:
With mixed emotions, I've decided to exit Jake.
Jake was an internal candidate for a promotion to a senior level executive position. While conducting due diligence for this promotion, some more information has been shared with me that Jake has not consistently displayed the qualities of a leader in all cases that we demand or expect. Specifically, it is now clear that Jake was not forthright with us around a major employee issue that impacted the business even when directly asked.
Jake made a meaningful impact over his many years at Netflix and for some, this will come as a shock. He did a lot of great work. But I'm confident that the feedback I've collected is clear and led to us needing to make this change.
As in the example above, Hastings said the post-firing emails should still be respectful of the person and recognize their contributions to the company.
He suggests managers ask themselves before sending: "Would I feel comfortable showing the person I let go of the email I sent?"
Disclosure: Mathias Döpfner, CEO of Business Insider’s parent company, Axel Springer, is a Netflix board member.
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