Rumors about the cutthroat environment at Netflix have circulated for years, but this week the Wall Street Journal revealed just how Darwinian it gets (paywall) at the streaming video and studio company.
While the Los Gatos, California-based firm has been open some aspects of its culture—for example, a policy of letting “adequate” employees go and replacing them with stars—the Journal story reveals various harsh psychological conditions under which Netflix employees labor.
Here’s what we learned.
One of the ways in which adequate employees are kicked to the curb is by failing the “keeper test.” According to the Journal, managers must regularly review their staff members against the question: Would you fight to keep this person on your team?
But while rank-and-file employees only have to watch out for a tap on the shoulder, middle managers are also under pressure to fire someone or fail the keeper test themselves.
One former marketing executive told the Journal that when she was let go by her boss, the head of marketing, with the then-chief talent officer, Tawni Nazario-Cranzin, in the room, she asked the latter, “What could I have done differently?”
It was 2014, and the two were sitting in a New York hotel room, since the marketing executive had spent the weekend prepping for the season two launch of Netflix’s Orange Is The New Black. The Journal reports:
“She said Ms. Nazario-Cranz told her she should have fired somebody on her team faster.
“I was trying to help somebody in their career, and they maybe saw that as a sign of weakness from me,” the former executive said. She cried all the way home on her six-hour flight to Los Angeles, wondering how she would break the news to her pregnant wife.
According to the Journal, when one public relations employee talked at a department meeting about his constant fear of being fired, the response was: “Good, because fear drives you.”
That reportedly came from Karen Barragan, head of publicity for original series, who denied making the comment. She told the Journal that open discussions of awkward issues are common at Netflix, so that employees “can get better.”
When someone has behaved inappropriately or taken some ethically questionable action, they are asked to “sunshine” the incident in front of a group of their peers. The Journal described this as “Netflix lingo for an apology or act of transparency in front of colleagues.”
The story describes one event involving the aforementioned Nazario-Cranz:
Hastings was dubious when he found that the executive had taken some of her team to get their hair done and bought makeup on the company’s dime ahead of a launch event in Milan a few years ago. Mr. Hastings asked her to “sunshine” what she did in front of dozens of top executives.
Ms. Nazario-Cranz argued that if a manager took two men out for a round of golf and expensed the outing, it wouldn’t have been so controversial. “It spun into an issue of gender equity,” an attendee said.
In 2017, Nazario-Cranz was either fired by Hastings, as sources told the Journal, or, as she claims, left as part of a mutual decision, “spurred in part by a heart condition and desire to spend more time with her children.” Nazario-Cranz told the Journal she “loved” and helped create Netflix’s culture.
Not all former staffers are so enamored with the company’s emphasis on radical transparency. Reports the Journal: “A Korean employee who left earlier this year from the Singapore office said the culture encouraging harsh feedback at times reminded her of North Korea, where mothers are forced to criticize their sons in front of the public.”
One interviewee said speaking the peculiar Netflix dialect is mandatory for survival at the firm. The story outlined a few choice phrases, like “north star” and “context, not control,” which naturally caught the eye of the Journal’s in-house linguist:
It’s not enough that employees are constantly rating each other; the brutal feedback continues even after Netflix has cut the cord. It’s common practice for employees to be present in a meeting where the reasons they were fired are aired. What’s more: “Postmortem emails and meetings explaining why people got fired are viewed by some employees as awkward and theatrical when the audiences can be dozens or even hundreds of people,” the Journal reports.
Later we learn: “The emails about firings can reach hundreds of employees across multiple divisions and can be painfully specific, calling out an employee’s flaws, while inviting more questions and gossip, many employees say.”
On paper, Netflix’s policies and generous benefits give employees leeway to make decisions about business expenses and leave time, part of the company’s “freedom and responsibility” culture. Except taking those policies at face value can apparently lead to trouble, as the Journal discovered:
Netflix announced in 2015 that it would offer its employees maternity or paternity leave up to a year, trusting employees to use their discretion on whether to take full advantage. Following Netflix’s lead, other companies expanded their own leave policies. But in recent months, after many people construed the policy as an automatic full year, Netflix executives discussed reining it in, people familiar with the situation said. The company now instructs managers to tell their employees that it’s common to take four to eight months, Netflix executives said.
Perhaps most disturbing of all, the story includes two accounts where employees did not comfort a just-fired peer, in one case because they were afraid they’d become targets if they approached a coworker who was crying as she packed up her boxes.
In another case, employees’ effort to show some camaraderie was kiboshed by senior management:
Belle Baldoza, a former public-relations manager in Singapore, got into trouble with human resources when she asked co-workers if they wanted to chip in to help out a receptionist who was fired during Chinese New Year and wasn’t eligible for severance because he worked on contract, people familiar with the incident said. Human resources officials told her such a collection was not the “Netflix way” and was “not in the best interest of the business,” the people said.
Hastings has been praised as a visionary and “miracle worker” for the brand he created in Netflix, a company now worth more than $130 billion. And the Journal story contained several quotes from people defending the company’s culture. Working at Netflix was an intense learning experience, they say, and the pay was generous. In fact, the voluntary leave rate is only 3%, far lower than the industry standard of 18%.
(The involuntary rate of departure is 8%, only 2 percentage points higher than the average for this category.)
Nevertheless, it’s impossible to see how Netflix’s culture, as described, could be sustainable. It’s also hard to imagine how building a workplace where compassion is actively discouraged will benefit Hastings’ legacy. For leaders, empathy is the new black, according to management experts.
When Quartz at Work contacted Netflix about the Wall Street Journal story, a spokesperson offered the following statement: “We believe strongly in maintaining a high performance culture and giving people the freedom to do their best work. Fewer controls and greater accountability enable our employees to thrive, making smarter, more creative decisions, which means even better entertainment for our members. While we believe parts of this piece do not reflect how most employees experience Netflix, we’re constantly working to learn and improve.”