Wednesday, Nov 07 2018

Why Do Employees at Netflix Like Its Termination Policy?

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Why Do Employees at Netflix Like Its Termination Policy

 

Many Netflix employees extol the virtues of the company’s generous benefits package and positive corporate culture. However, one interesting aspect that often garners positive attention is actually Netflix’s termination policy.

 

If you are wondering why employees embrace Netflix’s approach to assessing whether a worker should stay or be let go, here’s what you need to know about their unique approach.

 

The “Keeper Test”

Netflix understands that to build strong teams, every member needs to provide value. As a means of determining whether an employee is meeting the needs of the business, they are subject to the “keeper test.”

 

With the keeper test, managers consider one key question: If the employee was considering leaving Netflix for another company, would I strive to convince them to stay? If the manager would answer that with a “no,” then the person is either terminated or encouraged to leave on their own.

 

The approach is designed to ensure that only “highly effective” workers are retained. Not only does it ensure that mediocre employees don’t bog down their teams, but it also motivates employees to always be at their best, as everyone is subject to the seemingly ruthless evaluation.

 

“360” Evaluations

Netflix has also employed a formal tool, known as “360,” to give everyone the ability to review anyone else in the company, including CEO Reed Hastings. Additionally, it provides every worker with insight into why any person has been let go, a critical part of the company’s transparency-focused culture.

 

Together, they help managers to determine which employees are actually worth keeping. Additionally, it even leads to shakeups at the upper levels of the corporate hierarchy, serving as a non-traditional playbook for making retention decisions.

 

Is Emulating Netflix Wise?

Ultimately, when combined, the keeper test and 360 are meant to promote objectivity when it comes to hiring decisions. It removes emotions from much of the process, as whether an employee is liked is less important than if they are effective and productive. While this can certainly be beneficial, it doesn’t mean Netflix’s model is ideal for every business.

 

In some cases, the risk of being quickly terminated can lead some to constantly fear being fired, even if they don’t make a mistake. This can increase stress and potentially harm productivity, even in top performers if they have a tendency toward anxiety.

 

Similarly, it relies on management being able to set emotion aside at all times, which isn’t something everyone can do. Further, a good employee who is well liked may be better in your company than a tremendous talent whose personality clashes with the rest of the team, something that can breed conflict and harm overall productivity.

 

However, that doesn’t mean that companies can’t learn from Netflix’s approach, particularly if there is a tendency to keep mediocre workers without just cause.

 

If you would like to learn more about effective internal policies, the team at The Armada Group can help. Contact us to discuss your questions or concerns with one of our knowledgeable staff members today and see how our workplace expertise can benefit you.