What happens when you eliminate rules, policies, and procedures?
When the Netflix culture deck was first released, it created a phenomenon. Never before had work culture, recruiting, and compensation been approached with such innovative thinking. Companies everywhere began adopting these revolutionary ideas, which emphasized providing more freedom for employees.
Patty McCord co-created that presentation with Netflix CEO Reed Hastings, and more importantly, she shaped the unusual “no rules culture” that enabled Netflix to thrive during her 14 years as chief talent officer. She is the author of Powerful: Building a Culture of Freedom and Responsibility.
I recently interviewed McCord for the LEADx Leadership Show where she discussed how leaders can build their own high-performance culture that meets the challenges of today's rapid pace of change. (The interview below has been lightly edited for space and clarity.)
Kevin Kruse: What advice would you give to a first-time manager when she's starting out?
Patty McCord: Learn how to set context for people well. That's probably the most effective leadership trait that I've ever seen. The more you see yourself as a teacher rather than a teller or permission-giver, the more effective your team will be. The idea of context is really, really important. Who are our competitors? Where are we at? Let me go through the P&L with you and let you understand how the financials work before we talk about the budget for your department.
What feedback are we getting from our customers? Who are they? How do we know them? How do we stay in touch with them? How do we send out involvement? Just constantly keeping people informed.
The other thing that early stage managers don't do very well is they don't predict and estimate well because they just don't know. But the better you can get at putting time wrappers on things, the more effective you'll be. Because otherwise when people say, “Someday,” to five people, one of them thinks it's tomorrow afternoon, the other one thinks it's never going to happen. And if you mean by the end of the year, then nobody's on the same page.
I say, there's only one job of management. Here it is, it's one sentence: Build a great team that does amazing work, on time, with quality, and serves customers. Done.
Kruse: What are your thoughts on managing with goals and objectives?
McCord: I think it's great. I think everybody should be managed with goals and objectives and they should have timeframes and they should be really clear about what success looks like. I think that sometimes we spend more time administering those programs than we do actually accomplishing them. On all of those things, I think it would be best if we pushed it down to the local level where it was the manager's job to set goals and objectives.
Kruse: How should a small company think about setting pay scales as they’re recruiting?
McCord: I think young companies shouldn't worry about it one single iota. I think young companies should worry about what they need to get done and putting the right team of people together to do it.
All hiring should be based on starting with a problem you have to solve, and what it's going to take somebody to be great at solving it. What people will have done in their past that's going to lend expertise to solving the problem. Who the other members of the team are already so that you can hire for the gap, and some expertise that you don't have or somebody with more experience than you or somebody who wants to join the team and learn and come up to speed quickly. Those are three different types of people.
Say I'm going to pay everybody in the 90th percentile, depends on who you end up hiring to help you solve the problem. Then, when you do that, then you want to get the best person that you can to solve that problem. The junior person who wants to come in and learn from all of your senior people isn't going to be as expensive as the person who knows more about it than everybody on your team. That's why I'm saying don't get trapped in the ranges because you might overlook the right person. The other is if you look at the person who's going to most help you solve the problem, and represents the filling of a hole in your team, then you're more likely to consider someone who's not like the people you already have. It allows you to have diversity.
More and more companies are embracing a ‘freedom and responsibility’ mentality with great success. Patty McCord’s unique approach to company culture proves that to attract great employees you need flexibility, choice, and trust.