CULTURE

MANUAL

More than 16,000,000

of downloads...
 Translated by: Airc

We seek excellence
Our culture focuses on
help us achieve
excellence

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 Aspects of our culture
1
We value the values
2
High performance
3
Freedom & responsibility
4
Context, NOT control
5
Highly aligned, loosely coupled
6
We pay the best salaries
7
Promotions & development
Many companies have
statements of values that

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Translated by: Picc
They sound good at the entrance,
such
as:
Trust
Effectiveness
Reputation
Service

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 ODEBRECHT
*In said scandal, they were involved in
corrupt practices to more than 10 governments of
Latin America. At the time, they exhibited
these values in your input:
Trust
Efficiency
Reputation
Service
(However, these values were not what was actually
valued at Odebrecht)

NETFLIX *Case adapted to the Latin American

context

Translated by: Airc

 The actual values of the
company, unlike
values that sound good ,
show who he is
rewarded, promoted or
let go

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 The real values of the company
are the behaviors and
skills that are valued in
coworkers
At Netflix, we especially value
the following 9 behaviors and
skills in our colleagues...

...which means we hire and

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 We promote people who
show
1) Criterion
• You make good decisions despite ambiguity.
• You identify the root causes and go beyond
treating the symptoms.
• You think strategically and can articulate
what you are and what you are not.
• You intelligently separate what needs to be
done now and what can wait for later.

2) Communication
• You listen well, instead of reacting quickly, so

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 you can understand better.
• You are concise and articulate when
speaking and writing.
• You treat people with respect, regardless of
their status or disagreement with you.
• You remain calm in stressful situations.

3) Impact
• You do amazing amounts of important work.
• You consistently demonstrate excellent
performance, so your colleagues can trust
you.
• You focus on getting great results instead of
the process.

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• You show a bias towards action and avoid
analysis paralysis.

4) Curiosity
• You learn quickly and with enthusiasm.
• You seek to understand our strategy, market,
clients and suppliers.
• You have extensive knowledge of business,
technology and entertainment.
• You contribute effectively outside your
specialty.

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5) Innovation
• You re-conceptualize problems to discover
practical solutions to difficult problems.
• You challenge assumptions when warranted
and suggest better approaches.
• You create new ideas that prove to be useful.
• You keep us agile by minimizing complexity
and finding time to simplify.

Translated by: Aira

6) Courage
 • You say what you think, even if it's
controversial.
• You make difficult decisions without
agonizing.
• You take smart risks.
• You question actions inconsistent with our
values.

7) Passion

• You inspire others with your thirst for

excellence.
• You care intensely about the success of
Netflix.
• You celebrate the victories.

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 • You are tenacious.

8) Honesty
• You are known for your directness and
direct style
• You are not political when you disagree with
others.
• You only say things about coworkers that
you will say to their face.
• You are quick to admit mistakes.

9) Selfless
• You're looking for what's best for Netflix,
rather than what's best for you or your

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 group.
• You have no ego when you look for the best
ideas.
• You make time to help your colleagues.
• You share information openly and
proactively.

Aspects of our culture

1
We value the values
2
High performance
3
Freedom & responsibility
4
Context, NOT control
5
Highly aligned, loosely coupled

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6
We pay the best salaries
7
Promotions & development

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 Imagine if every person in
Netflix is someone who
respect and learn from...
A great workplace has
Awesome Colleagues
A great workplace is not coffee, benefits

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 luxurious, sushi lunches, grand parties
or nice offices

We do some of these things, but only if

They are efficient at attracting and retaining
awesome colleagues

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 Like all companies,
we try to hire well
Unlike many companies,
we practice:

Adequate performance achieves

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 generous severance package
We are a team , not a family

We are like a professional sports team ,

not a children's recreational equipment

Netflix leaders hire, develop and

they disengage intelligently , so

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 we have stars in every position

The Maintain Test

managers use:
If one of my collaborators
He told me that he is leaving for a similar job,

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 Would you fight to keep it on Netflix?

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 People who fail the test should
get generous compensation now, to
that we can open a space to find a
star for that role

The Maintain Test

managers use:
If one of my collaborators ,
He told me that he knows what, for a similar job
Would you fight to keep it on Netflix?

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 Honesty ALWAYS
As a leader, no one on your work team
You should be surprised by your views.
Honesty ALWAYS
Candor is not just the responsibility of a
leader. Periodically you should ask your
manager: "If I told you I was leaving, how hard would it

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 be
Would you work to change my opinion?"
We are all responsible for
ensure that we live
Our values
"Question actions incompatible with our
values" is part of Courage

Similar to the commitment to the honor code: "No

I will not lie, nor cheat, nor steal, nor tolerate those who

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 they do it"

The sports team metaphor

professional is good, but
imperfect
Sports teams have a fixed number
of positions, so the players
They are always competing with each other for one
of places in the starting team

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 Corporate team
The more talent we have,
more we can achieve, so our people
they help each other all the time

The internal behavior of "murderer" or

"sink or swim" is rare and not tolerated

We help each other

to be great

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 Isn't loyalty good?
What about people
workers?
What about idiots
bright?

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 Loyalty is good
• Loyalty is good as a stabilizer
• People who have been stars for us and who have
had a bad run get a short pass because we think
they are likely to shine for us again.
• We want the same thing: if Netflix has a bad streak,
we want people to stay with us
• But unlimited loyalty to a shrinking company, or an
ineffective employee, is not what it's about.
Hard work: not relevant
• We don't measure people by the number of hours

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 they work
• We care about doing great work
• Sustained performance at an acceptable level,
despite much effort, generates a generous
compensation package
• Sustained excellent performance, despite minimal
effort, is rewarded with more responsibility and
excellent pay.
Brilliant Idiots
• Some companies tolerate them

• For us, the cost of effective teamwork is too high.

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 • Diverse styles are fine, as long as the person
embodies our 9 values

Why are we so
insistent on the high
performance?
In procedural work, the best
They are 2 times better than average

In creative/inventive work, the best

are 10 times higher than the average, for

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 which are a great advantage in creating
the best effective teams

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 Why are we so
insistent on the high
performance?
A great workplace has
Awesome Colleagues
Our high performance culture
not suitable for everyone
• Many people love our culture and stay a long time
– They thrive on excellence, sincerity and change
 – Others will be disappointed if we have to let them go, but
they will still retain warmth and mutual respect for the
company
• Some people value job security and stability over
performance, and they don't like our culture
– They feel afraid on Netflix
– They become bitter if we let them go, and feel that we are a
political place to work
• We're getting better at attracting only the former and helping
the latter realize we're not right for them.

Translated by: Aira

Aspects of our culture

1
We value the values
2
High performance
3
Freedom & responsibility

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 4
Context, NOT control
5
Highly aligned, loosely coupled
6
We pay the best salaries
7
Promotions & development
The rare responsible person
• Enthusiastic
• Self conscious
• Disciplined
• In search of continuous improvement
• Act like a leader
• Does not wait to be told what to do
• Pick up trash from the floor
 Responsible people
They thrive in freedom and are
worthy of freedom
Our model is to increase the freedom of
employees as we grow,
instead of limiting it...

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 ...to continue attracting and nurturing
innovative people, so that we have
more chances to sustain our success

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 Most companies
They restrict freedom as
they get bigger

Freedom of
Equipment

Size of the company

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 Why do most companies
restrict freedom
and become bureaucratic as
do they grow?

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The desire for greater impact
positive creates growth

Translated by: Airc

 Growth increases
complexity

Complexity

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 Growth is also often
reduces talent density

performance

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 Chaos emerges
% Employees
High
performance

Chaos and errors increase

here: businesses have become
too complex to function
informally with this level of
talent
Complexity

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 The process emerges to stop the
chaos

No one likes
process, but it
feels good
Procedures
compared to the pain of
chaos
"Time to grow" becomes the
mantra of professional
management

The focus on the

process
generates more
talent

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 % High employees

The process brings strong results

short term
A highly successful process-driven company:
• With a leading share in its market
• Minimal thought required
• Few mistakes made - very efficient
• There are few curious nonconformist innovators left
• Highly optimized processes for the existing market
• Efficiency has surpassed flexibility

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 Then the market changes
• Changes in the market due to new technologies or
competitors or business models
• The company cannot adapt quickly -Employees are
extremely good at following existing processes,
and adherence to the process is in the value
system
• The company usually dies painfully in irrelevance

Translated by: Aira

There seem to be three bad options.

1.Stay creative while you are small, but you will have
 less impact
2 .Avoid the rules as you grow and suffer the chaos
3 .Use processes as you grow to drive efficient
execution of the current model, but this will weaken
creativity, flexibility, and the ability to thrive when
your market eventually changes.
A fourth option
Avoid chaos as you grow with increasingly high-
performing people - not rules
- Continue to function informally with self-discipline
and avoiding chaos
- The part of functioning informally is what allows and
attracts creativity

The key: increase the density of the

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 talent faster than
complexity grows

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 Increase talent density

• Best compensations on the market

• Attract high-value people through the freedom to have a big impact
•
Be demanding with
% High employees
performance

high

performance culture

Minimize the growth of

complexity

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 • Few big products versus many small ones
• Eliminate Distracting Complexity
• Beware of efficiency optimizations that increase complexity and rigidity

Note: sometimes long-term simplicity is achieved only

through bursts of complexity to rework current systems

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 With the right people,

Rather
a culture of adherence to the process,

We have a culture of creativity and

self-discipline, freedom and responsibility

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 Is it absolute freedom?
Are all rules and processes bad?
Freedom is not absolute

Like "freedom of speech"

there are some

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 limited exceptions to
"freedom at work"

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 Two Types of Necessary Rules
1.Prevent irrevocable disasters
- Accounting is bad
- Hackers steal our customers' credit card
information
2. Moral, ethical and legal issues
- Dishonesty, harassment are intolerable

For the most part, however, the

quick recovery is the model
correct
• Fix problems quickly

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 - High performing people make very few mistakes
• We are in a creative and inventive market, not a
safety-critical market like medicine or nuclear energy
• You may have heard that preventing the error is
cheaper than fixing it
- Yes, in manufacturing or medicine, but...
- Not so in creative environments
"Good" versus "bad" process
- The "good" process helps talented people do more things:
- Inform others when you are updating code.
- Spend within budget so you don't have to coordinate all
spending decisions between departments.
- Periodic strategy and context meetings scheduled.

• A "bad process" attempts to avoid recoverable errors:

- Get pre-approvals for a $5k spend.
- 3 people to sign on the advertisement.

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 - Permission required to hang a poster on a wall. - Multi-level
approval process for projects.
- Get 10 people to interview each candidate.

Slip Rule
• "Bad" processes tend to slip:
-Error prevention sounds great

• We try to get rid of the rules when we can, to

reinforce the point

Example: Policy and monitoring

Netflix Vacation

Until 2004 we had the standard model

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 of N days per year
Meanwhile…
We all work online some
nights and weekends, responding
emails at odd hours,
spending some afternoons in time
staff and taking good vacations
An employee pointed out...
We do not record hours worked by
day or week, so why
we are tracking the days of
holidays per year?

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 We realized…
We should focus on what the
people, not how many days they worked

Just as we do not have a policy of

workday from 9 am to 5 pm, no
we need a vacation policy

Policy and monitoring

Netflix vacation
"There is no politics or follow-up here"

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 Policy and monitoring
Netflix vacation
"There is no politics or follow-up here"

There is also no clothing policy on Netflix,

but no one comes to work naked

Lesson: You don't need policies for everything

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 No vacation policy
does not mean

No Vacation
Netflix leaders set good examples by
take a big vacation - and come back
inspired to find great ideas

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 Another example of freedom and
responsibility ...
Most companies have policies
complex about what you can spend, how
he travels, what gifts he can accept, etc.

In addition, they have complete departments

to verify compliance with these policies

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 Netflix Policies
for expenses, entertainment, gifts
and trips:
"Act in the best interest of
Netflix"

(7 words long)

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 "Acting in the best interests of
Netflix" generally means .
1 .Spend only what is necessary, and it is worth the
work
2 .Travel as if you were traveling with your own
money
3 .Disclose non-trivial gifts from suppliers
4 .Take Netflix only when it is inefficient not to take it,
and inconsequential
- "take" means, for example, printing personal documents at
work or making personal calls on the work phone:
inconsequential and inefficient to avoid it

Translated by: Aira

 Freedom and responsibility
• Many people say that you can't do it at scale
• But since we went public in 2002, which is
traditionally the end of freedom, we have
substantially increased talent density and
employee freedom

Summary of
Freedom and Responsibility:

As we grow,

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 We minimize the Rules

Inhibits chaos with high-ranking people

performance

Flexibility is more important

that long-term efficiency

Aspects of our culture

1
We value the values
2
High performance

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 3
Freedom & responsibility
4
Context, NOT control
5
Highly aligned, loosely coupled
6
We pay the best salaries
7
Promotions & development

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 If you want to build a boat,
you won't get the people
to collect wood, divide the
work and give orders.
Instead, teach them to long for
vast and endless sea

Antoine de Saint-Exupéry
Author of The Little Prince

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 The best managers discover how to get
excellent results establishing the context
appropriate, instead of trying to control his people
Context, not control
Provide the insight and understanding to enable decisions
correct

Context (host) • Metrics

• Assumptions
• Strategy

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• Goals
• Clearly defined roles
• Knowledge of the challenges
• Transparency in decision
making

Control (avoid)
• Top-down decision making
• Management approval
• Committees
• Planning and process valued
more than results

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 Good context
• Link to company/functional objectives
• Relative priority (how important/how time sensitive)
- Critical (must happen now), or...
- Good to have (when you can get to it)
- Level of precision and refinement
- No errors (debt management, etc.), or...
- Pretty good/can fix bugs (website), or...
- Crashed (experimental)
• Key stakeholders
• Key metrics/definition of success
Managers: when one of your talented people
does something stupid
don't blame him

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 Instead,
ask yourself what context
you failed to establish
Managers: When you are tempted to "control"
to your people, ask yourself what context they might
set in place

Are you articulating and inspiring what

enough about the objectives and
strategies?

Why manage
through context?
High-performing people will make a

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 better job if you understand the context

Invest in context
This is why we invest in training
of new employees, we hold meetings
department frequenters, and why we are so
open internally about strategies and results.

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 Exceptions to "Context, not
control"
• Control can be important in an emergency
- There is no time to adopt a long-term capacity
development vision
• Control can be important when someone is still
learning their area
- It takes time to grasp the necessary context
• Control can be important when you have the wrong
person in a role
- Temporarily, without a doubt

Translated by: Aira

 Aspects of our culture
1
We value the values
2
High performance
3
Freedom & responsibility
4
Context, NOT control
5
Highly aligned, loosely coupled
6
We pay the best salaries
7
Promotions & development
Three working models in
corporate team
1. Tightly coupled monolith
2. Independent silos

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 3. Highly aligned, loosely coupled

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 1. Monolith closely
coupled
• Senior management closely reviews all tactics
• Lots of n-department purchasing meetings
• Keeping other internal groups happy has the same
precedence as happy customers
• Rebels exhaust themselves trying to innovate
• Highly coordinated through centralization, but very
slow, and the slowness increases with size

Translated by: Aira

2. Independent silos
• Each group executes its objectives with little
 coordination
-Everyone does their own thing
• Work requiring coordination decreases
• Disconnection and suspicions between different
departments
• It only works well when the areas are independent
- For example, General Electric aircraft engines and
blenders

#3 is Netflix's choice

1. Tightly coupled monolith

2. Independent silos
3. Highly aligned, loosely coupled

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 3. Highly aligned, slightly
coupled
• Highly aligned:
- Strategies and objectives are clear, specific and widely understood
- Team interactions focused on strategy and objectives, rather than
tactics
- Requires a large investment in management time to be transparent,
articulate and perceptive
• Loosely coupled:
- Minimal cross-functional meetings, except to align with objectives
and strategy
- Trust between groups in tactics without anticipating/approving each
of them, so that groups can move quickly
- Leaders who proactively approach coordination and ad-hoc
perspective, as appropriate
- Late Tactics Needed to Increase Lineup

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 The effectiveness of highly teamwork
aligned and loosely coupled depends on the
high performance of people and
the good context

The goal is to be
Big, Fast and Flexible

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Aspects of our culture
1
We value the values
2
High performance
3
Freedom & responsibility
4
Context, NOT control
5
Highly aligned, loosely coupled
6
We pay the best salaries
7
Promotions & development
Pay the best salaries on the market
is the core of the
High Performance Culture
An exceptional employee does more and costs
less than two suitable employees

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 We strive to have only employees
exceptional

Three Tests to Identify

to an Exceptional Person
1. What could the person get elsewhere?
2. What would we pay for the replacement?
3. What would we pay to support that person?
- If they had a bigger offer elsewhere

Have Good Criteria

• The goal is to keep each employee at the top of
the market
- Pay them more than anyone else would
- Pay them as much as a replacement would

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 cost
- Pay them as much as we would pay to keep
them if they had a higher offer from somewhere
else

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 Titles are not very useful
• Many people have the title of "Major League
Pitcher" but not all are equally effective
• Likewise, all people with the title "Senior
Marketing Manager" or "Director of Engineering"
are not equally effective.
• So, the art of compensation answers the Three
Tests for Every Employee

Translated by: Aira

Annual Compensation Review

• In many companies, when employees are hired,
market compensation is applied
 -But at the time of compensation review, stop applying!
• At Netflix, market clearing always applies:
- Essentially, top-of-the-market compensation resets each
year for high-performing employees
- In the annual compensation review, the manager must
answer the three market tests for each of his employees.

No fixed budgets
• There are no centrally managed "surge
groups" each year
• Instead, each manager aligns his people to the
top of each year's market: the market will be
different in different areas.

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 Compensation throughout
time
• Some people will move up quickly because
their value in the market is rising rapidly, due
to strengthening of their skills and/or high
demand in their area.
• Some people will stay in the same role
because their market value has remained
constant:
- Depends partly on inflation and the economy
- We will always guarantee that it is at the top of the
market in which it operates.

Translated by: Aira

 Compensation does not depend on
Netflix hit
• Whether Netflix thrives or falters, we pay at the top
of the market - meaning sports teams with losing records
still pay the market rate for talent
• Employees can choose how much they want to
tie their financial destiny to Netflix by deciding
how many Netflix shares they want to hold

Poor compensation practices

• Manager sets salary at n-percentile of
compensation data linked by title
- The problem of the "Major League Pitcher"
• The manager is concerned with internal parity
rather than external market value.
- Fairness in compensation is faithful to the market

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• The manager gives everyone a 4% raise
- Very unlikely to reflect the market

When the top of the market

compensates well...
• We will rarely counter with increased
compensation when someone leaves
voluntarily because we have already moved
the compensation to the maximum for that
person.
• Employees will feel that they are paid well
relative to their other options in the market

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 Versus traditional model
• The traditional model is good the previous year
earns a raise, independent of the market - The
problem is that employees can be underpaid or overpaid
relative to the market, over time
- When wages are underpaid, employees change
companies to take advantage of the market
- When overpaid too much, employees become trapped in
their current company.
• Consistent market-based payment is a better
model

Translated by: Aira

Employee success
• It is quite ingrained in our society that the size
 of the salary increase is the indicator of how
well one did the previous year - But for us the
other factor is the external market

• Employee success remains an important factor

in compensation because it influences market
value
- In particular, how much we would pay to support the
person

It is good that each employee

understand your market value
It's a healthy idea, not a traitor, to understand
what other companies would pay you by
interviewing and talking to colleagues at other
companies.
- Talk to your manager about what you find in terms of

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 compensation.
- Please be aware of confidential company information.

Efficiency
• A large salary is the most efficient form of compensation
- The most motivating for any given spending level
- No bonuses, no free stock options, no philanthropic match
- Instead, put all that spending into big salaries and give people the
freedom to spend their salaries however they think best

- Health Benefits: Employees Get $10k Per Year

- If they choose Netflix plans that are less than $10k, they keep the
difference
- If they don't need benefits from us, they keep $10k
- CEO or receptionist - everyone gets $10k per benefits

Translated by: Aira

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 Optional options
• Employees get the best salary on the market,
and can then request to exchange the salary
for stock options
• Some people take all the cash, others ask for
half of their compensation options
- They are both fine
• This is consistent with freedom and
responsibility, and allows employees to decide
how much risk/reward they are comfortable
with.

Details about options

Actions
• Options are fully guaranteed and are 10-year exercise options,
regardless of how long they remain on Netflix

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• These fully vested options vest monthly at the current stock price, so
employees get an average price of their exercise price

• These options cost employees less than half of what those options
would cost on the open market, and they come from a pre-tax salary,
so it's a great deal.

• Employees can change their options request annually

• Options become valuable only if Netflix stock rises

Translated by: Aira

No irrevocability or
deferred compensation
• We don't want managers to "own" their team - all
compensation is fully set centrally.
• We want managers to be accountable for creating a great
place to work and pay at the top of the market

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• Employees are free to leave us at any time, without
penalty, but almost all stay
• Employees stay because they are passionate about their
jobs and are well paid, not because of a deferred
compensation system.

No ranking against others

employees
• We avoid "top 30%" and "bottom 10%"
rankings among employees
• We don't want employees to feel competitive
with each other.
• We want all of our employees to be the "top
10%" relative to the global candidate pool
• We want employees to help each other, and
they do

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Aspects of our culture
1
We value the values
2
High performance
3
Freedom & responsibility
4
Context, NOT control
5
Highly aligned, loosely coupled
6
We pay the best salaries
7
Promotions & development
In some periods of time, in some groups,
there will be many opportunities and growth in
Netflix

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 Some people, both luckily
as for talent, they will have a
extraordinary professional growth
Baseball Analogy: Passing
minor to major leagues
• Very talented people tend to get promoted,
but it's only true for very talented people.
• A little luck in terms of what positions open
up and what the competition is
• Some people move to other teams to get the
opportunity they want
• Great teams keep their best talent
• Some minor league players continue to play
even if they don't get promoted because they
love the game.

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 Netflix doesn't have to be for
everyone
life
• At some times, in some groups, there may not
be enough growth opportunities for everyone
• In which case, we should celebrate someone
leaving Netflix for a bigger job we didn't have
available to offer them
-If that is what the person prefers

Two Necessary Conditions for

the promotion
1. The job has to be big enough:
-We may have an amazing manager of something, but we
don't need a director because it's not big enough
- If the amazing manager left, we would replace him with a
manager, not a director

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2. He has to be a superstar in his current position:
-You could get the next level of job here if you apply from
abroad and we know your talents well
-You could get the next level of work at a company that knows
your talents well

Synchronization
• If a manager would promote a person to
prevent them from leaving, the manager
should promote them immediately instead of
waiting.
• Both tests still need to be passed
1. Big enough job
2. Superstar in current position

Development
• We develop people by giving them the
opportunity to develop, surrounding them

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 with amazing colleagues and giving them
great challenges to work on
- Mediocre colleagues or unchallenging work
is what kills the progress of a person's skills

Professional "planning"
it's not for us
• Formalized development is rarely effective,
and we don't try to do it
- for example, assigning mentors, rotating
around a firm, multi-year career path, etc.

We support improvement
staff
- High performers generally improve

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 themselves through experience, observation,
introspection, reading, and discussion.
- As long as they have awesome colleagues and great
challenges to work on
- We all try to help each other grow
- We are very honest with each other

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 We want people
manage your own
professional growth and
don't trust a corporation
to "plan" their careers

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Your economic security is based
on your skills and reputation

We strive to provide a
constant opportunity to grow
surrounding yourself with great talent

Aspects of our culture

1
We value the values
2
High performance

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 3
Freedom & responsibility
4
Context, NOT control
5
Highly aligned, loosely coupled
6
We pay the best salaries
7
Promotions & development

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 We continue to improve our
culture as we grow

We try to improve in
pursuit of excellence

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 If you want to recruit talent
100% online.

SCHEDULE YOUR FREE DEMO

WITH US AT:
www.airavirtual.com
 Tra by:
nsla Qirc
ted

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