You hear it all the time – “I love my job. We’re like family there.” It’s true that a workplace setting may sometimes resemble a family. You spend a lot of time together. You have parties together, go out to lunch, celebrate successes. Sometimes people in the office even get nicknames like Aunt Betty.
But there are big differences between a family and a business. Here are just two: a business has the goal of making a profit. And it can choose who gets to stay and who goes. With family members, for better or worse, you’re just stuck with them.
This family mentality, while it may sound inviting to outsiders and help with employees’ morale, is actually not what you want to encourage in a workplace. Yes, you can keep your parties and celebrations and encourage good relations and positive morale among co-workers. But the overall goal is to build a high-productivity team – not a happy family.
Let’s take a look at Netflix.
Netflix has 81 million subscribers and grew its revenue from $1.2 billion in 2007 to $6.8 billion. This pioneering company has changed the entertainment industry. Its history, place in our society and future is fascinating. You can read all about it in the New York Times Magazine article this past weekend, “Can Netflix Survive in the New World It Created?”
But there was a point early on when the company’s survival was in question. In 2001, after the internet bubble burst, Netflix had to lay off 50 of its 150 employees, cutting its staff by one-third. And what happened? The people who were left had to work harder, but were actually happier.
Founder and CEO Reed Hastings and former head of HR Patti McCord thought it was because they “held onto the self-motivated employees who assumed responsibility naturally.” They said office politics disappeared overnight.
Since then the company strives to maintain what Hastings calls its “high performance” culture. A lot of companies pay lip service to that value, but at Netflix, they mean it.
Netflix captured its culture in a slideshow the company produced in 2004. (And that has been viewed 14.5 million times.) This 124-slide, simply produced show includes the company’s philosophy of hiring, And firing.
“Like every company we try to hire well.”
“Unlike many companies, we practice: adequate performance gets a generous severance package.”
“We’re a team, not a family. We’re like a pro sports team, not a kids’ recreational team. Netflix leaders hire, develop and cut smartly, so we have stars in every position.”
The analogy of the kids’ recreational team versus the pro sports team is perfect to capture the mentality I’ve seen so often in my practice with GlassRatner. I mention a few stories in my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.”
There was the company where the CEO’s grandmother was on the payroll, but whose primary responsibility seemed to knit the CEO socks. There was the beloved “Aunt” Tess who handled payroll, helping herself to the salaries of several non-existent employees every two weeks.
I’ve seen many companies that run more like a kids’ recreational team. Everyone gets a trophy and we love the ladies who brings the snacks!
But in real life, people who don’t perform get cut from the team. And the job of CEOs and senior management is to field the best team possible. Netflix does that early on by recognizing mediocre talent and paying them to get off the team.
Zappos has a similar philosophy for cutting people quickly who aren’t going to be the best team members. They famously use “The Offer,” giving new employees the opportunity to receive $2,000 to leave rather than starting the job.
Last year, Zappos had a large increase in turnover when 18 percent of the company took buyouts, an extension of “The Offer.” Zappos was unfazed, according to this article in The Atlantic, “Why Are So Many Zappos Employees Leaving?”
“We have always felt like however many people took the offer was the right amount of people to take the offer, because what we really want is a group of Zapponians who are aligned, committed, and excited to push forward the purpose and vision of Zappos.”
That’s the kind of team you want to build. A pro sports team. Team members who don’t perform can and will be cut.