The Contented Cow Blog

Building Workplaces That Work

I just finished reading a good piece at Business Week’s Managing Channel site about the management mentality in place at Netflix. The hard charging DVD rental and online distribution business that ran Wal-Mart off the block, and has Blockbuster on the ropes is powered by some pretty heady management thinking. Under the direction of founder, Reed Hastings, the firm has adopted some downright grown up people management practices, like…

1. Hiring really, really talented people, and then encouraging them to hire folks they’ve most enjoyed working with. That alone probably does wonders for employee retention.

2. Paying people exceptionally well, and giving them choice in how they get paid. Employees may choose, for example, how much cash vs. stock compensation they want to receive.

3. Saddling them with lots of responsibility but few rules. Professional and managerial employees, for example, decide how much time off they want to take, and they are trusted to take it whenever circumstances permit.

4. In the spirit of a true meritocracy, they lavish more cash and responsibility on those who are playing their “A game”, and honest reviews and generous severance on those who aren’t. Imagine not having to try to keep an “A player” motivated by pointing out that she got a merit increase that is .5% bigger than someone who is barely treading water.

There might be a lesson here for those of us who still think empowerment means letting employees decide which cold cuts to serve at the company picnic, or when between 10 and 10:45 AM to take their 15 minute break.

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