Netflix handed out 127 slides and watched them go viral
Patty McCord helped write a PowerPoint about how Netflix managed people. Sheryl Sandberg called it perhaps the most important document ever to come out of Silicon Valley.
In the mid-2000s, Patty McCord, chief talent officer at Netflix from 1998 to 2012, sat down with CEO Reed Hastings and a small group of colleagues to write down what they actually believed about running a company. The result was a 124-page slideshow -- no animation, no music -- that laid out a philosophy so blunt it made most HR professionals uncomfortable.
When the deck was published online, it was viewed more than five million times in its first few years. A later version passed fifteen million downloads.
The deck argued that the standard tools of human resources -- annual performance reviews, retention bonuses, employee engagement programs -- were mostly theater. What Netflix wanted instead was a company that told people the truth and trusted them to handle it: unlimited vacation, expense accounts governed only by the instruction to act in Netflix's best interest, and salaries set at the top of the market without negotiation.
The hard part, McCord explains in Powerful, was the other side of that freedom. Employees who no longer fit what the company needed were asked to leave -- with a generous severance -- rather than managed sideways or kept out of loyalty. The keeper test asked managers a single question: if this person announced they were leaving tomorrow, how hard would you fight to keep them? If the honest answer was "not very hard," that told you something.
McCord's central insight was that adults can handle reality, and organizations that treat them otherwise end up paying for the pretense.