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How Big a Problem Is Netflix’s ‘Culture of Fear’?

Netflix is a company whose unsentimental culture of firing underperforming employees has “unsettle[d] the ranks,” according to the Wall Street Journal’s lengthy, detailed piece published Thursday.

But as in-depth as it was, the Journal’s 4,500-word story lacked some context. Namely: How happy are Netflix employees in general compared with other companies? And, more to the point, is its approach to culling the staff — which Netflix has fully disclosed for years — a problem for the business?

Yes, Netflix’s practice of quickly terminating employees viewed as not pulling their weight, as well as the open post-mortems in the wake of firings, comes to a shock to some new hires. (Forms of the word “fear” appear eight times in the WSJ piece.) But data shows that Netflix employees are, overall, as satisfied as those at other media companies — and on some factors, like pay, they’re happier.

According to more than 800 anonymous employee reviews on company-rating website Glassdoor, Netflix has an approval rating of 3.7 out of 5, above the Glassdoor average of 3.4 across 830,000-plus companies reviewed on the site. Netflix is in the same ballpark as or ahead of media companies including Disney (3.8), NBCUniversal (3.8), 20th Century Fox (3.7), WarnerMedia (3.5) and Viacom (3.4). Netflix does rank lower than big tech companies, like Amazon (3.8), Apple (4.0), Facebook (4.4) and Google (4.4).

Note, too, that Netflix’s employee rating has improved over the last several years, up from a 3.4 rating in 2013, per Glassdoor. The company currently has a high rating (4.2 out of 5) for compensation and benefits — far above the 3.1 cross-industry average. Netflix scores much lower on “work/life balance” with a 3.3 rating, but that’s just a hair below Glassdoor’s overall 3.4 for all employers.

Also, Netflix chief exec Reed Hastings currently has a relatively high approval rating — of 87% — among employees, according to Glassdoor. That’s well above the site’s average CEO approval rating of 69%. Hastings also tops other media chieftains including Disney’s Bob Iger (83%), Viacom’s Bob Bakish (84%), Comcast’s Brian Roberts (77%) and 21st Century Fox’s James Murdoch (55%).

The Journal’s well-researched report, based on interviews with more than 70 current and former Netflixers, outlines a workplace where some people come into work every day unsure about how long they’re remain employed. According to the WSJ report, many of those Netflix staffers said the culture at its worst could be “ruthless, demoralizing and transparent to the point of dysfunctional.”

But Netflix has long been up front about its policy of letting go employees who are deemed only “adequate” and says in its official corporate-culture statement that it expects staffers to give maximum effort even with the knowledge “you may not be on the team forever.”

In Netflix’s well-known “culture deck,” the company cites generous exit packages as a perk: “We generally offer a minimum of four months of full pay as a severance package, giving our ex-teammates time to find a new company.” The Netflix “keeper test” also is described in the document. “We focus on managers’ judgment through the ‘keeper test’ for each of their people: If one of the members of the team was thinking of leaving for another firm, would the manager try hard to keep them from leaving?”

Here’s more from the Netflix “culture deck,” which underscores the company’s philosophy of treating employees like members of a sports team: “We model ourselves on being a team, not a family. A family is about unconditional love, despite your siblings’ unusual behavior. A dream team is about pushing yourself to be the best teammate you can be, caring intensely about your teammates, and knowing that you may not be on the team forever.”

And, even with everything known about its allegedly cutthroat environment, Netflix remains a coveted place to work. The company jumped to the No. 1 spot on Hired’s 2018 survey of tech workers ranking the companies they most wanted to work for, up from fifth place on the job site’s 2017 survey. That put Netflix ahead of Google, Apple, Amazon, Hulu, Disney and Facebook.

The Journal’s story led with the episode of Hastings’ firing of comms chief Jonathan Friedman. The events leading to Friedman’s termination over several months may have been unusual, as he aired his explanation of using the n-word in meetings before a group of top company execs, according to the Wall Street Journal’s account.

But to put that into context, Hollywood has routinely parted ways with talent over controversial comments, and there’s an even higher sensitivity these days. Viacom fired Amy Powell as president of Paramount Television after she allegedly made racially insensitive remarks on a conference call. (Powell, who reached a settlement with Viacom over her termination, has denied the accusation, Variety reported.) NBC just canceled Megyn Kelly’s morning talk show over her “blackface” comments. This summer, Disney dismissed director James Gunn from “Guardians of the Galaxy Vol. 3” after old tweets surfaced in which Gunn “joked” about pedophilia and rape. The list goes on.

The question is how much of a liability Netflix’s corporate culture of regularly purging workers is as the company continues to grow.

Netflix’s employee base has ballooned in the last five years, more than doubling from 2,022 full-timers at the end of 2013 to 5,400 at the end of 2017. Ultimately, people looking to join the company know (or should know) the deal with the place and go in with their eyes open. A move-fast-and-break-things culture is not a fit for everyone.

Arguably, Netflix’s open practice of dismissing employees who aren’t working out should make it stronger. It may even be essential, as it continues to chase the goal of becoming the world’s biggest entertainment company.

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