No Rules Rules: Netflix and the Culture of Reinvention Review.

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Culture

April 26, 2024

No Rules Rules: sounds and is a paradox. ‘No Rules Rules: Netflix and the Culture of Reinvention’ details the fast transformation of Netflix from DVD mail orders to instant streaming. Netflix has a unique culture by rejecting the acceptable beliefs under which most companies operate. Despite having, what seems like, a strange culture; Netflix has thrived and revolutionised the entertainment industry. From abolishing financial approvals to unlimited holidays, Netflix runs in a completely different way – one that is, arguably, more untuned with the fast-paced world. Reed Hastings, the author and Netflix Chairman and CEO, shares his leadership philosophy.

Netflix appears to operate under a substantial amount of rules, some tactical and some spelled out. However, they are ‘informal’ rules. Rather than a rules framework, managers have to be more hands-on; they discuss with their teams what type of behaviour is ‘acceptable and appropriate.’  Expenses do not need to be approved, but employees are fired if there is ‘money business.’ Hastings argued that ‘when employees realise their managers are keeping an eye on expenses, they aren’t likely to test the limits much.’

However, although Netflix’s culture is fascinating, there are some troublesome aspects. Netflix has a ‘No Vacation Policy’, popularly known as ‘unlimited vacation.’ The policy puts employees in charge of deciding when they want to work and when they want to take a break. Although that allows employees freedom and flexibility, it can undermine employee freedom. The policy can lead to a culture of no one taking a vacation, which is already so prevalent in the professional industry. However, Hastings explains where many companies that try to implement the policy go wrong, and how a little emotional intelligence can help you make it right.

However, despite the controversy, the policy has not reduced Netflix’s success. So, what’s the secret?

Hastings explains that it is down to the leaders to lead by example. ‘When you remove a policy, employees don’t know how to operate with the absence,” writes Hastings. ‘If you don’t tell them, ‘Take some time off,’ they won’t. Others will imagine they have complete freedom to behave in wildly inappropriate ways, like going on vacation at a time that causes pain to everyone else.’ He continues, “In the absence of a written policy, every manager must spend time speaking to the team about what behaviours fall within the realm of the acceptable and appropriate.”

Not every employee will have the same perception. Thus, it is pivotal for managers to communicate and set parameters consistently – Hastings uses quarterly meetings to accomplish that. Hastings writes, ‘whenever I hear stories floating around about people not taking time off, it’s time to put vacations on the agenda of a [quarterly] meeting,’ he writes. ‘This gives me an opportunity to talk about the type of environment we aspire to have and gives our leaders a chance to discuss, in small groups, techniques they use in order to achieve a healthy work-life balance for our workforce.’

Hastings argues that an ‘unlimited vacation’ policy can empower your people, increase employee satisfaction, and be a powerful recruiting tool when done right. It reduces bureaucracy and administrative costs, and, according to Hastings, it helps attract and retain top talent, ‘especially Gen-Z-ers and Millennials, who resist punching clocks.’

So, it is down to emotional intelligence: a powerful tool to use to execute policies.

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