Deficit of corporate culture characterized by low employee morale, lack of trust, and poor leadership can significantly undermine business success, as evidenced by studies showing that companies with engaged employees are 21% more profitable and that 47% of job seekers consider company culture before applying for a role.

Corporate culture is usually described as “the way things are done around here”, but I would describe corporate culture as a shared experience with all the key elements.

Nurturing Key Elements in Corporate Culture

The most successful organizations understand that a culture comprises three key elements:

• Behaviors refer to the actions and conduct exhibited by employees at all levels within the organization. These behaviors should be consistent with and reflective of the company’s core values.
• Systems encompass the processes, structures, and frameworks that guide decision-making, communication, and collaboration.
• Practices are the day-to-day activities and routines that employees engage in to fulfill their roles and responsibilities.

All of which are underpinned by a unifying set of values.

• Values serve as the foundation upon which behaviors, systems, and practices are built. They provide a clear direction and guide the decision-making process, ensuring that all actions are consistent with the company’s mission and vision.

When these three elements are aligned and working in harmony, the result is a thriving organizational culture that drives success.

Such a culture fosters a positive employee experience that manifests itself through a sense of belonging, purpose and commitment and leads to increased engagement, productivity and innovation.

Ultimately, a great culture is the result of deliberate and thoughtful efforts to create an environment where employees can contribute to the success of the organization.

Analyzing the Netflix Case Study

Netflix’s proactive approach to addressing its corporate culture through strategic cultural transformations, transparent communication, and a focus on high performance not only revitalized its organizational culture but also played a significant role in its continued success and growth in the competitive digital media streaming industry.

Values

• Reed Hastings envisioned a highly democratic work environment at Netflix, focusing on creative autonomy and minimal bossism.
• Netflix revamped its organizational culture by emphasizing values such as teamwork, respect, and diversity, moving away from a culture that tolerated disruptive behavior and “brilliant jerks”.
• The company focused on building a culture of responsibility, autonomy, and high performance, aligning its values with the principles of “people over process”.

Behaviors

• Netflix enforced a strict zero-tolerance policy for behaviors that disrupted teamwork, fostering a more collaborative environment.
• The company recognized that the disruption caused by brilliant yet disruptive individuals far outweighed any potential benefits.

Systems

• Netflix shared information openly and broadly, allowing employees to read and comment on documents related to strategy, performance, and product testing.
• Organization adopted a rigorous hiring process, focusing on retaining only the best employees through the “keeper test,” which evaluated managers’ efforts to retain team members.
• The company encouraged employees to explore job opportunities with other companies and understand their true market value, wanting employees to stay because they were passionate about their work, not just because of compensation and incentives.

Practices

• “Company is a team, not a family” – employees at Netflix are treated like “adults”, enjoying generous pay packages, unlimited vacations, and freedom in expenses, as long as they act in Netflix’s best interests.
• Netflix empowered employees to take ownership of problems and find solutions, inspiring a culture of responsibility, accountability, and self-discipline.
• The Netflix culture involves continuous upskilling, 360-degree interviews for feedback, and letting go of employees whose skill sets do not align with the organization’s goals.
• The company eliminated rigid HR policies, trusting employees to act sensibly and do the right thing.

Unmasking the Dark Side: Insights into Netflix’s Corporate Culture

Netflix’s corporate culture, while praised for its emphasis on talent, autonomy, and high performance, also highlights the potential pitfalls of an extreme “no rules” approach. A few key reasons why the Netflix example is important for understanding corporate culture deficits:

• Netflix’s corporate culture has been described as more cult-like than comfortable, with a strong emphasis on fitting into the company’s culture during the hiring process and a focus on “freedom and responsibility”. Assumption that managers will always make decisions in the company’s best interest is flawed, as managers are human and can be influenced by their own agendas.
• Adapting such an extreme culture on a global scale is fraught with difficulties, especially in regions such as Japan, as cultural differences affect communication styles, in particular how employees respond to things like unlimited vacation and lack of supervision.
• Netflix maintains a high-performance culture that may lead to anxiety and fear among employees, with a focus on keeping only highly effective individuals and a demanding work environment that is not suitable for everyone.
• Former and current employees have described Netflix’s culture as ruthless, demoralizing, and transparent to the point of dysfunction. Aggressive “keeper test” to retain only top performers, while offering generous severance, can still result in the loss of many high-performing employees due to corporate politics and manager biases.
• Instances have been reported where employees were discouraged from comforting a just-fired peer, and efforts to show camaraderie were not in line with the company’s culture.

Netflix’s response to criticisms of its corporate culture emphasizes that its culture is not for everyone, and encourages individuals to evaluate their fit with the company’s values and expectations.

Conclusion

In summary, while Netflix’s culture has enabled its success, it also demonstrates the risks of taking a “no rules” approach too far – creating a high-pressure, unpredictable environment that can be demoralizing and unsustainable for many employees.

Pathology is also determined by the degree, there may also be too much of a good thing.

Striking the right balance in experience between autonomy (individual) and structure (organizational) is key for a healthy corporate culture.