Ne#lix Culture: Freedom & ResponsibilityNe#lix Culture: Freedom & Responsibility 1 We Seek...

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Ne#lix Culture: Freedom & Responsibility 1

Transcript of Ne#lix Culture: Freedom & ResponsibilityNe#lix Culture: Freedom & Responsibility 1 We Seek...

Ne#lixCulture:Freedom&Responsibility

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WeSeekExcellence

Ourculturefocusesonhelpingusachieveexcellence

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SevenAspectsofourCulture

•  ValuesarewhatweValue•  HighPerformance•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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Manycompanieshavenicesoundingvaluestatements

displayedinthelobby,suchas:

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IntegrityCommunica/on

RespectExcellence

Enron,whoseleaderswenttojail,andwhichwentbankruptfromfraud,

hadthesevaluesdisplayedintheirlobby:

IntegrityCommunica/on

RespectExcellence

5(Thesevalueswerenot,however,whatwasreallyvaluedatEnron)

Theactualcompanyvalues,asopposedtothe

nice-soundingvalues,areshownbywhogets

rewarded,promoted,orletgo

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Actualcompanyvaluesarethebehaviorsandskillsthatarevalued

infellowemployees

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AtNe#lix,weparNcularlyvaluethefollowingninebehaviorsandskills

inourcolleagues…

…meaningwehireandpromotepeoplewhodemonstratethesenine

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Youmakewisedecisions(people,technical,business,andcreaNve)despiteambiguityYouidenNfyrootcauses,andgetbeyondtreaNngsymptomsYouthinkstrategically,andcanarNculatewhatyouare,andarenot,tryingtodoYousmartlyseparatewhatmustbedonewellnow,andwhatcanbeimprovedlater

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Judgment

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CommunicaNon

Youlistenwell,insteadofreacNngfast,soyoucanbe^erunderstandYouareconciseandarNculateinspeechandwriNngYoutreatpeoplewithrespectindependentoftheirstatusordisagreementwithyouYoumaintaincalmpoiseinstressfulsituaNons

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Impact

YouaccomplishamazingamountsofimportantworkYoudemonstrateconsistentlystrongperformancesocolleaguescanrelyuponyouYoufocusongreatresultsratherthanonprocessYouexhibitbias-to-acNon,andavoidanalysis-paralysis

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Curiosity

YoulearnrapidlyandeagerlyYouseektounderstandourstrategy,market,customers,andsuppliersYouarebroadlyknowledgeableaboutbusiness,technologyandentertainmentYoucontributeeffecNvelyoutsideofyourspecialty

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InnovaNon

Youre-conceptualizeissuestodiscoverpracNcalsoluNonstohardproblemsYouchallengeprevailingassumpNonswhenwarranted,andsuggestbe^erapproachesYoucreatenewideasthatproveusefulYoukeepusnimblebyminimizingcomplexityandfindingNmetosimplify

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Courage

YousaywhatyouthinkevenifitiscontroversialYoumaketoughdecisionswithoutagonizingYoutakesmartrisksYouquesNonacNonsinconsistentwithourvalues

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Passion

YouinspireotherswithyourthirstforexcellenceYoucareintenselyaboutNe#lix‘ssuccessYoucelebratewinsYouaretenacious

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Honesty

YouareknownforcandoranddirectnessYouarenon-poliNcalwhenyoudisagreewithothersYouonlysaythingsaboutfellowemployeesyouwillsaytotheirfaceYouarequicktoadmitmistakes

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Selflessness

YouseekwhatisbestforNe#lix,ratherthanbestforyourselforyourgroupYouareego-lesswhensearchingforthebestideasYoumakeNmetohelpcolleaguesYoushareinformaNonopenlyandproacNvely

SevenAspectsofourCulture

•  ValuesarewhatweValue•  HighPerformance•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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ImagineifeverypersonatNe#lixissomeoneyou

respectandlearnfrom…

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GreatWorkplaceisStunningColleagues

Greatworkplaceisnotespresso,lushbenefits,sushilunches,grandparNes,orniceoffices

Wedosomeofthesethings,butonlyiftheyare

efficientata^racNngandretainingstunningcolleagues

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Likeeverycompany,wetrytohirewell

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Unlikemanycompanies,wepracNce:

adequateperformancegetsagenerousseverancepackage

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We’reateam,notafamily

We’relikeaprosportsteam,notakid’srecreaNonalteam

Ne#lixleaders

hire,developandcutsmartly,sowehavestarsineveryposiNon

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TheKeeperTestManagersUse:Whichofmypeople,

iftheytoldmetheywereleaving,forasimilarjobatapeercompany,wouldIfighthardtokeepatNe#lix?

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TheKeeperTestManagersUse:Whichofmypeople,

iftheytoldmetheywereleaving,forasimilarjobatapeercompany,wouldIfighthardtokeepatNe#lix?

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Theotherpeopleshouldgetagenerousseverancenow,sowecanopenaslottotrytofindastarforthatrole

HonestyAlways

Asaleader,nooneinyourgroupshouldbemateriallysurprisedof

yourviews

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HonestyAlways

Candorisnotjustaleader’sresponsibility,andyoushouldperiodicallyaskyour

manager:“IfItoldyouIwereleaving,howhardwouldyouworktochangemymind?”

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AllofUsareResponsibleforEnsuringWeLiveourValues

“YouquesNonacNonsinconsistentwithourvalues”ispartoftheCouragevalue

Akintothehonorcodepledge:

“Iwillnotlie,norcheat,norsteal,nortoleratethosewhodo”

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ProSportsTeamMetaphorisGood,butImperfect

AthleNcteamshaveafixednumberofposiNons,soteammembersarealwayscompeNngwitheachotherforoneof

thepreciousslots

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CorporateTeam

Themoretalentwehave,themorewecanaccomplish,

soourpeopleassisteachotheralltheNme

Internal“cu^hroat”or“sinkorswim”behaviorisrareandnottolerated

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WeHelpEachOtherToBeGreat

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Isn’tLoyaltyGood?WhataboutHardWorkers?WhataboutBrilliantJerks?

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LoyaltyisGood

•  Loyaltyisgoodasastabilizer•  Peoplewhohavebeenstarsforus,andhitabadpatch,getaneartermpassbecausewethinktheyarelikelytobecomestarsforusagain

•  Wewantthesame:ifNe#lixhitsatemporarybadpatch,wewantpeopletosNckwithus

•  Butunlimitedloyaltytoashrinkingfirm,ortoanineffecNveemployee,isnotwhatweareabout

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HardWork–NotRelevant

•  Wedon’tmeasurepeoplebyhowmanyhourstheyworkorhowmuchtheyareintheoffice

•  Wedocareaboutaccomplishinggreatwork•  SustainedB-levelperformance,despite“Aforeffort”,generatesagenerousseverancepackage,withrespect

•  SustainedA-levelperformance,despiteminimaleffort,isrewardedwithmoreresponsibilityandgreatpay

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BrilliantJerks

•  Somecompaniestoleratethem•  Forus,costtoeffecNveteamworkistoohigh•  Diversestylesarefine–aslongaspersonembodiesthe9values

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Whyarewesoinsistentonhighperformance?

Inproceduralwork,thebestare2xbe^erthantheaverage.

IncreaNve/invenNvework,thebestare10xbe^erthantheaverage,sohugepremiumon

creaNngeffecNveteamsofthebest

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Whyarewesoinsistentonhighperformance?

GreatWorkplaceisStunningColleagues

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OurHighPerformanceCultureNotRightforEveryone

•  Manypeopleloveourculture,andstayalongNme–  Theythriveonexcellenceandcandorandchange–  Theywouldbedisappointedifgivenaseverancepackage,butlotsofmutualwarmthandrespect

•  Somepeople,however,valuejobsecurityandstabilityoverperformance,anddon’tlikeourculture–  TheyfeelfearfulatNe#lix–  TheyaresomeNmesbi^erifletgo,andfeelthatwearepoliNcalplacetowork

•  We’regerngbe^erata^racNngonlytheformer,andhelpingthela^errealizewearenotrightforthem

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SevenAspectsofourCulture

•  ValuesarewhatweValue•  HighPerformance•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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TheRareResponsiblePerson

•  SelfmoNvaNng•  Selfaware•  Selfdisciplined•  Selfimproving•  Actslikealeader•  Doesn’twaittobetoldwhattodo•  Picksupthetrashlyingonthefloor

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ResponsiblePeopleThriveonFreedom,

andareWorthyofFreedom

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Ourmodelistoincreaseemployeefreedomaswegrow,

ratherthanlimitit,toconNnuetoa^ractandnourish

innovaNvepeople,sowehavebe^erchanceof

sustainedsuccess

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MostCompaniesCurtailFreedomastheygetBigger

Bigger

EmployeeFreedom

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WhyDoMostCompaniesCurtailFreedom

andBecomeBureaucraNcastheyGrow?

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DesireforBiggerPosiNveImpactCreatesGrowth

Growth

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GrowthIncreasesComplexity

Complexity

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GrowthAlsoOsenShrinksTalentDensity

%HighPerformanceEmployees

Complexity

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ChaosEmerges

%HighPerformanceEmployees

Chaosanderrorsspikehere–businesshasbecometoocomplextoruninformallywiththistalentlevel Complexity

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ProcessEmergestoStoptheChaos

ProceduresNoonelovesprocess,butfeelsgoodcomparedtothepainofchaos“Timetogrowup”becomestheprofessionalmanagement’smantra

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Process-focusDrivesMoreTalentOut

%HighPerformanceEmployees

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ProcessBringsSeducNvelyStrongNear-TermOutcome

•  Ahighly-successfulprocess-drivencompany– Withleadingshareinitsmarket– Minimalthinkingrequired–  Fewmistakesmade–veryefficient–  Fewcuriousinnovator-mavericksremain–  VeryopNmizedprocessesforitsexisNngmarket–  Efficiencyhastrumpedflexibility

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ThentheMarketShiss…

•  MarketshissduetonewtechnologyorcompeNtorsorbusinessmodels

•  Companyisunabletoadaptquickly– becausetheemployeesareextremelygoodatfollowingtheexisNngprocesses,andprocessadherenceisthevaluesystem

•  Companygenerallygrindspainfullyintoirrelevance

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SeemsLikeThreeBadOpNons

1.  StaycreaNvebystayingsmall,butthereforehavelessimpact

2.  Avoidrulesasyougrow,andsufferchaos3.  Useprocessasyougrowtodriveefficient

execuNonofcurrentmodel,butcripplecreaNvity,flexibility,andabilitytothrivewhenyourmarketeventuallychanges

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AFourthOpNon

•  AvoidChaosasyougrowwithEverMoreHighPerformancePeople–notwithRules– ThenyoucanconNnuetomostlyruninformallywithself-discipline,andavoidchaos

– Theruninformallypartiswhatenablesanda^ractscreaNvity

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TheKey:IncreaseTalentDensityfasterthanComplexityGrows

BusinessComplexity

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IncreaseTalentDensity

•  TopofmarketcompensaNon•  A^racthigh-valuepeoplethrough

freedomtomakebigimpact•  Bedemandingabouthigh

performanceculture

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MinimizeComplexityGrowth

BusinessComplexity

•  Fewbigproductsvsmanysmallones•  EliminatedistracNngcomplexity(barnacles)•  BewaryofefficiencyopNmizaNonsthat

increasecomplexityandrigidity

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Note:someNmeslong-termsimplicityisachievedonlythroughburstsofcomplexitytoreworkcurrentsystems

WiththeRightPeople,

InsteadofaCultureofProcessAdherence,

WehaveaCultureof

CreaNvityandSelf-Discipline,FreedomandResponsibility

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IsFreedomAbsolute?

Areallrules&processesbad?

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Freedomisnotabsolute

Like“freespeech”therearesome

limitedexcepNonsto“freedomatwork”

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TwoTypesofNecessaryRules

1.  Preventirrevocabledisaster–  Financialsproducedarewrong–  Hackersstealourcustomers’creditcardinfo

2.  Moral,ethical,legalissues–  Dishonesty,harassmentareintolerable

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Mostly,though,RapidRecoveryistheRightModel

•  Justfixproblemsquickly– Highperformersmakeveryfewerrors

•  We’reinacreaNve-invenNvemarket,notasafety-criNcalmarketlikemedicineornuclearpower

•  YoumayhaveheardprevenNngerrorischeaperthanfixingit– Yes,inmanufacturingormedicine,but…– Notsoincrea/veenvironments

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“Good”versus“Bad”Process

•  “Good”processhelpstalentedpeoplegetmoredone–  LerngothersknowwhenyouareupdaNngcode–  Spendwithinbudgeteachquartersodon’thavetocoordinateeveryspendingdecisionacrossdepartments

–  RegularlyscheduledstrategyandcontextmeeNngs•  “Bad”processtriestopreventrecoverablemistakes–  Getpre-approvalsfor$5kspending–  3peopletosignoffonbanneradcreaNve–  Permissionneededtohangaposteronawall– MulN-levelapprovalprocessforprojects–  Get10peopletointervieweachcandidate

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RuleCreep

•  “Bad”processestendtocreepin– PrevenNngerrorsjustsoundssogood

•  Wetrytogetridofruleswhenwecan,toreinforcethepoint

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Example:Ne#lixVacaNonPolicyandTracking

UnNl2004wehadthestandardmodelofNdaysperyear

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Meanwhile…

We’reallworkingonlinesomenightsandweekends,respondingtoemailsatoddhours,spendingsomeasernoonson

personalNme,andtakinggoodvacaNons

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Anemployeepointedout…

Wedon’ttrackhoursworkedperdayorperweek,sowhyarewetracking

daysofvacaNonperyear?

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Werealized…

Weshouldfocusonwhatpeoplegetdone,notonhowmanydaysworked

Justaswedon’thavean9am-5pmworkday

policy,wedon’tneedavacaNonpolicy

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Ne#lixVacaNonPolicyandTracking“thereisnopolicyortracking”

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Ne#lixVacaNonPolicyandTracking“thereisnopolicyortracking”

ThereisalsonoclothingpolicyatNe#lix,

butnoonecomestoworknaked

Lesson:youdon’tneedpoliciesforeverything

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NoVacaNonPolicyDoesn’tMeanNoVacaNon

Ne#lixleaderssetgoodexamplesbytakingbigvacaNons–andcomingbackinspiredtofindbigideas

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AnotherExampleofFreedomandResponsibility…

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Mostcompanieshavecomplexpoliciesaroundwhatyoucan

expense,howyoutravel,whatgissyoucanaccept,etc.

Plustheyhavewholedepartments

toverifycompliancewiththesepolicies

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Ne#lixPoliciesforExpensing,Entertainment,

Giss&Travel:

“ActinNeHlix’sBestInterest”

(5wordslong)

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“ActinNe#lix’sBestInterest”GenerallyMeans…

1.  Expenseonlywhatyouwouldotherwisenotspend,andisworthwhileforwork

2.  Travelasyouwouldifitwereyourownmoney3.  Disclosenon-trivialvendorgiss4.  TakefromNe#lixonlywhenitisinefficientto

nottake,andinconsequenNal–  “taking”means,forexample,prinNngpersonal

documentsatworkormakingpersonalcallsonworkphone:inconsequenNalandinefficienttoavoid

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FreedomandResponsibility

•  Manypeoplesayonecan’tdoitatscale•  Butsincegoingpublicin2002,whichistradiNonallytheendoffreedom,we’vesubstanNallyincreasedtalentdensityandemployeefreedom

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SummaryofFreedom&Responsibility:

AsWeGrow,MinimizeRules

InhibitChaoswithEverMoreHighPerformancePeople

FlexibilityisMoreImportant

thanEfficiencyintheLongTerm

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SevenAspectsofourCulture

•  ValuesarewhatweValue•  HighPerformance•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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Ifyouwanttobuildaship,don'tdrumupthepeopletogatherwood,dividethework,andgiveorders.

Instead,teachthemtoyearnforthevastandendlesssea.

-AntoineDeSaint-Exupery,AuthorofTheLi^lePrince

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Thebestmanagersfigureouthowtogetgreatoutcomesbyserngtheappropriatecontext,ratherthanby

tryingtocontroltheirpeople

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Context,notControl

Context(embrace)•  Strategy•  Metrics•  AssumpNons•  ObjecNves•  Clearly-definedroles•  Knowledgeofthestakes•  Transparencyaround

decision-making

Control(avoid)•  Top-downdecision-making•  Managementapproval•  Commi^ees•  Planningandprocessvalued

morethanresults

Providetheinsightandunderstandingtoenablesounddecisions

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GoodContext

•  Linktocompany/funcNonalgoals•  RelaNvepriority(howimportant/howNmesensiNve)–  CriNcal(needstohappennow),or…–  Nicetohave(whenyoucangettoit)

•  Levelofprecision&refinement–  Noerrors(creditcardshandling,etc…),or…–  Pre^ygood/cancorrecterrors(website),or…–  Rough(experimental)

•  Keystakeholders•  Keymetrics/definiNonofsuccess

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Managers:Whenoneofyourtalentedpeople

doessomethingdumb,don’tblamethem

Instead,

askyourselfwhatcontextyoufailedtoset

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Managers:Whenyouaretemptedto“control”yourpeople,ask

yourselfwhatcontextyoucouldsetinstead

AreyouarNculateandinspiringenoughaboutgoalsandstrategies?

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WhyManagingThroughContext?

Highperformancepeoplewilldobe^erworkiftheyunderstandthe

context

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InvesNnginContext

Thisiswhywedonewemployeecollege,frequentdepartmentmeeNngs,

andwhywearesoopeninternallyaboutstrategiesandresults

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ExcepNonsto“Context,notControl”

•  Controlcanbeimportantinemergency– NoNmetotakelong-termcapacity-buildingview

•  ControlcanbeimportantwhensomeoneissNlllearningtheirarea– TakesNmetopickupthenecessarycontext

•  Controlcanbeimportantwhenyouhavethewrongpersoninarole– Temporarily,nodoubt

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SevenAspectsofourCulture

•  ValuesarewhatweValue•  HighPerformance•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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ThreeModelsofCorporateTeamwork

1.  TightlyCoupledMonolith2.  IndependentSilos3.  HighlyAligned,LooselyCoupled

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TightlyCoupledMonolith

•  SeniormanagementreviewsnearlyalltacNcs– e.g.,CEOreviewsalljoboffersoradverNsing

•  Lotsofx-departmentalbuy-inmeeNngs•  Keepingotherinternalgroupshappyhasequalprecedencewithpleasingcustomers

•  Mavericksgetexhaustedtryingtoinnovate•  HighlycoordinatedthroughcentralizaNon,butveryslow,andslownessincreaseswithsize

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IndependentSilos

•  EachgroupexecutesontheirobjecNveswithli^lecoordinaNon– Everyonedoestheirownthing

•  WorkthatrequirescoordinaNonsuffers•  AlienaNonandsuspicionbetweendepartments

•  Onlyworkswellwhenareasareindependent– e.g.,aircrasenginesandblendersforGE

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#3istheNe#lixChoice

1.  TightlyCoupledMonolith2.  IndependentSilos3.   HighlyAligned,LooselyCoupled

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HighlyAligned,LooselyCoupled•  HighlyAligned

–  Strategyandgoalsareclear,specific,broadlyunderstood–  TeaminteracNonsfocusedonstrategyandgoals,ratherthantacNcs–  RequireslargeinvestmentinmanagementNmetobetransparentand

arNculateandpercepNve•  LooselyCoupled

–  Minimalcross-funcNonalmeeNngsexcepttogetalignedongoalsandstrategy

–  TrustbetweengroupsontacNcswithoutpreviewing/approvingeachone–sogroupscanmovefast

–  LeadersreachingoutproacNvelyforad-hoccoordinaNonandperspecNveasappropriate

–  Occasionalpost-mortemsontacNcsnecessarytoincreasealignment

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HighlyAligned,LooselyCoupledteamworkeffecNveness

dependsonhighperformancepeople

andgoodcontext

GoalistobeBigandFastandFlexible

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SevenAspectsofourCulture

•  ValuesarewhatweValue•  HighPerformance•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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PayTopofMarketisCoreto

HighPerformanceCultureOneoutstandingemployeegetsmoredone

andcostslessthantwoadequateemployees

Weendeavortohaveonlyoutstandingemployees

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ThreeTestsforTopofMarketforaPerson

1.  Whatcouldpersongetelsewhere?2.  Whatwouldwepayforreplacement?3.  Whatwouldwepaytokeepthatperson?–  Iftheyhadabiggerofferelsewhere

97ConfidenNal

TakesGreatJudgment

•  Goalistokeepeachemployeeattopofmarketforthatperson– Paythemmorethananyoneelselikelywould– Paythemasmuchasareplacementwouldcost– Paythemasmuchaswewouldpaytokeepthemiftheyhadhigherofferfromelsewhere

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TitlesNotVeryHelpful

•  LotsofpeoplehavetheNtle“MajorLeaguePitcher”buttheyarenotallequallyeffecNve

•  Similarly,allpeoplewiththeNtle“SeniorMarkeNngManager”or“DirectorofEngineering”arenotequallyeffecNve

•  SotheartofcompensaNonisansweringtheThreeTestsforeachemployee

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AnnualCompReview

•  Atmanyfirms,whenemployeesarehired,marketcompensaNonapplies•  ButatcompreviewNme,itnolongerapplies!

•  AtNe#lix,marketcompalwaysapplies:– EssenNally,topofmarketcompisre-establishedeachyearforhighperformingemployees

– Atannualcompreview,managerhastoanswertheThreeTestsforthepersonalmarketforeachoftheiremployees

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NoFixedBudgets

•  Therearenocentrallyadministered“raisepools”eachyear

•  Instead,eachmanageralignstheirpeopletotopofmarketeachyear–themarketwillbedifferentindifferentareas

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CompensaNonOverTime

•  Somepeoplewillmoveupincompveryquicklybecausetheirvalueinthemarketplaceismovingupquickly,drivenbyincreasingskillsand/orgreatdemandfortheirarea

•  Somepeoplewillstayflatbecausetheirvalueinthemarketplacehasdonethat– DependsinpartoninflaNonandeconomy– Alwaystopofmarket,though,forthatperson

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CompensaNonNotDependentonNe#lixSuccess

•  WhetherNe#lixisprosperingorfloundering,wepayatthetopofthemarket– SportsteamswithlosingrecordssNllpaytalentthemarketrate,togetbacktowinning

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BadCompPracNces

•  ManagersetspayatNthpercenNleofNtle-linkedcompensaNondata– The“MajorLeaguePitcher”problem

•  Managercaresaboutinternalparityinsteadofexternalmarketvalue– Fairnessincompisbeingtruetothemarket

•  Managergiveseveryonea4%raise– Veryunlikelytoreflectthemarket

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WhenTopofMarketCompDoneRight...

•  Wewillrarelycounterwithhighercompwhensomeoneisvoluntarilyleavingbecausewehavealreadymovedcomptoourmaxforthatperson

•  EmployeeswillfeeltheyaregerngpaidwellrelaNvetotheirotheropNonsinthemarket

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VersusTradiNonalModel

•  TradiNonalmodelisgoodprioryearearnsaraise,independentofmarket– Problemisemployeescangetmateriallyunder-orover-paidrelaNvetothemarket,overNme

– Whenmateriallyunder-paid,employeesswitchfirmstotakeadvantageofmarket-basedpayonhiring

– Whenmateriallyover-paid,employeesaretrappedincurrentfirm

•  Consistentmarket-basedpayisbe^ermodel

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EmployeeSuccess

•  It’spre^yingrainedinoursocietythatthesizeofone’sraiseistheindicatorofhowwellonedidtheprioryear– butforustheotherfactoristheoutsidemarket

•  EmployeesuccessissNllabigfactorincompbecauseitinfluencesmarketvalue–  InparNcular,howmuchwewouldpaytokeeptheperson

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GoodForEachEmployeetoUnderstandTheirMarketValue

•  It’sahealthyidea,notatraitorousone,tounderstandwhatotherfirmswouldpayyou,byinterviewingandtalkingtopeersatothercompanies– Talkwithyourmanageraboutwhatyoufindintermsofcomp

– StaymindfulofcompanyconfidenNalinformaNon

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Efficiency

•  Bigsalaryisthemostefficientformofcomp– MostmoNvaNngforanygivenexpenselevel– Nobonuses,nophilanthropicmatch–  Instead,putallthatexpenseintobigsalaries,andgivepeoplefreedomtospendtheirsalariesastheythinkbest

–  EmployeescandecidehowmuchNe#lixstocktheywant,versuscash

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NoVesNngorDeferredComp

•  Wedon’twantmanagersto“own”theirpeoplewithvesNng–allcompisfullyvested

•  WewantmanagerstoberesponsibleforcreaNngagreatplacetowork,andpayingatthetopofmarket

•  EmployeesarefreetoleaveusanyNme,withoutpenalty,butnearlyeveryonestays

•  Employeesstaybecausetheyarepassionateabouttheirwork,andwellpaid,notbecauseofadeferredcompensaNonsystem

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NoRankingAgainstOtherEmployees

•  Weavoid“top30%”and“bo^om10%”rankingsamongstemployees

•  Wedon’twantemployeestofeelcompeNNvewitheachother

•  Wewantallofouremployeestobe“top10%”relaNvetothepoolofglobalcandidates

•  Wewantemployeestohelpeachother,andtheydo

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SevenAspectsofourCulture

•  HighPerformance•  ValuesarewhatweValue•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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InsomeNmeperiods,insomegroups,therewillbelotsof

opportunityandgrowthatNe#lixSomepeople,throughbothluckandtalent,willhaveextraordinarycareer

growth

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BaseballAnalogy:MinorstoMajors•  Verytalentedpeopleusuallygettomoveup,butonlytruefortheverytalented

•  SomeluckintermsofwhatposiNonsopenupandwhatthecompeNNonis

•  Somepeoplemovetootherteamstogettheopportunitytheywant

•  Greatteamskeeptheirbesttalent•  Someminorleagueplayerskeepplayingeventhoughtheydon’tmoveupbecausetheylovethegame

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Ne#lixDoesn’tHavetoBeforLife

•  InsomeNmes,insomegroups,theremaynotbeenoughgrowthopportunityforeveryone

•  InwhichcaseweshouldcelebratesomeoneleavingNe#lixforabiggerjobthatwedidn’thaveavailabletoofferthem–  Ifthatiswhatthepersonprefers

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ThreeNecessaryCondiNonsforPromoNon

1.  Jobhastobebigenough–  Wemighthaveanincrediblemanagerofsomething,butwedon’tneedadirectorofitbecausejobisn’tbigenough•  Iftheincrediblemanagerles,wewouldreplacewithamanager,notwithadirector

2.  Personhastobeasuperstarincurrentrole–  Couldgetthenextleveljobhereifapplyingfromoutsideandweknew

theirtalentswell–  Couldgetthenextleveljobatpeerfirmthatknewtheirtalentswell

3.  Personisanextraordinaryrolemodelofourcultureandvalues

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Timing

•  Ifamanagerwouldpromotetopreventanemployeefromleaving,themanagershouldpromotenowinsteadofwaiNng

•  ThreetestssNllhavetobepassed1.  Jobbigenough2.  Superstarincurrentrole3.  Personisanextraordinaryrolemodelofour

cultureandvalues

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Development

•  Wedeveloppeoplebygivingthemtheopportunitytodevelopthemselves,bysurroundingthemwithstunningcolleaguesandgivingthembigchallengestoworkon– Mediocrecolleaguesorunchallengingworkiswhatkillsprogressofaperson’sskills

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Career“Planning”NotforUs

•  FormalizeddevelopmentisrarelyeffecNve,andwedon’ttrytodoit– e.g.,Mentorassignment,rotaNonaroundafirm,mulN-yearcareerpaths,etc.

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WeSupportSelf-Improvement

•  Highperformancepeoplearegenerallyself-improvingthroughexperience,observaNon,introspecNon,reading,anddiscussion– Aslongastheyhavestunningcolleaguesandbigchallengestoworkon

– Wealltrytohelpeachothergrow– Weareveryhonestwitheachother

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Wewantpeopletomanagetheirowncareergrowth,

andnotrelyonacorporaNonfor“planning”theircareers

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YourEconomicSecurityisbasedonyourSkillsandReputaNon

Wetryhardtoconsistentlyprovideopportunitytogrowbothby

surroundingyouwithgreattalent

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SevenAspectsofourCulture

•  ValuesarewhatweValue•  HighPerformance•  Freedom&Responsibility•  Context,notControl•  HighlyAligned,LooselyCoupled•  PayTopofMarket•  PromoNons&Development

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Wekeepimprovingourcultureaswegrow

Wetrytogetbe^eratseekingexcellence

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