In autumn 2001 the dot-com bubble burst and investors closed their wallets. Netflix was still a DVD-by-mail company of around 120 people with no profits. Reed Hastings had to lay off about a third of them1.
He braced himself for a demoralised office. The opposite happened. The people who stayed worked with more energy, even while carrying the workload of colleagues who had gone. Hastings later drew from it what he called talent density: surrounded by strong people, strong people do better work, and one merely adequate performer can drag a whole team down1. He also concluded that a company is not a family, because nobody lays off two of their children1.
A 125-slide deck travels the world
In 2009 Hastings and chief talent officer Patty McCord put online a deck of roughly 125 slides describing Netflix's culture. It spread at a speed few corporate documents ever reach, was viewed millions of times, and Sheryl Sandberg, then Facebook's chief operating officer, was quoted calling it the most important document ever to come out of Silicon Valley.
Its ideas are familiar now: freedom paired with responsibility, context instead of control, no tracking of vacation days. And one line that made HR people everywhere sit up: adequate performance gets a generous severance package2.
The tool that went with it was the keeper test. A manager asks about each person on the team: if this person told me they were leaving for a similar job at a peer company, would I fight hard to keep them? If the answer is no, Netflix pays a generous severance and lets them go, rather than waiting for them to fail. The culture statement on Netflix's jobs site still carries the same idea today: if X wanted to leave, would I fight to keep them3?
When the test turned on its author
Patty McCord worked with Hastings for 14 years, following him from his previous company to Netflix. It was she who pushed him to ask himself several times a year: if this job were open, would I hire the person sitting in it4?
In 2012 Hastings asked that question about McCord herself. The answer was no. The company needed a different kind of HR leader for its next phase, and she was asked to move on4. McCord has told the story many times since, in interviews and in her 2018 book Powerful, not as a grievance but as proof that the system worked as designed.
The dark side the deck leaves out
In October 2018 The Wall Street Journal published interviews with more than 70 current and former Netflix employees. They described a culture of transparency so intense it could be harsh: emails announcing a dismissal could reach hundreds of people across divisions and spell out the person's shortcomings; executives at director level and above could see everyone's salary5. For a number of those interviewed, the culture could at its worst be ruthless, demoralising and transparent to the point of dysfunction5.
Both things are true. Netflix became one of the largest entertainment companies in the world working this way. And the way it works has a cost, paid by the people inside.
Should you copy Netflix?
Plenty of companies, in Vietnam included, have translated the deck and put it on the wall. Most copy only the "freedom" and "transparency" parts and leave out what makes them work: pay at the top of the market so that strong people are there from the start, and severance large enough to make letting someone go a decent act.
In Vietnam there is also a fundamental difference. The Labour Code does not let an employer unilaterally terminate a contract because an employee's performance is merely "adequate". Any mutual termination must be a genuine agreement, in writing, and the payment is offered in exchange for consent, not as a substitute for due process.
The most useful part may be the question rather than the policy. Asking whether you would hire someone again forces a manager to look squarely at the team instead of letting things drift. The question also works in reverse: an employee can ask their manager whether they would fight to keep them if they resigned. A straight question gets a straight answer, and plenty of workplaces lack exactly that.
