Photo Credit: Dino Miele

All companies seek excellence, and to achieve that requires establishing values that not only reflect their behaviors and skills but that are also adopted and valued by their employees. Dino Miele explains that Netflix is an excellent example of a company that got its culture of freedom and responsibility right. It walks the talk, which has made it such a success in disrupting the DVD market and remaining the biggest player in the streaming space, with more than 260 million subscribers as of 2024.

Six specific aspects of Netflix’s culture stand out for Dino Miele.

1. Adequate Performance Gets a Generous Severance Package

A company can’t survive, never mind thrive, with mediocre colleagues, especially in a startup where putting together crucial personnel is critical in implementing and carrying out strategy. Imagine having a 20-person startup with one employee who doesn’t carry his or her weight and performs poorly. This outlier translates to having five percent of your workforce underperforming, disrupting the entire team. As the saying goes, one bad apple ruins the whole bunch.

While hiring mistakes happen, immediate action must take place. Cut your losses, terminating those who don’t perform with grace and class. Continue to hire well and let go of employees who are not contributing to the company with a generous severance package.

2. Brilliant Jerks

People approach work differently. Style diversity is acceptable as long as everyone embodies the company’s values. It’s also easier to put up with a jerk when things run smoothly. It’s another story when the strategy and process is derailed. One jerk can destroy a company, especially when it’s first launched.  

The cost of having a jerk on the team is simply too high. Again, make a decision early on to cut your losses.

3. Responsible People Thrive on Freedom and Are Worthy of Freedom

Companies tend to want complete control as they grow, implementing rules and procedures for everyone to follow. Dino Miele agrees with Netflix’s decision to resist this control mindset and instead increase employee freedom rather than limit it. By doing so, you attract more high-value talent motivated by responsibility and the freedom to make a real impact. Netflix developed a culture of creativity, self-discipline, and freedom, enabling it to grow as the market evolved.

4. There is No Vacation Policy

Put another way, Netflix employees can take as many vacations as they want as long as the work gets done. While you may rightly worry about the potential of employees abusing this policy, if you hire right, abuse won’t occur. Employees will be responsible for taking vacations when they know things are taken care of. This is part of the responsibility that comes with the freedom Netflix employees enjoy. 

5. Act in the Company’s Best Interest

After a vigorous discussion on whether to enact a rigid expense and travel policy, Netflix’s executive staff decided to forgo implementing complex policies and tracking expense reports, travel, vendor gifts, and related costs. The executive staff agreed that if abuse occurred, it would self-correct. Employees who continually abuse the policy would be given a generous severance package and shown the door. 

6. No Fixed (Raise Pool) Budgets

Netflix looks at the market pay rate for each position on an annual basis. If salaries for senior designers, for example, rise by 15% in a year, the company would increase the pay for its respective staff accordingly. As a result, Netflix’s reputation for fairness has spread throughout the industry. It rectified pay inequities, built employee loyalty, and increased employee retention.

Inspired by Zappos and Sandy Koufax

Netflix also looked to two other inspirations when creating its company culture and values. Zappos, the online shoe retailer purchased by Amazon, was founded by then-CEO, the late Tony Hsieh. His customer service model was built on the principles in his book, “Delivering Happiness.” Netflix modeled its customer service organization after Zappos.

According to Miele, Netflix also embraced Sandy Koufax’s “Keep it Simple” mantra. A two-pitch, and often only a one-pitch, starting baseball pitcher for the Los Angeles Dodgers, Koufax dominated the sport by honing just two pitches. Most starting pitchers throw at least four pitches. Koufax’s approach worked splendidly in baseball due to its simplicity, as it does with business success. If something is complicated, it usually means something is wrong.