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Info You Can Use: Netflix HR Policies and the Arts

January 29, 2014

by:

Joe Patti

Apparently Netflix Powerpoint presentation on human resources has been getting a lot of views this last month. I remember being able to read the accompanying article on Harvard Business Review at one time, but it seems to be protected by a registration requirement now.

The Powerpoint presentation can be viewed however and has some interesting lessons about employee relations for non-profit arts organizations. I will state outright that probably the biggest hurdle for arts organizations will be paying top dollar for top talent since the arts are often limited in their earning ability. However, given that arts people are often motivated by psychic income rather than monetary income, some of Netflix basic philosophy may apply.

Or perhaps having highly talented people working for you and following their ideas about jettisoning process and procedure can help you identify income streams needed to provide appropriate remuneration.

There are 126 slides so I can’t really summarize the whole presentation, but I wanted to talk about a few that stuck out.

Slides 4-18 talk about the values of Netflix making it clear that their view is that the true values of any company aren’t what they say they value on paper, but what employee activities are actually rewarded. A company says they value integrity, but punish a whistleblower, then that is not a true company value.

This is something to think about when writing your organizational values and mission statement. It almost seems best to be like the college campus that only puts in sidewalks when they see where the students walk to get between buildings. It might be best to enumerate the values you do exhibit rather than the ones you aspire to–and then revise as you evince more constructive behavior.

The thing about Netflix HR policy that most companies might have a hard time implementing is in slide 22. “Adequate performance gets a generous severance package.” They want people who are performing at their best and give those who aren’t the boot, but in the nicest way possible.

In the article which is now behind a registration system, they talk about a woman who was a great producer, but as technological advances left her behind, she couldn’t conform so they sat her down. They make it sound like she was relived to be let go (and maybe the severance package is just that good).

It seems a little cold hearted, but it does show they are in earnest when they claim a commitment to only working with the top talent they can find. In the slides that follow, they talk more about that, saying they use the metric of who would they fight to keep if the person was being hired away. You keep those you would fight for and give severance to everyone else.

To be fair, they say the approach should go the other way (slide 27) and that every employee should periodically ask what their manager would do to keep them on if they gave their two weeks. Later in the slides, they say that interviewing with other firms while working for Netflix is not a sign of disloyalty, but a good way to discover your market value, just make sure you don’t reveal any corporate secrets. (slide 108)

In slide 38, they admit working for them is not for everyone. They focus on results, so you don’t get an A for effort.

Where things get interesting is around slide 43. This is where they talk about why they are so focused on only keeping the most talented people. They note how companies often start curtailing freedom as they get bigger and more complex. Companies will add processes, but Netflix says that is only a short term solution because they lose their ability to be flexible (slide 51-61) in the face of change.

The solution is to increase the level of talent in your organization faster than complexity, that way you have self-disciplined, creative people working for you who don’t require tons of processes to keep them reined in.

This is the part I felt was most applicable to the arts. The conversation these days focuses on how inflexible arts organizations are at responding to the changing operating environment. Yet we have some of the most talented, creative people working for us. Small arts groups are nimble, but as they grow and become established, they generally seem to become less flexible. The size and desire for job stability by the employees has frequently been identified as prime culprits.

But according to Netflix you can have growth, organizational flexibility and job stability, so perhaps it is the processes that are to blame.

The next slide was the one that intrigued me most:

That last line implying it is better to be flexible enough to recover from a problem rather than having rules to prevent them really caught me off guard. And in the slides that follow (63-71) they give examples of good and bad processes and discuss how their famous “take whatever vacation time you want” policy came into being. (Slide 67 is essentially the thesis)

But the idea that it is better for creative environments to take errors in stride and move past them echoes the oft expressed idea that artists and arts organizations shouldn’t fear making mistakes and taking risks because it is integral to self-development.

There are some interesting slides on employee relations, providing context rather than attempting to control (81-87). I don’t want to get into summarizing that because I wanted to tackle their compensation policy.

Their philosophy is that the compensation for each person is individual and they should be paying top market price for that person. And that they shouldn’t wait until an annual review to award an increase in compensation if they realize they are not paying top dollar, they should do so immediately.

Compensation is not dependent on Netflix success. (96-104) They are against giving raises based on job title (what are all other marketing directors getting? Not all people with that title are of the same quality), or giving across the board percentage raises, or practicing internal parity (everyone in the department/seniority get paid the same).

For Netflix, monetary compensation is everything. I imagine that is because they are hiring people who are both very talented and motivated by the idea monetary compensation is everything.

For arts organizations, it is probably possible with some thought to find non-monetary rewards that motivate employees along the same philosophical lines utilized by Netflix. Perhaps flex time, access to facilities and supplies to exercise their creativity, use of organization owned housing for out of town guests at Christmas, etc.

Given the idea that compensation level is personal to each individual, the opportunities provided to each person may be different. An administrator and a receptionist may end up making the same salary because the administrator values being able to use the ceramic studio to create works they can sell over being paid more.

If you subscribe to their philosophy that A level results for B level effort gains you greater responsibility and compensation that will allow you to grow within the company, then a receptionist who has made great contributions could be promoted to the marketing department.

But then you potentially run into the area that takes the most courage–letting go of a mediocre producer in the marketing department. If there are a couple of stars in the marketing department who have the potential of heading up a new endeavor that will earn more revenue, that’s great, shuffle them off to better things. But you might as easily need to let someone go to get the best talent into marketing.

Netflix philosophy assumes everyone working for them is motivated to advance. I don’t recall if they covered this in the slides or the article, but I suspect if someone declined to be promoted, they might be viewed as too timid for the company’s ambitions and content to invest B effort to generate A work.

This may be just as true for an employee of an arts organization, but much more difficult to discern because the person could value the work/life balance afforded by their position so they can spend time with family or artistic pursuits. You might never find someone who can produce as well as they can working 25 hours a week and they may stick with you for the next 10 years. It can be tougher to discern in the arts and tougher to find the resolve to cut mediocre people loose.

But I suppose allowing for employee work-life balance is why Netflix has the very liberal “no-vacation policy” vacation policy. They probably understand that those needs are just as individual as compensation.

Info You Can Use, Leadership, Management Philosophy, Terms and Ideas, Working In The Arts

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Is A Ticket A Contract?

January 28, 2014

by:

Joe Patti

Yesterday, commenter Lee Saylor asked a question about foul weather and refunds on a post I did a couple weeks ago regarding that subject.

He noted that like many performing arts organizations, the no-refund policy was on the back of the ticket. That raised an interesting topic I wanted to discuss.

When I was first starting out my career, I was told that a ticket was a contract with the audience member and that the policies on the back were the terms of the contract. If I recall correctly this was to support the idea that if someone purchased a ticket, they had the right not to appear and we had to hold the empty seat for them.

However, I believe it was just last week that someone pointed out to me that it can’t be a contract because you receive the terms after you have made the purchase. That made sense to me because it wouldn’t be fair to a consumer to find out they were bound to certain conditions they were unaware of prior to their purchase.

EXCEPT, that is exactly what happens when you buy software. You don’t learn about the terms of service (TOS) until after you have purchased the software and start to install it. Back when software came on discs, there was a big outcry because if you broke the seal on the envelop it came in the company wouldn’t issue a refund if you didn’t like it or it didn’t work on your computer system.

At the time they were concerned people were copying the discs and returning them. These days I am not sure if software companies will refund you if you actually read the TOS and say you don’t agree and want your money back.

Refunds aside, like buying a ticket, you don’t learn the details of the TOS until after you have made the purchase. (Contrast with buying airline tickets where they encourage you to read their contract of carriage prior to completing your transaction.) So my question is, are they contracts? Does the timing of when you receive the terms determine whether they constitute a contract or not?

Do any lawyers or people who play them on stage or TV have any idea?

Now whether it is a contract or not doesn’t disqualify what is written on the back of your tickets as a statement of policy or rules that will govern the transaction should the person seek to redeem it for a performance.

Whether that will protect you against a legal claim is another issue entirely.

Legal Topics, Working In The Arts

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Stuff To Ponder: The Working Job Interview

January 27, 2014

by:

Joe Patti

Earlier this month, I read an interview with WordPress creator Matt Mullenweg about his company, Automattic’s, hiring process. The title of the interview, Hire by Audition, Not Resumes, is what caught my eye.

What Automattic does is pay potential hires to do short term work for them so they can get a real sense of the person they might be potentially working with long term. Mullenweg says they hire about 40% of those who tryout and have very low employee turnover.

During the trials, we give the applicants actual work. If you’re applying to work in customer support, you’ll answer tickets. If you’re an engineer, you’ll work on engineering problems. If you’re a designer, you’ll design.

There’s nothing like being in the trenches with someone, working with them day by day. It tells you something you can’t learn from resumes, interviews, or reference checks. At the end of the trial, everyone involved has a great sense of whether they want to work together going forward. And, yes, that means everyone — it’s a mutual tryout. Some people decide we’re not the right fit for them.

Automattic employs people who work virtually so they don’t care when and how the work get done which allows people who already have jobs to “audition” for a new one on their own schedule.

It might be problematic for an arts organization to include those who are already employed in a short term work interview that requires them to be physically present. But this format does give both the employer and applicant an opportunity to evaluate the reality of each other.

If you are seeking to fill a position where the person is required to be self-directed, having them physically work onsite for the whole period probably isn’t a necessary. You can give a person marketing or financial materials and ask them to come back after a few days to discuss/present the approach they might take promoting events or improving the financial status of the organization.

Mullenweg admits this process requires a significant investment of time and energy, something most arts organizations don’t have an excess supply of. However, if your organization only has 20 people, each which must shoulder a large share of responsibility, it will be better to make the effort and avoid having someone leave and shift the burden to everyone else. Likewise, it is preferable that each person be competent enough to bear their entire share of the load.

Automattic’s process answers a common gripe from freelancers who are often asked to submit a proposal involving a great deal of work without any compensation only to later find that the company which solicited the materials is using all their ideas. Even under this process the applicant can have his work and ideas appropriated, but at least they will have received some sort of payment for their effort.

Arts in an Age of Technology, Info You Can Use, New Initiatives, State of the Arts, Working In The Arts

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Imagining Doing Many Things With The Rest of Your Life

January 22, 2014

by:

Joe Patti

It is something of a trope that when you are a teenager without a lot of work experience looking to get a better job, you get creative about how you describe your past experience, claiming to have “coordinated the comfort and appreciation of over 1000 customers daily” when your job was to keep the restrooms clean.

After writing my post yesterday about artists doing a better job of communicating their value, I remembered a post on the Theatre Communication Group (TCG) website this summer about how artists already possess many of the skills needed to be entrepreneurs.

At the time, some of the comparisons seemed a little facile and the same sort of stretch teenagers make to sound more skilled.

For example, the improvisation classes we take develop a sensitivity to imagination and impulses. We learn how to say, “Yes” and to follow impulses without fear, judgment or resources. We find ourselves acting with others in highly bizarre and complex scenarios that we have to “act” our ways through. Entrepreneurs, similarly, often find themselves in such situations and must rely on quick thinking, problem solving and the following of impulses.

Further, the storytelling skills we learn as performers, play well into branding ourselves as an artist, entrepreneur or arts business. The research skills we use to research a play and character can simply be repurposed to research one’s market and competition. Our understanding and experience in collaboration aids us in building a culture around creative businesses that represents values: personal, professional, political, artistic, etc. Just like we cast plays, entrepreneurs hire employees.

After reading over the report assembled by the Brooklyn Commune, I realized that the only reason I felt like it was a stretch is that I haven’t really come across many arts people who are interested in applying the skills they acquired in other areas. I have to include myself in that statement. While I look for new opportunities on behalf of my organization, I generally have no inclination to start a business or apply those skills on behalf of a company in another industry.

I think this gets back to the sentiment many of us hear when we begin to embark on a career in the arts, “if you can imagine yourself doing anything else for the rest of your life, pursue that instead.”

What might be inhibiting some of the progress in the arts is that we have so little desire to do anything else that we don’t give a lot of consideration to how our skills might be of practical use outside our field.

One of the reasons the arts community is having difficulty communicating their value to the public at large may be due to never thinking, much less talking, about how the skills we have cultivated are of use anywhere else, because we have no inclination to employ them anywhere else.

When I went back and re-read the TCG posting from the perspective that people would be intentionally trying to apply the skills they have gained to be entrepreneurs, I became more convinced by the idea of the skills being eminently transferable.

I have written a few posts before about how classes and training in the performing arts confer these skills to students, but in my mind I always pictured these students as people who always intended to pursue careers in other areas and are picking up useful skills to transfer to those jobs.

I never really considered someone who had had a successful career in the arts over 10-15 years deciding they would parlay that experience into starting a company that provided logistical support to construction sites.

Again, because we aren’t supposed to imagine doing anything else, why would someone who was successful want to do anything else? But with a partner with construction industry knowledge, an arts person would already have the skills to sell the services, assemble and direct project teams and find creative solutions to problems.

The simple truth is, while we learn a lot of important skills during our arts careers, we don’t acquire all the requisite skills after we start pursuing an arts career. We bring a lot of skills from other jobs and interests in with us.

After I ran my first music festival, I remember the marketing director asking me where I learned to be so highly organized, anticipate problems and develop plans. She wondered if any of my previous jobs had included organizing large outdoor events before.

The truth was while I brought many useful skills from other jobs, none of them directly prepared me for that experience as well as my mother had. Since we lived so far from the supermarket, she used to have us kids make monthly meal menus and shopping lists.

We would go tent camping a few hours away back when you were lucky to have a running water tap nearby much less power. You learned quickly that if you didn’t pack books or games to keep you occupied or forgot to pack the right clothes, it could be a long, boring miserable week.

If you do intend to make a career in the arts, you really still do need possess the drive that comes from a mindset where you can’t imagine doing anything else because it ain’t getting any easier.

Or maybe that is the wrong approach and will just maintain an long too myopic vision.

Since the definition of what it means to participate in artistic pursuits is expanding, the concept of what constitutes a successful artistic career probably also needs to expand—as will the concept of what a person trained in the arts is capable of accomplishing in other industries.

While not all people who work hard pursuing their art becomes highly accomplished or successful, I do believe that it takes a great deal of effort and dedication to become an accomplished exponent.

If nothing else, you need to surmount all the missteps and failures that are part of the process. This has often meant devoting so much time and energy in the pursuit and practice that it doesn’t leave much time for other jobs. But maybe we need to think more about how working in other areas can provide skills to benefit our artistic practice.

A pianist isn’t going to hone her skills by typing hours a day the way a visual artist can learn about composing images in a space while working as a graphic designer. However working in the trust and estate planning department of a bank might provide the pianist with the ability to speak to potential donors about their giving plans and help her better understand how to market her career.

Business Models, State of the Arts, Working In The Arts

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