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One of the things I loved about working at Netflix was that the base assumption was that everyone was a top performer. If you weren't a top performer, you were

One of the things I loved about working at Netflix was that the base assumption was that everyone was a top performer. If you weren't a top performer, you were given a severance check. The analogy we used was a sports team. Pro sports teams have really good players and great players. Some people are superstars, but unless you're at least really really good you're not on the team. Performance and compensation were completely separate, which was also nice. Performance evals were 360 peer reviews, and compensation was determined mostly by HR based on what it was costing to bring in new hires, and then bumping everyone up to that level. So at least at Netflix 10 years ago, performance wasn't really distributed at all. Everyone was top 10% industrywide.

lifeisstillgood 2y ago
Logically no-one else will try this - because if every company competed for the top talent, wages would rise to consume all profit. I think this is probably how labour and capital should compete - I expect we need to equalise tax treatment so that becomes more possible
brabel 2y ago
It's really difficult for me to believe that they really got 10% top performers. For one, knowing the cut-throat nature of employment there, I would expect only a minority of developers would be willing to try working there, despite the awesome rewards. Another reason I really don't trust that to be true is that I've never seen a good way to measure who is a top performer and who is not. I don't think there's one, people are good in different things, even within the same job... for one assignment, Joe may be the best, but for another, Mary is the winner (but again, to measure this reliably and objectively is nearly impossible IMHO for anything related to knowledge work - and I've read lots of research in this area!). Finally, just as a cheap shot at Netflix, sorry I can't resist as a customer: they absolutely suck at the most basic stuff in their business, which is to produce good content in the first place, and very importantly, NOT FREAKING CANCEL the best content! I won't even mention how horrible their latest big live stream was... oh well, I just did :D.
- FuriouslyAdrift 2y ago
  Netflix has a reputation for the highest salaries in tech. That tends to attract top talent. https://medium.com/dice-insights/netflix-ceo-explains-why-he-pays-employees-insanely-huge-salaries-79aaaa68e784 https://medium.com/dice-insights/netflix-ceo-explains-why-he...
  - crystal_revenge 2y ago
    My career experience has been that there's low correlation between TC and talent, especially at the high end of the talent spectrum. While I know some really smart people working at various FAANGS making great TC, nearly all of the people that are truly something special are grinding away on hard problems, relatively unknown, getting paid "fine" because they'd rather work on truly hard problems than make optimal amounts of money. My experience has been that the high TC crowd is above average skillwise, but attracts far more people whose number one concern career-wise is maximizing TC. These are often people that chose technical work because they did the math and felt it was the highest paying per effort required but aren't really passionate about the areas they get paid in. Truly brilliant people, especially ones from less traditional backgrounds, tend to have a hard time surviving in high TC orgs because they aren't aligned with the culture. Likewise whenever I interact with someone in a high TC role, I'm undoubtedly disappointed by how little they care about their area of work. For them the point of the job is to make money, and they make a lot of money, so there's nothing to talk about.
    - ip26 2y ago
      You can apply a filter to top 10% talent and get a perfectly well supplied collection of driven, high output people who are motivated by high TC. It’s a subset, of course. And while visionary genius may not be motivated by TC, nobody said Netflix was looking to crack string theory. People don’t have to be passionate about their job to do really good work.
      - crystal_revenge 2y ago
        > People don’t have to be passionate about their job to do really good work. Even in your core logic here you're proving my point. It's not about being passionate about your job, it's about being passionate about your work, which for me and most of the people I've enjoyed working with the most only has a rough overlap with our jobs. It's a true privileged to work in an area with high paying jobs, but if tech completely crumbled I would remain working in the field so long as the work was relevant to what interests me, regardless of how little it paid. Doing really good work, in the sense I'm talking about, has little to do with how good you are at your job. In fact, as your job pays more it increasingly requires a distracting loyalty to your employer and the "work" you do tends to increasingly become less interesting. There are very clear exceptions to this, but for the most part I've found it to be the case. High TC speaks solely to an individuals ability to meet the needs of a high paying employer. I prefer to work with people who are working on something much larger than their job, so tend to work at weirder companies that pay less. I guess it all comes down to what you define as "talent" (as that was the original point), personally I'm not interested in working with people whose primary talent is being a good employee.
Eikon 2y ago
How are 'top performers' and 'low performers' being defined in this context? In my experience, these labels in corporate environments often correlate more with social dynamics and political acumen than actual work output. People who are less socially connected or don't engage in office politics may find themselves labeled as 'low performers' regardless of their actual contributions, while those who excel at workplace networking might be deemed 'top performers'. The interview process of these kind of companies also often falls into a problematic pattern where interviewers pose esoteric questions they've recently researched or that happen to align with their narrow specialization from years in the same role. This turns technical interviews into more of a game of matching specific knowledge rather than evaluating problem-solving abilities, broader engineering competence or any notion of 'performance'. Let's be honest: how many people can truly separate personal feelings from performance evaluation? Even with structured review processes in place, would most evaluators give high marks to someone they personally dislike, even if that person consistently delivers excellent work?
- efitz 2y ago
  > problematic pattern where interviewers pose esoteric questions they've recently researched The days of the “brain teaser” interview question are gone, at least from the “magnificent 7” and similar big tech companies. Nowadays it’s coding, behavioral, and design, at least for engineers. I concur with the sentiment that performance ranking has a very significant social component. If you have a bad relationship with your manager, watch out. But also, if your manager has a bad relationship with THEIR manager, or are not adept at representing their employees, you can get screwed too.
thifhi 2y ago
> Performance and compensation were completely separate, which was also nice. Huh? How is that nice? Does performance and compensation not correlate in your ideal world, or am I misunderstanding it?
- jedberg 2y ago
  In my ideal world, no they do not. Pay equals what it would cost to rehire me today. Performance should always be great for what you are expected to do. Where the two correlate is that if you're hiring a mid-level person they get mid-level pay, and if they are top performing mid-level, they get promoted to senior and get commensurate pay. So performance leads to promotions which leads to better pay. But pay is not directly correlated with performance. I expect everyone in the same level to have equal performance (over the long term, of course there will be short term variations).
- HWR_14 2y ago
  I read that as compensation wasn't correlated to your performance relative to peers. Which is I think what most people would appreciate in an ideal world. I don't think they meant absolute performance and compensation weren't linked.
haolez 2y ago
How can 360 peer performance reviews ever work? The incentives are against a fair evaluation: the reviewers have the incentive to overly criticize others so that they can stand out more. I'm not saying that everyone on a 360 review process does that. But the incentive is there and it's working against fair reviews.
- jedberg 2y ago
  If performance is not tied to pay, why would you have an incentive to do that? If anything the incentive is problematic in the other direction. People tend to be nice because they don't want to say mean things that they know the manager will see.
- stonemetal12 2y ago
  >The incentives are against a fair evaluation: the reviewers have the incentive to overly criticize others so that they can stand out more. Wouldn't that(how you view and fit in with your team) be part of your review? If I was Bob's manager and all reviews he gave of his teammates were "Teammate M is a dumbass and the only reason they are productive is because I do 80% of their job for them", wouldn't leave me thinking Bob is great. It would leave me thinking Bob is a jerk who doesn't work well with others.
yreg 2y ago
A bit offtopic, but I've been curious about this. Could you please describe how the unlimited vacation policy worked? How did people feel about it and whether they were anxious regarding using it (afraid that it will reflect on them badly when they take "too much" time off)?
- jedberg 2y ago
  I loved the unlimited vacation policy. I took more vacation at Netflix than anywhere else. No one was anxious about using it. It helped that senior leadership set a good example. The CEO took a few weeks off every year and made sure everyone knew that it was ok to do that. He also made sure all his directs took a few weeks every year at a minimum. There was a culture of management encouraging you to take advantage of the program.
  - ksdnjweusdnkl21 2y ago
    Ok, but how about few months? Did anyone do that?
    - relaxing 2y ago
      Not even workers in France get a few months vacation. What are you after here?
      - fnfjfk 2y ago
        “Unlimited” means there is no limit, so logically it means a few months should be fine. If a few months not fine, I think a reasonable request would be to define the limit and claim that instead of “unlimited”. I work at place with about 5 work weeks off, which is a lot for the US, and there’s never any question about whether you can use your time or not because the number of days is exactly specified. I like that better than a vague “unlimited” (but not actually) policy.
        yreg 2y ago
dangus 2y ago
In summary, Netflix told all their employees that they are so amazing at their job, they are the top 10% of the whole world, they are like NFL athletes. If they don't perform to top tier levels, they'll be shown the door. Here's a thought experiment: pretend that Netflix is lying and that their employees are not actually made up of the top 10% of talent industrywide. Let's for this thought experiment assume the realit is that they have slightly above average talent because Netflix pays slightly above industry average. But now they've convinced those employees that they're not just slightly above average, they are like elite NFL players. And that means they have to work like elite NFL players. Netflix convinces their employees to work XX% harder with longer hours than the rest of the industry because they think they are elite. "Only amazing pro athlete geniuses can work here" is way more motivating than "You have to work yourself to death with extra hours to make quota or you're fired!" because it's a manipulation of the ego. I think this thought experiment is closer to reality than Netflix or their kool-aid-drunk employees will admit, and that Netflix's "pro athlete" culture is worker-harming psychological manipulation.
- jonas21 2y ago
  Most Netflix employees have worked at other places and can make the comparison for themselves. They don't have to take Netflix' word for it. Also, since when is telling people they're good at what they do "worker-harming psychological manipulation?"
  - MilanTodorovic 2y ago
    My guess would be that it nurtures the imposter sydrome once the "top performer" starts struggeling with something they shouldn't if they truely were a top performer.
  - dangus 2y ago
    The employees are making that judgment in an environment that has been tainted by the psychological manipulation itself. How many people have brains that are going to seriously put up a fight for objective truth when other people talk them up like that? If you tell me my team is full of excellent talent I’m not going to self-sabotage my ego and question it. It’s negative psychological manipulation when it’s being used as an excuse to fire and replace reasonably productive people. The employment contract is highly lopsided. An employee is harmed far more when they are fired than a business, and Netflix exploits that advantage with this organizational culture.

lifeisstillgood 2y ago

Logically no-one else will try this - because if every company competed for the top talent, wages would rise to consume all profit. I think this is probably how labour and capital should compete - I expect we need to equalise tax treatment so that becomes more possible

brabel 2y ago

It's really difficult for me to believe that they really got 10% top performers. For one, knowing the cut-throat nature of employment there, I would expect only a minority of developers would be willing to try working there, despite the awesome rewards. Another reason I really don't trust that to be true is that I've never seen a good way to measure who is a top performer and who is not. I don't think there's one, people are good in different things, even within the same job... for one assignment, Joe may be the best, but for another, Mary is the winner (but again, to measure this reliably and objectively is nearly impossible IMHO for anything related to knowledge work - and I've read lots of research in this area!). Finally, just as a cheap shot at Netflix, sorry I can't resist as a customer: they absolutely suck at the most basic stuff in their business, which is to produce good content in the first place, and very importantly, NOT FREAKING CANCEL the best content! I won't even mention how horrible their latest big live stream was... oh well, I just did :D.

FuriouslyAdrift 2y ago
Netflix has a reputation for the highest salaries in tech. That tends to attract top talent. https://medium.com/dice-insights/netflix-ceo-explains-why-he-pays-employees-insanely-huge-salaries-79aaaa68e784 https://medium.com/dice-insights/netflix-ceo-explains-why-he...
- crystal_revenge 2y ago
  My career experience has been that there's low correlation between TC and talent, especially at the high end of the talent spectrum. While I know some really smart people working at various FAANGS making great TC, nearly all of the people that are truly something special are grinding away on hard problems, relatively unknown, getting paid "fine" because they'd rather work on truly hard problems than make optimal amounts of money. My experience has been that the high TC crowd is above average skillwise, but attracts far more people whose number one concern career-wise is maximizing TC. These are often people that chose technical work because they did the math and felt it was the highest paying per effort required but aren't really passionate about the areas they get paid in. Truly brilliant people, especially ones from less traditional backgrounds, tend to have a hard time surviving in high TC orgs because they aren't aligned with the culture. Likewise whenever I interact with someone in a high TC role, I'm undoubtedly disappointed by how little they care about their area of work. For them the point of the job is to make money, and they make a lot of money, so there's nothing to talk about.
  - ip26 2y ago
    You can apply a filter to top 10% talent and get a perfectly well supplied collection of driven, high output people who are motivated by high TC. It’s a subset, of course. And while visionary genius may not be motivated by TC, nobody said Netflix was looking to crack string theory. People don’t have to be passionate about their job to do really good work.
    - crystal_revenge 2y ago
      > People don’t have to be passionate about their job to do really good work. Even in your core logic here you're proving my point. It's not about being passionate about your job, it's about being passionate about your work, which for me and most of the people I've enjoyed working with the most only has a rough overlap with our jobs. It's a true privileged to work in an area with high paying jobs, but if tech completely crumbled I would remain working in the field so long as the work was relevant to what interests me, regardless of how little it paid. Doing really good work, in the sense I'm talking about, has little to do with how good you are at your job. In fact, as your job pays more it increasingly requires a distracting loyalty to your employer and the "work" you do tends to increasingly become less interesting. There are very clear exceptions to this, but for the most part I've found it to be the case. High TC speaks solely to an individuals ability to meet the needs of a high paying employer. I prefer to work with people who are working on something much larger than their job, so tend to work at weirder companies that pay less. I guess it all comes down to what you define as "talent" (as that was the original point), personally I'm not interested in working with people whose primary talent is being a good employee.

Eikon 2y ago

How are 'top performers' and 'low performers' being defined in this context? In my experience, these labels in corporate environments often correlate more with social dynamics and political acumen than actual work output. People who are less socially connected or don't engage in office politics may find themselves labeled as 'low performers' regardless of their actual contributions, while those who excel at workplace networking might be deemed 'top performers'. The interview process of these kind of companies also often falls into a problematic pattern where interviewers pose esoteric questions they've recently researched or that happen to align with their narrow specialization from years in the same role. This turns technical interviews into more of a game of matching specific knowledge rather than evaluating problem-solving abilities, broader engineering competence or any notion of 'performance'. Let's be honest: how many people can truly separate personal feelings from performance evaluation? Even with structured review processes in place, would most evaluators give high marks to someone they personally dislike, even if that person consistently delivers excellent work?

efitz 2y ago
> problematic pattern where interviewers pose esoteric questions they've recently researched The days of the “brain teaser” interview question are gone, at least from the “magnificent 7” and similar big tech companies. Nowadays it’s coding, behavioral, and design, at least for engineers. I concur with the sentiment that performance ranking has a very significant social component. If you have a bad relationship with your manager, watch out. But also, if your manager has a bad relationship with THEIR manager, or are not adept at representing their employees, you can get screwed too.

thifhi 2y ago

> Performance and compensation were completely separate, which was also nice. Huh? How is that nice? Does performance and compensation not correlate in your ideal world, or am I misunderstanding it?

jedberg 2y ago
In my ideal world, no they do not. Pay equals what it would cost to rehire me today. Performance should always be great for what you are expected to do. Where the two correlate is that if you're hiring a mid-level person they get mid-level pay, and if they are top performing mid-level, they get promoted to senior and get commensurate pay. So performance leads to promotions which leads to better pay. But pay is not directly correlated with performance. I expect everyone in the same level to have equal performance (over the long term, of course there will be short term variations).
HWR_14 2y ago
I read that as compensation wasn't correlated to your performance relative to peers. Which is I think what most people would appreciate in an ideal world. I don't think they meant absolute performance and compensation weren't linked.

haolez 2y ago

How can 360 peer performance reviews ever work? The incentives are against a fair evaluation: the reviewers have the incentive to overly criticize others so that they can stand out more. I'm not saying that everyone on a 360 review process does that. But the incentive is there and it's working against fair reviews.

jedberg 2y ago
If performance is not tied to pay, why would you have an incentive to do that? If anything the incentive is problematic in the other direction. People tend to be nice because they don't want to say mean things that they know the manager will see.
stonemetal12 2y ago
>The incentives are against a fair evaluation: the reviewers have the incentive to overly criticize others so that they can stand out more. Wouldn't that(how you view and fit in with your team) be part of your review? If I was Bob's manager and all reviews he gave of his teammates were "Teammate M is a dumbass and the only reason they are productive is because I do 80% of their job for them", wouldn't leave me thinking Bob is great. It would leave me thinking Bob is a jerk who doesn't work well with others.

yreg 2y ago

A bit offtopic, but I've been curious about this. Could you please describe how the unlimited vacation policy worked? How did people feel about it and whether they were anxious regarding using it (afraid that it will reflect on them badly when they take "too much" time off)?

jedberg 2y ago
I loved the unlimited vacation policy. I took more vacation at Netflix than anywhere else. No one was anxious about using it. It helped that senior leadership set a good example. The CEO took a few weeks off every year and made sure everyone knew that it was ok to do that. He also made sure all his directs took a few weeks every year at a minimum. There was a culture of management encouraging you to take advantage of the program.
- ksdnjweusdnkl21 2y ago
  Ok, but how about few months? Did anyone do that?
  - relaxing 2y ago
    Not even workers in France get a few months vacation. What are you after here?
    - fnfjfk 2y ago
      “Unlimited” means there is no limit, so logically it means a few months should be fine. If a few months not fine, I think a reasonable request would be to define the limit and claim that instead of “unlimited”. I work at place with about 5 work weeks off, which is a lot for the US, and there’s never any question about whether you can use your time or not because the number of days is exactly specified. I like that better than a vague “unlimited” (but not actually) policy.
      - yreg 2y ago

dangus 2y ago

In summary, Netflix told all their employees that they are so amazing at their job, they are the top 10% of the whole world, they are like NFL athletes. If they don't perform to top tier levels, they'll be shown the door. Here's a thought experiment: pretend that Netflix is lying and that their employees are not actually made up of the top 10% of talent industrywide. Let's for this thought experiment assume the realit is that they have slightly above average talent because Netflix pays slightly above industry average. But now they've convinced those employees that they're not just slightly above average, they are like elite NFL players. And that means they have to work like elite NFL players. Netflix convinces their employees to work XX% harder with longer hours than the rest of the industry because they think they are elite. "Only amazing pro athlete geniuses can work here" is way more motivating than "You have to work yourself to death with extra hours to make quota or you're fired!" because it's a manipulation of the ego. I think this thought experiment is closer to reality than Netflix or their kool-aid-drunk employees will admit, and that Netflix's "pro athlete" culture is worker-harming psychological manipulation.

jonas21 2y ago
Most Netflix employees have worked at other places and can make the comparison for themselves. They don't have to take Netflix' word for it. Also, since when is telling people they're good at what they do "worker-harming psychological manipulation?"
- MilanTodorovic 2y ago
  My guess would be that it nurtures the imposter sydrome once the "top performer" starts struggeling with something they shouldn't if they truely were a top performer.
- dangus 2y ago
  The employees are making that judgment in an environment that has been tainted by the psychological manipulation itself. How many people have brains that are going to seriously put up a fight for objective truth when other people talk them up like that? If you tell me my team is full of excellent talent I’m not going to self-sabotage my ego and question it. It’s negative psychological manipulation when it’s being used as an excuse to fire and replace reasonably productive people. The employment contract is highly lopsided. An employee is harmed far more when they are fired than a business, and Netflix exploits that advantage with this organizational culture.