"Unlimited Vacation" Netflix... Why They Shouted "Responsibility" as They Grew Bigger

Netflix Releases Internal Document Reflecting New Corporate Culture
Emphasizes Importance of Responsibility... "Performance Must Come Through Freedom"

'Netflix Culture: Freedom and Responsibility'

Reed Hastings, the founder of Netflix, summarized the fundamental aspects of corporate culture in 2009 through a presentation with two words: 'freedom' and 'responsibility.' Based on the belief that employees would act in ways that maximize the company's benefits, he intended to provide freedom without imposing rules to drive performance. Unlimited vacation days were offered so employees could freely take time off, and employees with children were encouraged to take parental leave whenever they wished. Netflix's culture has been praised as a driving force that enables active adaptation to change and rapid growth.

[Image source=Reuters Yonhap News]

The New York Times (NYT) recently reported that Netflix disclosed an internal document to employees outlining some adjustments to this corporate culture and collected their feedback. After an eight-month internal review, the document was shared with employees on the 8th of last month, receiving about 1,500 comments, and the final version is planned to be released publicly.

In the internal document, Netflix did not significantly change the core principle of 'freedom and responsibility,' but emphasized hiring "highly responsible people who can make good use of the company's openness and freedom." This is interpreted as stressing that freedom must be accompanied by responsibility.

Netflix explained that the changes to the corporate culture document are intended to establish a culture appropriate for the company's expanding size and business. With the number of employees growing to about 13,000, it has become difficult for all employees to participate in every decision as before. The intention is to enable the organization to flexibly embrace changes amid continuously evolving business strategies and move in a direction that delivers results.

While Netflix, which has pursued 'freedom,' continues to maintain strong business performance, NYT explained that a perception has gradually spread among employees that "anything desired can be done," leading to some abuses. For example, one employee exploited the lack of a company-set expense limit and submitted a $30,000 (approximately 42 million KRW) expense claim.

Founder Hastings told NYT in an interview, "The core of Netflix culture is to systematically enable employees to produce good results over the long term," adding, "There will certainly be tremendous creativity, freedom, and innovation, but we want employees to take responsibility themselves." He emphasized, "We care only about achieving excellent results through freedom, not about giving freedom for its own sake."

Although Netflix has provided unlimited freedom without imposing separate rules on employees, it is regarded as not being a 'comfortable' company. NYT reported that employees rarely voluntarily resign, and about 9% of employees are laid off each year. This means that freedom has already been made contingent on performance. Within Netflix, employees are considered to have achieved results if they have worked for five years.

This change at Netflix came about a little over a year after a change in company leadership. Hastings, who served as CEO for 25 years and 5 months since the company's founding in 1997, announced his retirement in January last year. Ted Sarandos, co-CEO, and Greg Peters, Chief Operating Officer (COO), are now leading Netflix as its top executives.