Netflix likes to tout its culture of avoiding rules and minimizing red tape. But, of course, the company does have operational guidelines, as detailed in the Netflix Culture document posted on its website. Co-founder Reed Hastings even wrote a 2020 book detailing the principles entitled “No Rules Rules: Netflix and the Culture of Reinvention.”
Now, for the first time in nearly five years, Netflix is releasing an update to its corporate culture memo, a copy of which Variety acquired exclusively ahead of Thursday’s release. The last major update was in 2017, when it distilled Hastings’ original presentation of 125 slides from 2009 (which has been viewed more than 21 million times).
The core tenets of the Netflix Culture memo, including strengthening employee decision-making, requiring candid feedback, and firing executives unable to sniff “dreamteam” remain intact. But there are some important changes. For starters, the document has a new title: “Netflix Culture – In Search of Excellence” (previously it was just called “Netflix Culture”).
More importantly, the document adds new guidance for employees to act with tax responsibility — a change that comes as Netflix saw its first quarterly subscriber decline in more than a decade. The updated Netflix Culture memo also includes a new section called “Artistic Expression,” explaining that the streamer will not censor “specific artists or voices,” even if employees find the content “harmful,” and bluntly states, “If you would find it difficult to support our content breadth, Netflix may not be the best place for you.”
The Artistic Expression portion of the Netflix Culture document appears to be largely a response to the controversy over Dave Chappelle’s “The Closer” that had Netflix embroiled last fall in what critics say were his transphobic and homophobic comments in the stand-up special. Co-CEO Ted Sarandos defended the company’s decision to keep the Chappelle special in service, sparking a major workers’ strike in protest.
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Entertaining the world is a great opportunity and also a challenge because viewers have very different tastes and points of view. That’s why we offer a wide variety of TV shows and movies, some of which can be provocative,” the new section reads. “To help members make informed choices about what to watch, we offer ratings, content alerts and easy-to-use parental controls.
“Not everyone will like or agree with everything on our service,” the Artistic Expression section continues. “While every title is different, we approach them based on the same set of principles: we support the artistic expression of the creators we want to work with; we program for a diversity of target groups and tastes; and we let viewers decide what suits them, rather than Netflix censoring specific artists or voices.”
The section concludes: “As contributors, we support the principle that Netflix offers a diversity of stories, even if we find some titles that conflict with our own personal values. Depending on your role, you may need to work on titles that you consider harmful. If you’d find it hard to support our content breadth, Netflix might not be the best place for you.”
In terms of leash tightening, in the “Valued Behavior” section (formerly called “True Values”), there’s a new entry under the “Judgement” heading: “You’re Spending Our Members’ Money Wisely.”
While that’s new to the Netflix Culture memo, corporate executives have used similar verbiage in the past — including in the April 2018 quarterly letter to shareholders, which said of the revenue increases, “Our job is to spend this money wisely to increase our members’ joy.”
That said, there are other changes to the culture document that indicate Netflix wants to make it clear that employees have no carte blanche when it comes to spending the company’s money. For example, this passage in the document has been deleted: “There are virtually no expenditure controls and few controls on the signing of contracts. Every employee is expected to seek advice and perspective where necessary. ‘Use common sense’ is our core commandment.”
The update also deletes the following section: “Note that if our company were in financial difficulties, we would not ask our employees to accept less pay. A sports team with a losing record is still paying the top of the personal market for the players they hope will put them back in a winning position. On the other hand, if the company does well, our broad-based stock options become quite valuable.”
In addition to the vocabulary on artistic expression, the memo adds three other new sections: “Ethical Expectations” (which says, in part, “We act honorably even when no one is looking” and “We expect all employees to protect confidential company information, whether marked or unmarked.” as ‘confidential’”); “Representation Matters” (“Our members want to see a variety of stories and people on screen – and our company and leadership must reflect that diversity”); and “Employees Direct Our Philanthropy” (documents that when an employee donates to charity, Netflix donates double to the same group).
The addition of the Ethical Expectations section comes after Netflix said in October it fired an employee who admitted they downloaded internal data and shared it outside the company. The information, which was leaked to Bloomberg, included Netflix financial data for Chappelle’s “Squid Game” and “The Closer,” apparently an attempt by an irate employee to emphasize that the streamer paid more for Chappelle’s controversial content than the best performing South Korean thriller.
Even with the addition of the four new sections, the updated Netflix Culture memo is shorter than the previous version: it now has about 4,070 words, a 6% drop from 4,340 previously.
According to Netflix, anyone in the company could view and comment on suggested updates to the culture memo in a shared document. Thousands of employees took part in the six-month process.
The wording of Netflix’s infamous ‘keeper test’ is much the same: ‘To strengthen our dream team, our managers use a ‘keeper test’ for each of their people: if a team member were to leave for a similar position at another company, would the manager try to keep them?” The document still states that employees who fail the goalkeeper test “will receive a generous severance payment so that we can find someone even better for the position”; however, in the updated version, this footnote has been omitted: “We generally offer a minimum of four months of full pay as severance pay so that our ex-teammates have time to find a new company.”
Some of the material edited from the Netflix Culture memo is clumsily worded. For example, these two sentences have been removed from the discussion of the goalkeeper test: “Being cut by our team is very disappointing, but there is no shame” and “We suck compared to how great we want to be.”
Also deleted is this critical remark, which was intended to underline the point that a company doesn’t need rules for everything:[W]We also don’t have a dress policy, yet no one has come to work naked… Most people understand the benefits of wearing clothes at work.”
In addition, Netflix has revised a section of its “Freedom and Responsibility” section that previously stated, “In rare cases, freedom is abused. We had a senior employee who arranged bribes on IT contracts, for example.” In the new version it now reads: “Over the years, some employees have taken advantage of this freedom in various unfortunate ways.”
And this paragraph, deleted from unnamed Apple co-founder Steve Jobs:
We don’t believe in the lore of senior leaders who are so involved in the details that their product or service becomes great. The legend of Steve Jobs was that his micromanagement made the iPhone a great product. Others go to extremes and proudly call themselves nanomanagers. The heads of major networks and studios sometimes make many decisions in the creative process of their content. We don’t follow these top-down models because we believe we are most effective and innovative when employees across the company make decisions and make their own decisions.
Meanwhile, Netflix’s Values section has removed the “Impact” headline. Netflix said that was removed because it’s not technically a behavior. The section had these points:
- You do amazing amounts of important work
- You consistently demonstrate strong performance so that colleagues can rely on you
- You make your colleagues better
- You focus on results over process
Two of those principles are reiterated elsewhere in the document, where it says, “You make time to help colleagues on Netflix succeed” and “our core philosophy is people over process.”
Finally, here are some other edits worth mentioning in the Valuable Behavior section:
- New entry under “Integrity”: “You act with good intentions and trust your colleagues to do the same”
- New entry under “Selflessness”: “You openly debate ideas and help execute every decision, even if you don’t agree with it”
- New entry under “Passion”: “You are proud to entertain the world”
- Adapted in “Innovation”: “You thrive on change” is now “You are flexible and thrive in a constantly evolving organization”
- Cut off from “Curiosity”: “You contribute effectively outside of your specialty”
You can read the full memo at https://jobs.netflix.com/culture.