When it comes to corporate culture, many banks know that building a genuine and sustainable culture is like baptizing cats. It’s tough work fraught with many scratches and a lot of moving around. However, when it comes to corporate culture, Netflix is in the pantheon and can give banks insight. In 2011, their CEO, Reed Hastings, their Chief Talent Officer, and others produced a “Culture Doc” (below) that spread like wildfire among the Silicon Valley’s elite. It has influenced many a corporation including LinkedIn was a Harvard Business School case study and Facebook’s COO Sheryl Sandberg said it may be “the most important document to ever come out of the Valley.” The document could be equally important for banks and remains amazingly relevant.
Here are some key points:
Job skills that matter: Hire for honesty, judgment, communication skills, impact, curiosity, ability to innovate, courage, passion, and selflessness.
Co-workers: Working with other “A” players is a perk in itself and should not be underestimated. Top performers working together are happier and more productive.
You are not a family: Many banks are fond of saying “we are like a family.” They should stop as it is a bad analogy. You can’t fire or promote your kids. A better analogy is a corporate team – you hire, train, cut, move positions and above all else, support one another.
Hard work is overrated: Results matter – effort is irrelevant
Structure: If you hire well and set expectations, there is little need for formal rules. Not having formal rules instills trust, freedom, and flexibility. Most banks curtail freedom as they grow – this is a mistake, as it drives out high performing employees that are creative and thrive on freedom. While many banks have formal vacation policies, Netflix’s HR policy says “take what vacation you feel necessary and act in the best interest of the Company.” Their point - you don't track all the hours you work (weekends, vacations, etc.) so why track vacation hours?
The Talent Density Function: The key to overcoming growth challenges is to increase the “Talent Density” (the percentage of top performers) faster than growth.
Ditch the formal review: Formal reviews tend to turn into administrative tasks that only occur when due. It is far better to instill a culture that gives feedback (driven by praise over criticism) soon after the point occurrence. Don’t rank employees against each other as it runs counter to objectives. The goal should be to have a whole company of above-average employees when compared to your competition.
Help employees prepare to leave the bank: While counter-intuitive, the bank should understand every employee’s goals, be honest upfront and prepare for that employee to leave from the start. If the bank cannot provide enough opportunity for growth, then it should support the employee to find a better job. It is better to attract talent for a short time then to never attract top talent at all.
Banish the performance improvement plan: An underperforming employee on a plan rarely changes and often gets more resentful. Paying a generous severance to reduce litigation usually wastes fewer resources and time.
Set compensation policies and levels to be able to recruit people that already have great jobs: A good employee is the best investment your bank can make and if managed right will pay off multiple times their compensation. Be prepared to pay off for top performers that can immediately bring a set of useable skills to the company. Stop tying pay range to a title and never strive for pay equality as it will force top performers to leave. Give employees the option of designing their mix of equity, incentive, and salary. Forget the vesting schedule for equity. If an employee wants to leave, your bank should want him or her to leave.
Define “high performance”: Every employee should be clear what constitutes high performance and every manager should ensure the employees have the resources they need to achieve the bank’s goals. Bank performance and morale are correlated – everything else is fluff.
Invest in “context”: By making sure your employees are trained, are updated to everyone’s work, have a clear set of direction, have metrics and have the tools to do their job, the context will be right and great results will naturally follow.
The Bottom Line
If you want to outperform make sure your employees are happy and productive. To do that, hire right, give them freedom, pay them well and be clear what you want from them. Embrace things like strategy, benchmarks, objectives, transparency, the risk/reward equation of decisions and clarity. Avoid top-down decision making, approval processes, committees and when processes are valued more than results. Strive to be fast and flexible with a fantastic ability to adapt and your bank will overcome all challenges.
If you want more information on the Netflix culture, download HERE the entire 126-page presentation and see what many banks have used as a cornerstone to their human capital initiative. It is well worth your time as it is a masterclass on managing human capital.
Submitted by Chris Nichols on July 30, 2019