Netflix reportedly encourages execs to widely explain why they fire people

Key Points
  • Netflix executives are told to explain their firing decisions, while directors are allowed to see salaries of all employees.
  • It's awkward for some employees, but the company says its turnover rate is below the industry average.
Netflix CEO Reed Hastings.
Philippe Huguen | AFP | Getty Images

Netflix is so transparent with its employees that executives sometimes send emails to hundreds of workers explaining why they fired a particular person, according to a report from the Wall Street Journal. In rare cases, meetings about the firing can include the employee who was ousted. 

CEO Reed Hastings also encourages "sunshining," a practice where people explain their decisions in public. Hastings "sunshined" his decision to give senior executives cash bonuses to buy houses in the Bay Area, a necessary perk to retain talent but one that led to a debate on whether the company should help more employees in a similar fashion.

Through interviews with more than 70 current and former employees, the Journal described a culture of "radical transparency," or openness about sensitive topics that would be considered taboo at most companies. 

Starting last year, Netflix allowed any executive above the director level to see the salaries of all employees, a decision that, like most of those detailed by the Journal, received mixed reviews from the people interviewed. In the case of employee pay, some said it led to awkwardness, while others said it encouraged people making less money to try and get raises. However, Netflix executives recently shot down an effort by Hastings to allow any employee to see the pay of any colleague, regardless of rank, the paper said.

As for the openness in the firing of employees, one executive who requested to be in the discussion about his ouster said he felt it was "beneficial" to his team's transition, with another former employee describing the sessions as "generally useful."

A Netflix spokesperson told the Journal that the company only fires employees for performance issues.

In one "sunshining" scene described by the Journal, former talent chief Tawni Nazario-Cranz was asked by Hastings in front of dozens of executives why she paid for some of her team's makeup and hair styling ahead of a company launch event. Nazario-Cranz said that if a manager took employees to a golf outing it wouldn't be questioned, which led to a debate about "gender equity," one person in attendance told the paper.

Employees are also encouraged to review each other and share feedback with their teams. There are"real-time 360" lunches and dinners for feedback and criticism, with one former executive saying the pressure to participate was the "hardest part about the culture."

Still, Netflix said its total employee turnover is 11 percent a year, which the Journal said, citing a 2018 LinkedIn survey, is below the 13 percent annual average for technology companies.

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