Welcome to The Benchmark, powered by Blend. In this video series, Blend’s executives meet with leaders across industries to share insights about growth and success during a time of extraordinary change.
For this episode, Blend CEO and co-founder Nima Ghamsari met remotely with Patty McCord, who spent 14 years at Netflix experimenting with new ways to work. Patty created the highly regarded Netflix culture deck, which encourages independent decision making by employees, emphasizes people over process, and advocates for sharing information “openly, broadly, and deliberately.” Nima and Patty had a wide-ranging discussion, spanning those topics and more.
Explore four takeaways from the video
1. Building trust with greater transparency
“We have so many more people in the company now and so many different parts of the company that are working in lockstep to get things done,” said Nima, noting that Blend has been growing rapidly and now has 500 employees. “So we’ve had to create more functions and teams and areas within the company, but then it becomes really hard to keep all those teams in the loop.”
Patty and Nima focused on a key challenge for growing companies: the best ways for teams and individuals to collaborate, share information, and offer and receive feedback.
One collaboration model Nima discussed was a “default-private, invite-only” format for all new projects. The advantage of that model is that participants can speak candidly without the distractions of the “peanut gallery” chiming in. An alternative model is a “default-public, opt-in” approach, which would create visibility for anyone who wanted to join a conversation, drive additional context, and encourage feedback from a larger group.
“I would opt for transparency 100% of the time,” said Patty. “If you’re willing to share everything with people, my experience has been that they give it back to you in terms of trust.”
2. Separating pay from performance
“For years at Netflix I argued for open compensation,” said Patty. “I wanted to put everybody’s numbers on the door. Of course, I got all these reasons why we couldn’t do it, because compensation is so personal and it’s like health data. But here is why I pushed so hard for it: you should be able to explain to people why they’re paid what they’re paid.”
Nima and Patty turned their attention to a topic that many companies struggle to get right: how to measure and reward individual performance. They also considered to what degree an employee’s salary should be shared within an organization and whether pay and performance should be linked.
“I don’t think a numeric application of somebody’s performance is very useful to anybody,” said Patty. “The tenets of Netflix’s culture were we are going to expect high performance from everybody. Period. We’re not going to bonus you for performance. We’re going to assume that everybody’s a 9 or a 10 and that’s who we’re going to hire, and if you’re not performing at a 9 or a 10 then something’s wrong.”
3. Prioritizing people over process
“We hire smart people, give them the reins, and let them run with it,” said Nima.
Patty and Nima delved into the ways leaders can ensure that employees have the autonomy and support to do their jobs, take chances and succeed, and stumble and learn from setbacks. They also discussed how organizations can set clear expectations, champion high standards, and hold people accountable to company-wide goals and initiatives.
Patty said it’s critically important for managers to share precise contextual information about what success looks like with a specific time frame attached to it.
She also discussed her least-favorite word.
‘I really hate management-speak and the word that I hate more than any of them is empowerment,” said Patty. “As if we have a magic wand and can empower people. My theory is people are already powerful and the reason we have to go back and empower them is because we take it all away.”
4. Making informed decisions, owning up to mistakes
“Especially for companies that are moving fast, you are making decisions with incomplete information,” said Nima. “That will necessitate that we make some mistakes along the way.”
The drive to innovate has resulted in extraordinary successes in Silicon Valley and transformed entire industries, but it’s also presented challenges. Chief among them is the need for leaders to make decisions at a rapid pace while often relying on incomplete information or data. That can be especially true for agile organizations that are trying to move beyond the playbook of the past to build the technology of the future.
Mistakes are inevitable, Patty and Nima agreed. The key is to recognize them, own up to them, and correct them quickly and transparently.
“When you make a mistake it’s not just important that you stand in front of the company and say, ‘Oh, humble me, I made an error,’” said Patty. “It’s really important that you follow up by going, ‘We made the wrong decision, here’s the information we had when we made the decision, and here’s what we know now.’
“And this gives me a chance to give you one of my favorite Patty-isms. Have an opinion, take a stand, and be right most of the time.”