10 Lessons on Culture and Hiring From Netflix’s Patty McCord

(photo credit: Dear World)

Do job titles really matter?

Are companies responsible for employee happiness?

Should company culture evolve as your company grows, or should it be set in stone?

Those are just a few of the topics Patty McCord discussed during a recent interview for our Seeking Wisdom podcast.

For those who don’t know, Patty is Netflix’s former Chief Talent Officer. She spent 14 years on their HR team building the company’s innovative culture, and was a co-creator of their famous “Culture” deck, which has been viewed millions of times.

If you haven’t already, I highly recommend you listen to the full episode. (Co-host Dave Gerhardt is on the record calling it the “best Seeking Wisdom episode to date.”)

But if you don’t have time to listen to the whole thing now, don’t sweat it:

I’ve pulled out the top 10 lessons from our interview with Patty McCord that you can check out below.

1) “By keeping things the same, you’re assuring certain death.”

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The are three possible outcomes for a startup, as Patty told us: “You get bigger, you get smaller, or you get eaten.”

And while getting bigger is definitely the most desirable outcome, there’s no avoiding the growing pains that come with it. That’s especially true when it comes to company culture.

When startups begin adding headcount, there are always people who start saying, “We need to keep the culture. We need to preserve it.” But as Patty explained, if you try to keep the culture static as your company grows and grows, it’s just not going to work out.

You can’t keep the culture of 50 people when you have 500 people at the same company. By keeping things the same, you’re assuring certain death. You killed yourself because you can’t do the next-level work with the first-level people.

2) “People have power. They walk in the door with it.”

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In the interview, we learned that Patty is not a big fan of HR buzzwords. And one of her least favorites is “empowerment.”

Here’s why:

When I talk about it I say sure, you got the magic wand in HR and I get to go: ‘You’re empowered.’ Sprinkle on the fairy dusty and all of a sudden we have low retention because people are empowered because they get ice cream sundaes on Friday and beer.

My tirade is you know why we have to empower them now because we took it all away. Now, you’ve got to ask permission and you got to refer to the guideline, you got to go to the keeper of the secrets in HR to find out what’s really going on with your pay or your team. It’s just ridiculous.

In Patty’s view, the HR function has become this weird balancing act of protecting the company “from the evil employees that might sue” and simultaneously “empowering them with perks and happiness so that they’ll be happy and stay and be engaged and retained.”

But as Patty explained, “People have power. They walk in the door with it.” By avoiding traditional HR processes that slow everyone down, you can free employees up to use the power they already came to the company with — no ice cream sundaes required.

3) “I’m a great recruiter because I really respect what people do.”

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What makes a job candidate tick? What are they passionate about?

For Patty, the key to becoming a great recruiter is to understand what people do, and to understand why they love it. As she explained:

It’s a different way of looking at people, it’s more about matchmaking. I’m a great recruiter because I really respect what people do and I want to get inside their skin. I want to sit next to somebody writing code and watch the magic that’s like composing music and wonder, ‘What happens in those brains?’

4) “The two most important qualities, in leadership and HR, are pattern recognition and common sense.”

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Let’s tackle these one by one. First, pattern recognition:

My CFO and I used to fight about it and say, “You have this intuition, you have this gift, I just don’t have it.” I said, “No, actually we have the same gift, yours is just with numerals, mine is with people.

By being able to identify patterns in who you hire, and seeing which hires end up being successful at the company, you can avoid making bad hiring decisions.

The second quality needed for HR and leadership roles: Common sense. And for Patty, “common sense” includes always putting the customer and the company ahead of yourself and your team.

We use other words for the common sense part. I talk about it a lot as ‘judgment.’ I would rather have you make the right call than be the smartest person. Because if you’re going to give people a lot of freedom to make great decisions, then you’ve got to trust the that they’re going to make the best decisions for the company and the customer, not for themselves or their team.

5) “I always equate recruiting with painting: It’s all in the prep.”

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Here’s Patty’s breakdown of the prep work you need to do in order to recruit and hire successfully:

First, you’ve got to go deep into what is it that we don’t know how to do. What problem is it that we need to solve? How do we want to round up the team? What needs to happen that’s not happening now?

By asking these questions and getting to the root of why you’re hiring, the better you’ll become at pattern recognition. Or as Patty put it:

“The more you know about the problem, the more you’ll start to recognize the patterns.”

6) “People’s body language says as much as what comes out of their mouths.”

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Patty believes that the in-person interview process should take no more than a single day. After that, if you need more information, video conferencing is the way to go.

Why? Because you can still read a person’s facial expressions and see their reactions — something you can’t do over the phone. As Patty told us:

Video conferencing is a great way to interview. Do that whenever you can because people’s body language says as much as what comes out of their mouth.

7) “If you’re prepared to talk about it, be prepared to show up on time.”

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Patty told the story of how Reed Hastings (Netflix co-founder and CEO) hated when people showed up late to meetings. As she explained:

It was sacrosanct to be on time especially if Reed was in the room. If you walked in 10 minutes late, then he would set up the next meeting so that your decision that he knew you were interested in, we made that in the first four minutes. Then, you’d walk in and go, ‘Yeah, I’m prepared to talk about this.’ Well, if you’re prepared to talk about it, be prepared to show up on time.

The only exception to the rule? If you were late because you were interviewing, that was OK.

“It was so important to always have the right talent, that that was the only thing that would trump something else.”

8) “It’s not that you have progressive job titles, it’s that you can describe what you’ve accomplished.”

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We’re all familiar with the traditional career trajectory: You start out as an Associate something, then you become a Senior something, or a manager (p.s. good time to start reading Peter Drucker). Then there’s Director, and VP, and it keeps going up.

For Patty, these progressive job titles are less important than being able to describe — and show passion and enthusiasm for — your actual accomplishments.

I think that the way you go farther in your career is you have a track record of I know that’s true, you know that’s true. It’s not that you have progressive job titles, it’s that you could describe what you accomplished. When you interview people and you think, “This person is really great,” it’s when their eyes light up and they can tell you exactly what they did. When you touch their passion button, they can’t fake it.

9) “Builders are rarely the best maintainers.”

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Let’s face it: the first handful of people at a company — who are passionate about building things and disrupting the status quo — are rarely a good fit for the later stages of a company.

As Patty explained, if an employee is passionate about doing something that your company is no longer focused on, turning to career development and trying to find a new role for the person within the company isn’t necessarily best solution. Instead, Patty recommends asking this question:

Looking six months out and seeing what you have to do and the team you have to build, if that person interviewed today, would you hire them?

If the answer is no, you should help them find a company that’s looking for someone who has that particular passion and skillset.

10) “Companies don’t exist to make employees happy.”

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When Patty was advising with a startup that seemed to be more concerned with installing kegerators than improving their bottom line, she asked them this question:

“You guys know that companies don’t exist to make employees happy, right?”

Patty was met with confused looks, and then offered this incredibly blunt (and incredibly awesome) explanation:

Okay, let’s do a quick review. You have the service that people give you money for — that’s called revenue. And then you use that revenue to buy things like your salaries and the swings and hammocks and however many kegerators you need. What’s left over is profit. Oh right, you don’t have any of that.

Final Thought

If you haven’t picked up on this by now, Patty McCord is an absolute legend.

Truth be told, I probably could have pulled a hundred lessons out of this interview.

So as a final thought, I just want to remind you to check out the full interview. It’s one of our longest Seeking Wisdom episodes yet, but there’s no fluff or filler — just first-hand lessons (and some great startup stories) from Patty.

Subscribe on iTunes and catch the full interview with Patty on this episode of Seeking Wisdom