Powerful: Building a Culture of Freedom and Responsibility

by Patty McCord

You’ve got to hire now the team you wish to have in the future.

But I find that they rarely look to the future in thinking about the team they’ll need. They tend to focus on what their current team is achieving and how much more that team can do.

He had said he needed 150 new people, so I asked, “Are you sure you don’t want seventy-five people who you pay twice as much because they have twice as much experience and can be higher performers?”

“Let’s look at everybody you hired last year. You brought in twenty people in one quarter, and five of them were wrong for the job because you were in such a rush.” Other times they were very picky but hadn’t been creating a pipeline of potential hires, so we couldn’t find good enough people in time and actually had to postpone a project.

“Are we limited by the team we have not being the team we should have?”

You’re Building a Team, Not Raising a Family

we decided to use the metaphor that the company was like a sports team, not a family.

We had a rule of thumb for whether to promote from within or bring in a top performer from outside: did the job to be done require expertise that no one inside had, or was the work in an area that we were ourselves at the forefront of innovating?

When I consult to company leaders and their team managers, probably the most difficult advice for them to accept is that they don’t owe their people anything more than ensuring that the company is making a great product that serves the customer well and on time.

Managers should not be expected to be career planners. In today’s fast-moving business environment, trying to play that role can be dangerous.

Would your team’s performance be significantly boosted if you brought in a new top performer, or several, even if the cost of those hires would mean scaling down the size of your team?

we tried to hire a person who would be a great fit, not just adequate. Finally, we would be willing to say goodbye to even very good people if their skills no longer matched the work we needed done.

If you are not great at hiring high-talent people, then you cannot truly be comfortable letting good people go.

This is why I say that retention is not a good metric by which to evaluate your team-building success or whether you’ve created a great culture.

The measure should be not simply how many people you are keeping but how many great people you have with the skills and experience you need. How many of them you are keeping? How many new people with the skills and experience you need are you hiring?

Great Work Is Not About the Perks

We also did not have a bonus system. If your employees are adults who put the company first, an annual bonus won’t make them work harder or

smarter.

We didn’t understand right away at Netflix that great colleagues and tough challenges to tackle were the strongest draws to working at the company.

Finding the right people is also not primarily about “culture fit.” What most people really mean when they think someone is a good culture fit is that the candidate is someone they’d like to have a beer with. That approach is often totally wrong-headed. People can have all sorts of different personalities and be great fits for the job you need done.

Organizations can adapt to many people’s styles; culture fit can work both ways.

▶ Bonuses, stock options, high salaries, and even a clear path to promotion are not the strongest draw for high performers. The opportunity to work with teams of other high performers whom they’ll learn from and find it exhilarating to work with is by far the most powerful lure.

Can you name the two people you would call right away to talk to about taking the place of your top performers should they leave?

What change is under way in your business? How prepared are you to begin interviewing for the new talent you need in the event the change happens faster than you’ve expected?

How well do you think the recruiters working with you understand the details of the jobs to be filled and the qualities you are looking for in hires?

Pay People What They’re Worth to You

Companies should not be reluctant to explain their compensation rationale. They withhold the information partially because so many are following some below-top-of-market percentile rule, and they think their employees will feel they should be getting compensated at a higher overall market level. They also feel that specific individuals will react badly if they learn they’re making less than colleagues they perceive to be doing work of comparable value.

No question: pay is one of people’s favorite things to gripe and gossip about. But that’s actually a great reason to be more transparent about it.

So am I arguing, after all, for tying pay to performance reviews? No, I am arguing for tying pay to performance, full stop, and the way reviews are generally carried out, there is a big, big difference between those two.

Do you know who on your team has been contacted for another job recently? Have you told all of your people that you want them to be open about discussing this?

How much do you think being tied to predetermined salary ranges is holding you back from building the best possible team?

If you could select certain roles for which you would make the case for hiring star performers at top-of-market compensation, which would they be and why?

Winning games is the only measure of success for sports teams, which is why it’s not just players but coaches too who are replaced readily on top-performing teams.

“Mr. Bowman, you’ve coached so many famous players to such tremendous success. What’s your secret? How did you give them feedback?” And Scotty said, “Well, we have an eighty-game season, and every ten games I would sit down with them individually. I’d bring all their stats and I would I ask other people—the other coaches, the other team members—for feedback also, and the player would bring a self-evaluation. Then we would have a conversation about what to do for the next ten games.” The moderator said, “Thank you, Mr. Bowman!” and then turned to me. “Patty,” he said, “you’re well known for not believing in the annual performance review, but I’ve never really heard you say what you advise instead.” I pointed to Scotty and replied, “What he said!”

If you’re a manager who has no latitude to do away with annual reviews, then fine, but go ahead and start having the kinds of frequent one-on-one meetings with your people that Scotty Bowman described. This is both much more effective and more humane.

I also came to realize that when you hire someone and it turns out that they can’t do the job, the problem is with the hiring process, not the individual. You simply hired the wrong person. It’s not their fault! So you shouldn’t make them feel like it is.

conducted a seriously eye-opening analysis of how employee engagement tracked with performance. She had taken a close look at the company’s heat-mapping survey, which measured how happy and engaged employees were, and compared those results with the performance of teams. The good news, she told me, was that most of the company was green, meaning highly engaged and happy. But the bad news was that the teams with subpar performance were just as green as those that were performing really well. That’s a striking demonstration that there is not such a simple link between engagement and performance.

In my experience, high performers are, in fact, often somewhat frustrated with how their teams are performing rather than satisfied that everything is going swimmingly and life is all good. They are pushing for great results, and achieving those often requires some pain and a degree of discontent. That commitment to achievement is what we want to foster, not the expectation that as long as you’re working hard, the company will have your back.

a simple rule when evaluating their teams,

is what this person loves to do, that they’re extraordinarily good at doing, something we

need someone to be ...

It’s based on critical thinking and it takes the emotion out of the decision. Employees can also use the algorithm to assess whether they should stay at a company or start looking for a new job that will be a better fit.

“The way that we’re socialized to work with people, to not tell them hard truths, is completely different from how Netflix was trying to get us to operate, and so you’re fighting your own instincts. And for me I really learned to embrace

Managers don’t do best by their people by sugarcoating difficult truths, waiting until the last moment to let them go, or shunting them into roles they don’t truly want or the company doesn’t really need.

What would be the equivalent for you of offering your team members individual general feedback on their performance ten games at a time?

distinctive, explicitly articulated, and appealing culture at Netflix

“You can’t do it all at once; you have to pick where you want to start, prioritizing just as you do with the rest of the business.”

Some people will find the changes uncomfortable. People will push back, and some may decide to leave. Some of the practices that worked so well at Netflix might not work for you,

One thing I can promise you about the process of building your own culture of freedom and responsibility is that you will be heartened by how people step up. When people feel that they have more power, more control over their careers, they feel more confidence—confidence to speak up more, to take more risks, to pick themselves up again when they make mistakes, and to take on more and more responsibility. They will amaze you.