With these two elements in place, you are ready to begin removing controls. Chapters 3a and 3b will show you how.
NOW BEGIN REMOVING CONTROLS . . .
3a
REMOVE VACATION POLICY
Well before Netflix, I believed that the value of creative work should not be measured by time. This is a relic of an industrial age when employees did tasks that are now done by machines.
If a manager came to me and said, “Reed, I want to give Sherry a promotion because she works like crazy,” I would be frustrated. What do I care? I want that manager to say, “Let’s give Sherry a promotion because she’s making a huge impact,” not because she’s chained to her desk. What if Sherry’s accomplishing amazing things working a twenty-five-hour week from a hammock in Hawaii? Well, let’s give her a big raise! She’s extremely valuable.
Today, in the information age, what matters is what you achieve, not how many hours you clock, especially for the employees of creative companies like Netflix. I have never paid attention to how many hours people are working. When it comes to how we judge performance at Netflix, hard work is irrelevant.
Nevertheless, until 2003 we allocated vacation and tracked days off, just like every other company I knew. Netflix was following the pack. Each employee received a specific number of days off per year depending on seniority.
Then a suggestion from an employee led us to make a change. He pointed out the following:
We are all working online some weekends, responding to emails at odd hours, taking off an afternoon for personal time. We don’t track hours worked per day or week. Why are we tracking days of vacation per year?
There was no answer. An employee could be working from 9:00 a.m. to 5:00 p.m. (eight hours) or from 5:00 a.m. to 9:00 p.m. (sixteen hours). That’s a 100 percent variation, yet no one monitored it. So why should I care if that employee works fifty weeks a year or forty-eight weeks a year? That’s only a 4 percent variation. Patty McCord suggested we remove the policy altogether: “Let’s just say our vacation policy is ‘Take Some!’”
I liked the idea of telling people they were in charge of their own lives and could decide for themselves when to work and when to take a break. Yet no other company I knew of was doing this. I worried how it would play out. During this time, I often woke in the night with one of two nightmares.
In the first, it’s summer. I’m late for an important meeting. I rip into the office parking lot and sprint into the building. The preparation I have to do is gigantic. It will require the input of the entire office. I run through the front doors calling out names: David! Jackie! But the office is dead quiet. Why is the place empty? Finally, I find Patty in her office wearing this white feather boa. “Patty! Where is everybody?” I gasp, out of breath. Patty looks up from her desk with a smile. “Oh, hi, Reed! Everyone’s on vacation!”
This was a serious concern. We were a small group of people with a lot to accomplish. If two of our team of five DVD buyers all took a monthlong vacation in the winter, that would cripple the office. Would ever-vacationing employees sink the company?
In the second nightmare, it’s winter and there’s a blizzard outside, like we used to have in Massachusetts when I was a child. The entire workforce is stuck in the office with heaps of snow blocking the door. Icicles the size of elephant tusks hang from the roof. The wind is whipping the windows. The office is stuffed with people. Some are lying on the kitchen floor asleep. Others are staring blankly at their computers. I’m furious. Why is no one working? Why is everyone so tired? I try to get the people asleep on the floor back to work. I tug them to a standing position, but when they head back to their desks they walk like zombies. In the back of my mind, I know why we are all stuck in this building exhausted. It’s been years, and no one’s taken any vacation.
I worried that people would stop taking vacation if it wasn’t allotted to them. Would our “No Vacation Policy” become a “No Vacation” policy? Many of our biggest innovations happened when people took time off. One example was Neil Hunt, who was our chief product officer for almost twenty years. Neil is from the UK. Patty calls him “Brain-on-a-Stick” because he’s six foot four, pencil thin, and especially smart. Neil oversaw many of the technical innovations that have made Netflix what it is today. He also has a passion for vacationing in the extreme outdoors.
When Neil left on vacation, often he went to an isolated place. Each time he came back he had a fantastic new idea for how to move the business forward. Once he and his wife took ice saws to the northern Sierra Nevada mountains and spent a week sleeping in igloos. When they returned, Neil had dreamed up a new mathematical algorithm to improve the way we select the movies to offer our customers. He was living proof of why companies benefit when their employees take vacations. Time off provides mental bandwidth that allows you to think creatively and see your work in a different light. If you are working all the time, you don’t have the perspective to see your problem with fresh eyes.
Patty and I brought the executive team together to discuss the two contradictory anxieties that occupied my mind as we prepared to get rid of our vacation policy. We decided, despite some trepidation, to remove the vacation policy, but only as an experiment. The new system would allow all salaried staff to take off whenever they wanted for as long as they wanted. There would be no need to ask for prior approval and neither the employees themselves nor their managers would be asked or expected to track their days away from the office. It was left to the employee alone to decide if and when he or she felt like taking a few hours, a day, a week, or a month off.
The experiment worked well, and we still operate that way today, leading to plenty of benefits. Unlimited vacation helps attract and retain top talent, especially Gen Z-ers and millennials, who resist punching clocks. Removing the policy also reduces bureaucracy and the administrative costs of keeping track of who is out and when. Most important, the freedom signals to employees that we trust them to do the right thing, which in turn encourages them to behave responsibly.
That said, if you remove the vacation policy without taking a couple of other necessary steps, you may find either of my nightmares turning into your reality. The first is that . . .
LEADERS MUST MODEL BIG VACATION-TAKING
I recently came across an article by the CEO of a small company who tried the same vacation experiment as Netflix, but with considerably less success. He wrote:
If I take two weeks off, will my coworkers think I’m a slacker? Is it okay to vacation more than my boss?. . . . I get it. For almost a decade, my company offered unlimited vacation time. As we grew to forty employees, questions like these began lingering beneath the surface. Last spring, my executive team decided it was time to put the policy up for a vote for all of our employees to decide. When my staff ultimately decided to strike down unlimited vacation in favor of a more finite policy based on tenure, I can’t say I was surprised.
But I was surprised. Our unlimited vacation is so popular, I couldn’t imagine this happening at Netflix. My first question was “Did the leader model taking big vacations?” Further in the article I found the answer:
Even as CEO, under our unlimited plan, I realized I was only taking a yearly total of about two weeks off. Under the new (finite vacation) plan, I’m planning to use most if not all of my five weeks. To me, the fear of losing these days I’ve “earned” is what’s motivating me to actually use them.
If the CEO is taking only two weeks’ vacation, of course his employees feel the unlimited plan doesn’t give them much freedom. They’re bound to take more time off with three allotted weeks than with an indefinite number and a boss who models just two. In the absence of a policy, the amount of vacation people take largely reflects what they see their boss and colleagues taking. Which is why, if you want to remove your vacation policy, start by getting all leaders to take significant amounts of vacation and talk a lot about it.
Patty articulated this right from the beginning. During the 2003 leadership meeting, where we decided to launch the no-vacation-policy experiment, Patty insisted that in order for this to work we, the executive team, would have to take big vacations and talk about them a lot. Without a policy, the example the bosses set would become incredibly important. She told us that she wanted to see our postcards from Indonesia or Lake Tahoe posted all over the office, and that when Ted Sarandos got back from his July holiday to Southern Spain, she expected everyone to sit through his 7,000-photo slideshow.
With the absence of a policy, most people look around their department to understand the “soft limits” of what’s acceptable. I have always been interested in travel and before we lifted our vacation policy I already tried to take a good amount. But after we lifted the policy I started talking a lot more about those vacations to anyone who was willing to listen.
* * *
• • •
When I began collaborating with Reed I expected him to work like a maniac. Much to my surprise, he seemed to be frequently on vacation. He couldn’t meet while I was in Los Gatos because he was hiking in the Alps, he complained about a stiff neck from lumpy pillows after a week in Italy with his wife, and an ex-employee told me that he and Reed had just returned from a week’s scuba excursion in Fiji. By Reed’s count, he takes six weeks of vacation a year, and from my limited experience, I would add “at least.”
Reed’s own modeling is fundamental to the success of the unlimited vacation policy throughout Netflix. If the CEO doesn’t model this, the method can’t work. Even then, Reed’s substantial vacation-taking has trickled down as intended in some areas of Netflix and not so well in others. When those leaders under Reed don’t follow his example, their employees often sound a bit like the zombies from Reed’s nightmares.
One example is marketing executive Kyle. He was a newspaper journalist before joining Netflix. Kyle loves the thrill and pressure that comes from working against tight deadlines: “It’s the middle of the night, breaking news is just in. That paper is going to print in just a few hours. There’s nothing more exciting than the weight of the ticking clock and the reward of finishing a project that should have taken days in a matter of hours.” Kyle’s kids are grown up. He’s in his late fifties and until recently headed up one of the Netflix departments based in Hollywood. While at Netflix he continued to work like he was constantly under deadline—and everyone in his department did too. Kyle explained, “We all work like crazy, but that’s because we are so passionate about our jobs.” Kyle didn’t take much vacation and didn’t talk much about vacations, but those in Kyle’s department heard his message loud and clear.
Marketing manager, Donna, for example, was one burnt-out example.
According to her Fitbit, Donna had slept four hours and thirty-two minutes the previous night. Working late nights and getting up early in an effort to complete what she described as “valleys of uncompleted work” was status quo. Donna hadn’t taken a nonworking vacation in four years, ever since the birth of her first of two children. “I took a few days off to visit my mother at Thanksgiving. I spent the entire time in the laundry room working.”
Why didn’t Donna use the freedom allotted to Netflix employees and take more time off? “My husband’s an animation artist—he draws cartoons. I’m the one bringing home the bacon.” Donna worked so much because that’s what her boss and everyone on her team did, and she didn’t want to look like she wasn’t pulling her weight: “The Netflix culture has great ideals but sometimes the gap between the ideals and practice is big, and what should bridge that gap is leadership. When leaders don’t set a good example . . . I guess I’m what happens.”
As Netflix grows there are an increasing number of pockets where Reed’s modeling and Patty’s initial instructions don’t seem to have trickled down. On these Netflix teams, the “no vacation policy” does feel a bit like a “no vacation” policy. But many leaders at Netflix are consciously following Reed’s modeling, taking big vacations and making sure everyone is watching. And when they do, employees use the freedom Netflix provides in many surprising and beneficial ways.
Greg Peters, who replaced Neil Hunt as chief product officer in 2017, is one example. Greg gets to work at the normal hour of 8:00 a.m. and leaves the office by 6:00 p.m. to be home for dinner with his children. Greg makes a point of taking big vacations, including visiting his wife’s family in Tokyo, and encourages his staff to do the same. “What we say as leaders is only half the equation,” Greg explains. “Our employees are also looking at what we do. If I say, ‘I want you to find a sustainable and healthy work-life balance,’ but I’m in the office twelve hours a day, people will imitate my actions, not follow my words.”
Greg’s actions are speaking loud and clear and his people are hearing them.
John, an engineer on Greg’s team, is one example. John drives a 1970s two-toned tan-brown Oldsmobile with vinyl front bench seats, wood-colored paneling, and a wayback. John loves the feeling of being transported back to the 1970s as he drives to his office at the Netflix Silicon Valley headquarters. The Oldsmobile gives him the space he needs for his mountain bike, his guitar, his Rhodesian ridgeback puppy, and his six-year-old twin girls. John feels a little guilty about his extraordinary work-life balance:
I’ve taken seven weeks of vacation already this year and it’s only October. My bosses take a lot of vacation, but I don’t think even they know how much I’ve had. No one’s ever asked or blinked an eye. I bike, I’m a musician, and my kids need me. I often think, I’m making all this money . . . shouldn’t I be working more? But I’m getting a ton done, so I tell myself that this incredible work-life balance I have . . . it’s okay.
Others on Greg’s team have found creative ways to organize their lives that would be impossible under a traditional vacation policy. Senior software engineer Sarah works seventy to eighty hours a week, but takes ten weeks of vacation a year (most recently for an anthropological trip to see the Yanomami tribe in the Brazilian Amazon). She considers it a rotation of several weeks of intense work followed by a week of doing something wildly different. “This is the great benefit to the Netflix vacation freedom,” she explained. “Not that you can take more or less days off, but that you can organize your life in any crazy way you like—and as long as you do great work nobody bats an eyelid.”
The behavior of the boss is so influential that it can even wipe out national cultural norms. Before becoming CPO, Greg served for a time as Netflix’s general manager in Tokyo. In Japan, businesspeople are famous for long work hours and taking little time off. There are stories of people working so much there, they literally die from it. There’s even a word for this phenomenon, karoshi. The average Japanese worker uses about seven vacation days a year, and 17 percent take none at all.
One evening over beer and sushi, Haruka, a manager in her early thirties, told me, “In my last job, I worked for a Japanese company. For seven years, I arrived at work at 8:00 a.m. and I took the last train home just after midnight. In seven years, I took one week of vacation, and only then because my sister in the US was getting married.” Her experience is common in Japan.
Joining Netflix changed Haruka’s life. “When Greg was here, he left the office every day before dinnertime, and so did the other employees. He’d take frequent vacations to Okinawa Island or to Niseko to take his kids skiing, and when he returned he’d show us all photos. He asked us about our vacations too, so we all started taking them. My biggest fear about leaving Netflix is that I’d have to go back to a life of suffocating long days and no breaks, because Netflix offers such incredible work-life balance.”
Greg, an American, managed to get an entire office of Japanese people to work and vacation like Europeans. He didn’t create rules or nag. He just modeled the behavior and communicated expectations.
* * *
• • •
If you want to remo
ve the vacation policy in your organization, lead by example. Even at Netflix where I model taking off six weeks a year and encourage my leadership team to do the same, Kyle and Donna’s story demonstrates that getting big vacation-taking to trickle down requires ongoing reminders and attention. But if you and those on your leadership team set the example you want your team to follow, you won’t have to worry about pulling vacationless zombies off your kitchen floor.
Leadership modeling is the first part of getting the unlimited vacation to work properly. The other concern many have about removing the vacation policy is that their teams will use the freedom to take off months on end at inconvenient moments, harming teamwork and sabotaging the business. That’s what brings us to the second required step for a successful lifting of vacation policy. Do this well and it will also help you fix the problem of any leaders in your organization, like Kyle, who don’t emulate the big vacation-taking their bosses are modeling and in doing so fail to achieve healthy work-life balance on their own teams.
SET AND REINFORCE CONTEXT TO GUIDE EMPLOYEE BEHAVIOR
In 2007, Leslie Kilgore coined the expression “Lead with context, not control” (which we will explore further in chapter 9), but we didn’t have this guiding principle when we removed the vacation policy in 2003. We had only the notion that the leaders must take a lot of vacation and talk about those vacations a lot. Beyond that, we hadn’t thought much about the need to say anything specific or set context at all. We told people we would be neither allotting vacation days nor tracking days off. We left it at that. Within months, we started having problems.
No Rules Rules Page 6