How to Build a Culture of Freedom and Responsibility: Reed Hasting's No Rules Rules

Building the right company culture is challenging.

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We constantly hear about organizations and the challenges they face. But where are the role models for creating high-performance culture?

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Look no further than Reed Hastings, the CEO and Founder of Netflix.

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*No Rules Rules* on McKinsey's "2020 Business Book of the Year" Shortlist

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In his New York Times Bestseller No Rules Rules: Netflix and the Culture of Reinvention, the unorthodox founder outlines the steps he believe allowed Netflix to be successful. The result is an employee culture built around freedom and responsibility. Alongside Erin Meyer, Reed Hastings shares the cycle he used to allow Netflix to grow at an astronomical rate while maintaining autonomy for employees at every level.

Here are the 3 Steps to Culture of Freedom and Responsibilty:

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1. Build up Talent Density

A Great Workplace Is Stunning Colleagues

Your number one goal as a leader is to develop a work environment consisting exclusively of stunning colleagues

Stunning colleagues accomplish significant amounts of important work and are exceptionally creative and passionate

Jerks, slackers, sweet people with nonstellar performance, or pessimists left on the team will bring down the performance of everyone

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"A fast and innovative workplace is made up of what we call "stunning colleagues" - highly talented people, of diverse backgrounds and perspectives, who are exceptionally creative, accomplish significant amounts of important work, and collaborate effectively."

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2. Increase Candor

Say What You Really Think (with Positive Intent)

With candor, high performers become outstanding performers. Frequent candid feedback exponentially magnifies the speed and effectiveness of your team or workforce

Set the stage for candor by building feedback moments into your regular meetings

Coach your employees to give and receive feedback effectively, following the 4A guidelines

as the leader, solicit feedback frequently and respond with belonging cues when you receive it

get rid of jerks as you instill a culture of candor

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These three cycles and their iterative steps lead to a culture of freedom and responsibility

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3. Remove Controls

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3a. Remove Vacation Policy

When removing your vacation policy, explain that there is. no need to ask for prior approval and that neither the employees themselves nor their managers are expected to keep track of their days away from the office

It is left to the emplyoee alone to decide if and when he or she feels like taking a few hours, a day, a week, or a month off work

When you remove the vacation policy, it will leave a hole. What fills the hole is the context the boss provides for the team. Copious discussions must take place ,setting the scene for how employees should approach vacation decisions

The practices modeled by the boss will be critical to guide employees as to the appropriate behavior. An office with no vacation policy but a boss who never vacations will result in an office that never vacations

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3b. Travel and Expense Approvals

When removing travel and expense policies, encourage managers to set context about how to spend money up front and to check employee receipts at the back end. If people overspend, set more context

With no expense controls, you'll need your finance department to audit a portion of receipts annually

When you find people abusing the system, fire them and speak about the abuse openly- even when they are start performers in other ways. This is necessary so that others understand the ramifications of behaving irresponsibly

Some expenses may increase with freedom. But the costs from overspending are not nearly as high asthegains that freedom provides

With expense freedom, employees will be able to make quick decisions to spend money in ways that help the business

Without the time and administrative costs associated with purchase orders and procurement processes, you will waste fewer resources

Many employees will respond to their new freedom by spending less than they would in a system with rules. When you tell peiople you trust them, they will show you how trustworthy they are

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"Our culture, which focused on achieving top performance with talent density and leading employees with context not control, has allowed us to continually grow and change as the world, and our members' needs , have likewise morphed around us."

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Conclusion

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Building strong company culture is difficult. Reed's framework provides the tools you need, yet these three steps in this summary are just the first cycle. Increasing talent density, increasing candor, and removing controls are iterative processes that must be repeated until the organization has achieved a culture of freedom and responsibility.

While a high-performance culture can lead to a company's success, a dysfunctional one can lead to its demise. What are you doing to actively build your company culture?

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