Inside Netflix's Notorious Firing Practices

The 'keeper test' is reportedly employed by CEO and co-founder Reed Hastings.

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By Nina Zipkin

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Netflix's company culture is often cited as one that startups would do well to emulate. The now famous document, "Netflix Culture: Freedom & Responsibility," which emphasizes self-directed decision-making, being candid and transparent, keeping only the most effective employees and doing their best to "avoid rules," was created by Netflix's then-Chief Talent Officer Patty McCord. In a 2013 GQ piece about the rise of the company, Facebook's Sheryl Sandberg even said of McCord's work, "It may well be the most important document ever to come out of the Valley."

But The Wall Street Journal's recently reported what life is really like at Netflix. The story reveals that sometimes even with the best of intentions, a company culture can develop into something that isn't quite what you intended -- especially if employees constantly worry that they don't measure up, either from a performance or cultural fit standpoint, and be fired.

Netflix is notable for having a firing practice that can be characterized as particularly blunt, having managers and executives constantly ask themselves if they would fight to keep an employee -- and if not, they're let go.

That "keeper test" is even utilized by CEO and co-founder Reed Hastings, who fired early Netflix employee and close friend Neil Hunt, the company's chief product officer who created the company's algorithm. Hastings had told him that with the business' expansion, particularly internationally, another employee, Greg Peters, was better suited for the job.

According to the Wall Street Journal report, after people are fired, the next step, in keeping with the M.O. of transparency, is to explain why on a broad scale, leading to emails that can be received by hundreds of employees detailing what led to the dismissal. These post-mortems can also be in-person.

A former VP named Sean Carey told The Wall Street Journal that he was asked to be at the meeting following his layoff to provide continuity for his team. "It was certainly awkward for some, but was also consistent with the culture -- there is sometimes a cost to transparency," Carey told The Wall Street Journal. "In the end I felt it was beneficial."

But apparently, this element of culture has had some difficulty translating to countries with more stringent labor laws as the company has expanded overseas.

Nina Zipkin

Entrepreneur Staff

Staff Writer. Covers leadership, media, technology and culture.

Nina Zipkin is a staff writer at Entrepreneur.com. She frequently covers leadership, media, tech, startups, culture and workplace trends.

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