Erin Meyer: Poor performance is contagious

Day two at UNLEASH World 2022 kicked off with a bang. The keynote was UNLEASH veteran Erin Meyer, professor of the management practice at Paris’s INSEAD.

But Meyer is much more than just a professor and conference speaker, she is also a prolific author. Her most recent book No Rules Rules was co-authored by Reed Hasting, the co-founder of Netflix.

So, in this special keynote at UNLEASH World, Meyer shared the story of how Netflix threw the rule book out of the window and built its highly unusual company culture. Are you prepared to do the same?

Employee freedom is key

“Avoid speaking in absolute positives” is the first lesson from Meyer and Netflix. A lot of companies say their culture is around integrity, but it’s a meaningless statement.

Meyer joked: “I’ve never come across a company that says ‘we are all about corruption’”.

Instead of using absolutist terms, culture should be forged around the “tough dilemmas that employees are facing on a daily basis”, and how the company wants to go about resolving those challenges.

Do you want to have a culture of innovation or a culture of error prevention? Do you want to have a culture of transparency or team stability?

Once organizations have made decisions around this, then employees know when they come up against these dilemmas what action to take.

Meyer then dug deeper into the dilemmas business leaders need to resolve in their organizations – Hastings and Netflix decided to build a culture that bred innovation and embraced flexibility, and therefore they needed to fully empower employee freedom.

Ultimately, for Netflix, freedom breeds innovation and process kills flexibility.

Performance is contagious

Giving employees complete freedom is, of course, much easier said than done. To achieve it, Netflix had to remove controls on employees (aka get rid of salary bands, vacation policies, key performance indicators etc).

Instead, the company increased its talent density – it did this by being very intentional with its hiring practices, and taking its time to find the highest performers, and having a small, dedicated team of top talent – and increasing candor through frank feedback between peers.

“A great workplace is about being surrounded by the best” is what Netflix learnt, according to Meyer. This is based on the idea that “performance is contagious” – small numbers of top performers will inspire each other to stay top of their game and therefore need less oversight from leadership.

The opposite is also true; “poor performance is especially contagious”; “the best predictor of how a team will perform is not what the top performer is like. Most often it comes down to what the worst team member is like”.

Bad, negative energy demotivates people, so you want to avoid filling your team with disengaged workers if you want to build a productive, high-performing team.

To help here, Hastings implemented something called the Keeper Test. It is where managers take some time alone, and they think about how they would feel if each of their direct reports resigned; would they be relieved, pleased or devastated? That gut reaction tells the manager everything they need to know about their team and who is a high performer.

Going back to feedback, Netflix takes a dramatic approach. It encourages not just a manager-employee feedback loop, but it calls on its high-performing employees to hold each other to account by giving frank and honest feedback in group sessions called 360 feedback dinners.

This feedback loop includes employees giving feedback to their bosses – the idea is to always do what is best for the company, not seeking to please the boss.

Meyer stated: “Feedback is shown by research to be the number one way to improve performance in an organization”.

While Netflix’s approach  may be too whacky for many organizations, given how crucial feedback is to performance, companies need to get better at putting feedback on the agenda. It needs to be positive in tone – managers need to tell their team members what they’re doing well, what they could do better.

“That deals with all the BS right”, concluded Meyer.