ReferenceGuideonour

Freedom&Responsibility
Culture
Theseslidesaremeantforreading,
ratherthanpresen<ng

Freedom&Responsibility
Appliestoour
SalariedEmployees
Ourhourlyemployeesareimportant,
buthavemorestructuredjobroles

Culture:whatgivesNeGlix
thebestchanceof
con<nuoussuccess
formanygenera<ons
oftechnologyandpeople?

SevenAspectsofourCulture
ValuesarewhatweValue
HighPerformance
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
4

Lotsofcompanieshave
nicesounding
valuestatements

EnronHadANiceSounding
ValueStatementwith4Values
Enronheadquarters

Integrity
Communica/on
Respect
Excellence

Their4valueswerechiseledin
marbleinthemainlobby,but
hadliXletodowiththereal
valuesoftheorganiza<on
6

Therealcompanyvalues,
asopposedtothe
nicesoundingvalues,
areshownbywhogets
rewarded,promoted,orletgo

Realcompanyvaluesarethe
behaviorsandskills
thatwepar<cularlyvalue
infellowemployees

WePar<cularlyValue
inourColleagues
theseNineBehaviorsandSkills

Youmakewisedecisions
(people,technical,business,and
crea<ve)despiteambiguity

Judgment

Youiden<fyrootcauses,andget
beyondtrea<ngsymptoms
Youthinkstrategically,andcan
ar<culatewhatyouare,andare
not,tryingtodo
Yousmartlyseparatewhatmust
bedonewellnow,andwhatcan
beimprovedlater

10

Youlistenwell,insteadof
reac<ngfast,soyoucanbeXer
understand

Communica<on

Youareconciseandar<culatein
speechandwri<ng
Youtreatpeoplewithrespect
independentoftheirstatusor
disagreementwithyou
Youmaintaincalmpoisein
stressfulsitua<ons

11

Youaccomplishamazing
amountsofimportantwork

Impact

Youdemonstrateconsistently
strongperformanceso
colleaguescanrelyuponyou
Youfocusongreatresultsrather
thanonprocess
Youexhibitbiastoac<on,and
avoidanalysisparalysis

12

Youlearnrapidlyandeagerly

Curiosity

Youseektounderstandour
strategy,market,subscribers,
andsuppliers
Youarebroadlyknowledgeable
aboutbusiness,technologyand
entertainment
Youcontributeeec<vely
outsideofyourspecialty

13

Youreconceptualizeissuesto
discoverprac<calsolu<onsto
hardproblems

Innova<on

Youchallengeprevailing
assump<onswhenwarranted,
andsuggestbeXerapproaches
Youcreatenewideasthatprove
useful
Youkeepusnimbleby
minimizingcomplexityand
nding<metosimplify

14

Yousaywhatyouthinkevenifit
iscontroversial

Courage

Youmaketoughdecisions
withoutexcessiveagonizing
Youtakesmartrisks
Youques<onac<ons
inconsistentwithourvalues

15

Youinspireotherswithyour
thirstforexcellence

Passion

YoucareintenselyaboutNeGlix'
success
Youcelebratewins
Youaretenacious

16

Youareknownforcandorand
directness

Honesty

Youarenonpoli<calwhenyou
disagreewithothers
Youonlysaythingsaboutfellow
employeesyouwillsaytotheir
face
Youarequicktoadmitmistakes

17

YouseekwhatisbestforNeGlix,
ratherthanbestforyourselfor
yourgroup

Selessness

Youareegolesswhensearching
forthebestideas
Youmake<metohelp
colleagues
Youshareinforma<onopenly
andproac<vely

18

Judgment

Communica/on

Impact

Youmakewisedecisions(people,technical,
business,andcrea<ve)despiteambiguity

Youlistenwell,insteadofreac<ngfast,soyou
canbeXerunderstand

Youaccomplishamazingamountsofimportant
work

Youiden<fyrootcauses,andgetbeyondtrea<ng
symptoms

Youareconciseandar<culateinspeechand
wri<ng

Youdemonstrateconsistentlystrong
performancesocolleaguescanrelyuponyou

Youthinkstrategically,andcanar<culatewhat
youare,andarenot,tryingtodo

Youtreatpeoplewithrespectindependentof
theirstatusordisagreementwithyou

Youfocusongreatresultsratherthanonprocess

Yousmartlyseparatewhatmustbedonewell
now,andwhatcanbeimprovedlater

Youmaintaincalmpoiseinstressfulsitua<ons

Curiosity

Youlearnrapidlyandeagerly

Youseektounderstandourstrategy,
market,subscribers,andsuppliers
Youarebroadlyknowledgeableaboutbusiness,
technologyandentertainment
Youcontributeeec<velyoutsideofyour
specialty

Passion

Innova/on

Youreconceptualizeissuestodiscoverprac<cal
solu<onstohardproblems
Youchallengeprevailingassump<onswhen
warranted,andsuggestbeXerapproaches
Youcreatenewideasthatproveuseful
Youkeepusnimblebyminimizingcomplexityand
nding<metosimplify

Honesty

Youinspireotherswithyourthirstforexcellence

Youareknownforcandoranddirectness

YoucareintenselyaboutNeGlix'success

Youarenonpoli<calwhenyoudisagreewith
others

Youcelebratewins
Youaretenacious

Youonlysaythingsaboutfellowemployeesyou
willsaytotheirface
Youarequicktoadmitmistakes

Youexhibitbiastoac<on,andavoidanalysis
paralysis

Courage

Yousaywhatyouthinkevenifitiscontroversial
Youmaketoughdecisionswithoutexcessive
agonizing
Youtakesmartrisks
Youques<onac<onsinconsistentwithourvalues

Selessness

YouseekwhatisbestforNeGlix,ratherthanbest
foryourselforyourgroup
Youareegolesswhensearchingforthebest
ideas
Youmake<metohelpcolleagues
Youshareinforma<onopenlyandproac<vely

WeWanttoWorkwithPeopleWhoEmbodyTheseNineValues

19

Youques<onac<ons
inconsistentwithourvalues
PartoftheCouragevalue
Akintothehonorcodepledge:
Iwillnotlie,norcheat,norsteal,nortoleratethosewhodo
Allofusareresponsibleforvalueconsistency

20

Valuesreinforcedinhiring,
in360reviews,atcompreview,in
exits,andinpromo<ons

21

SevenAspectsofourCulture
ValuesarewhatweValue
HighPerformance
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
22

ImagineifeverypersonatNeGlix
issomeoneyou
respectandlearnfrom

23

GreatWorkplaceis
StunningColleagues
Greatworkplaceisnotdaycare,espresso,health
benets,sushilunches,niceoces,
orbigcompensa<on,
andweonlydothosethatareecientat
aXrac<ngstunningcolleagues
24

Likeeverycompany,
wetrytohirewell

25

But,unlikemanycompanies,
weprac<ceadequateperformance
getsagenerousseverancepackage.

26

Wereateam,notafamily
Werelikeaprosportsteam,
notakidsrecrea<onalteam
CoachesjobateverylevelofNeGlix
tohire,developandcutsmartly,
sowehavestarsineveryposi<on
27

TheKeeperTestManagersUse:
Whichofmypeople,
iftheytoldme
theywereleavingintwomonths
forasimilarjobatapeercompany,
wouldIghthardtokeepatNeGlix?

28

Theotherpeopleshouldgetagenerousseverancenow,
sowecanopenaslottotrytondastarforthatrole

TheKeeperTestManagersUse:
Whichofmypeople,
iftheytoldme
theywereleavingintwomonths
forasimilarjobatapeercompany,
wouldIghthardtokeepatNeGlix?

29

HonestyAlways
Toavoidsurprises,youshouldperiodically
askyourmanager:IfItoldyouIwere
leaving,howhardwouldyouworktochange
mymindtostayatNeGlix?

30

IsntLoyaltyGood?
WhatAboutHardWorkers?
WhataboutBrilliantJerks?

31

LoyaltyisGood
Loyaltyisgoodasastabilizer
Peoplewhohavebeenstarsforus,andhitabad
patch,getaneartermpassbecausewethink
theyarelikelytobecomestarsforusagain
Wewantthesame:ifNeGlixhitsatemporary
badpatch,wewantpeopletos<ckwithus
Butunlimitedloyaltytoashrinkingrm,ortoan
ineec<veemployee,isnotwhatweareabout
32

HardWorkNotDirectlyRelevant
Itsabouteec<venessnoteorteven
thougheec<venessishardertoassessthan
eort
Wedontmeasurepeoplebyhowmany
eveningsorweekendstheyareintheircube
Wedotrytomeasurepeoplebyhowmuch,
howquicklyandhowwelltheygetworkdone
especiallyunderdeadline
33

BrilliantJerks
Somecompaniestoleratethem
Forus,thecosttoteamworkistoohigh
Diversestylesareneaslongasperson
embodiesthe9values

34

Whyarewesomanicon
highperformance?
Inproceduralwork,thebestare2x
beXerthantheaverage.
Increa<vework,thebestare10x
beXerthantheaverage,sohugepremiumon
crea<ngeec<veteamsofthebest
35

Whyarewesomanicon
highperformance?
GreatWorkplaceis
StunningColleagues

36

SevenAspectsofourCulture
ValuesarewhatweValue
HighPerformance
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
37

TheRareResponsiblePerson
Selfmo<va<ng
Selfaware
Selfdisciplined
Selfimproving
Actslikealeader
Doesntwaittobetoldwhattodo
Neverfeelsthatsnotmyjob
Picksupthetrashlyingontheoor
Behaveslikeanowner
38

ResponsiblePeople
ThriveonFreedom,
andareWorthyofFreedom

39

Ourmodelistoincrease
employeefreedomaswegrow,
ratherthanlimitit,tocon<nueto
aXractandnourish
innova<vepeople,
sowehavebeXerchanceof
longtermcon<nuedsuccess

40

MostCompanies
CurtailFreedomastheygetBigger
Bigger

EmployeeFreedom

41

MostCompaniesCurtailFreedom
AsTheyGrowtoAvoidErrors
(soundspreXygoodtoavoiderrors)

42

DesireforBiggerPosi<veImpact
CreatesGrowth

Growth

43

GrowthIncreasesComplexity

Complexity

44

GrowthShrinksTalentDensity
inMostFirms

Complexity

%HighPerformanceEmployees

45

ChaosEmerges
Chaosanderrorsspikesherebusiness
hasbecometoocomplextorun
informallywiththistalentlevel

Complexity

%HighPerformanceEmployees

46

ProcessEmergestoStoptheChaos

Procedures
Noonelovesprocess,but
feelsgoodcomparedtothe
painofchaos

47

ProcessfocusDrivesMoreTalentOut

%HighPerformanceEmployees

48

StrongNearTermOutcome
Ahighlysuccessfulprocessdrivencompany
Withleadingshareinitsmarket
Minimalthinkingrequired
Fewmistakesmadeveryecient
Fewcuriousinnovatormavericksremain
Veryop<mizedprocessesforitsexis<ngmarket

49

ThentheMarketShirs
Marketshirsduetonewtechnologyornew
compe<torsornewbusinessmodels
Companyisunabletoadaptquickly,because
theemployeesareextremelygoodat
followingtheexis<ngprocesses,andprocess
adherenceisthevaluesystem
Companygenerallygrindspainfullyinto
irrelevance,duetoinabilitytorespondtothe
marketshir
50

SeemsLikeThreeBadOp<ons
1. Staycrea<vebystayingsmall
2. Trytoavoidrulesasyougrow,suerchaos
3. Useprocessasyougrowtodriveecient
execu<onofcurrentmodel,butcripple
crea<vity,innova<on,exibility,andabilityto
thrivewhenmarketinevitablyshirs

51

AFourthOp<on
AvoidChaosasyougrowwithEverMoreHigh
PerformancePeoplenotwithRules
Thenyoucancon<nuetoruninformallywith
selfdisciplineandavoidchaos
Theruninformallypartiswhatenablesand
aXractscrea<vity

52

TheKey:IncreaseTalentDensityfaster
thanComplexityGrows

y
t
i
x
e
l
p
essCom

Busin

53

IncreaseTalentDensity

Topofmarketcompensa<on
AXracthivaluepeoplethrough
freedomtomakeimpact
Bedemandingabouthigh
performanceculture

54

MinimizeComplexityGrowth
Fewbigproductsvsmanysmallones
Eliminatedistrac<ngcomplexity(barnacles)
Valuesimplicity

y
t
i
x
e
l
p
essCom

Busin

55

WiththeRightPeople,
Insteadofa
CultureofProcessAdherence,
Cultureof
FreedomandResponsibility,
Innova<onandSelfDiscipline

56

IsFreedomAbsolute?
Areallrules&processesbad?

57

Freedomisnotabsolute.
Likefreespeech
therearesome
limitedexcep<onsto
freedomatwork

58

TwoTypesofNecessaryRules
1. Preventirrevocabledisaster
E.g.Financialsproducedarewrong
E.g.Hackersstealourcustomerscreditcardinfo

2. Moral,ethical,legalissues
E.g.Dishonesty,harassmentareintolerable

59

Mostly,Though,RapidRecoveryis
theRightModel
Justxproblemsquickly
Highperformersmakeveryfewerrors

Wereinacrea<veinven<vemarket,nota
safetycri<calmarketlikemedicineornuclear
power
Youmayhaveheardpreven<ngerroris
cheaperthanxingit
Yes,inmanufacturingormedicine,but
Notsoincrea/veenvironments
60

GoodvsBadProcesses
Goodprocesseshelptalentedpeoplegetmoredone
Websitepusheverytwoweeksratherthanrandom
Spendwithinbudgeteachquartersodonthaveto
coordinateeveryspendingdecisionacrossdepartments
Regularlyscheduledstrategyandcontextmee<ngs

Badprocessestrytopreventrecoverablemistakes
Getpreapprovalsfor$5kspending
3peopletosignoonbanneradcrea<ve
Permissionneededtohangaposteronawall
Mul<levelapprovalprocessforprojects
Get10peopletointervieweachcandidate
61

RuleCreep
Badprocessestendtocreepin
Preven<ngerrorsjustsoundssogood

Wetrytogetridofruleswhenwecan,to
reinforcethepoint

62

Example:NeGlixVaca<onPolicy
andTracking
Un<l2004wehadthestandard
modelofNdaysperyear

63

Meanwhile
Wereallworkingonlinesomenights
andweekends,respondingtoemailsat
oddhours,andtakinganarernoonnow
andthenforpersonal<me.
64

Anemployeepointedout
Wedonttrackhoursworkedperday
orperweek,sowhyarewetracking
daysofvaca<onperyear?

65

Werealized
Weshouldfocusonwhatpeoplegetdone,
nothowmanyhoursordaysworked.Just
aswedonthavean95daypolicy,wedont
needavaca<onpolicy.

66

NeGlixVaca<onPolicy
andTracking
thereisnopolicyortracking

67

NeGlixVaca<onPolicy
andTracking
thereisnopolicyortracking
ThereisalsonoclothingpolicyatNeGlix,butnoonehas
cometoworknakedlately.PaXyMcCord,2004
Lesson:youdontneeddetailedpoliciesforeverything.

68

AnotherExampleofFreedom
andResponsibility

69

Mostcompanieshavecomplex
policiesaroundwhatyoucan
expense,howyoutravel,whatgirs
youcanaccept,etc.
Plustheyhavewholedepartments
toverifycompliance
withthesepolicies.
70

NeGlixPolicies
forExpensing,Entertainment,
Girs&Travel:
ActinNeLlixsBestInterests
(5wordslong)
71

ActinNeGlixsBestInterests
GenerallyMeans
1. Expenseonlywhatyouwouldotherwisenot
spend,andisworthwhileforwork.
2. Travelasyouwouldifitwereyourownmoney.
3. Disclosenontrivialvendorgirs.
4. TakefromNeGlixonlywhenitisinecientto
nottake,andinconsequen<al.
takingmeans,forexample,prin<ngpersonal
documentsatworkormakingpersonalcallsonwork
phone:inconsequen<alandinecienttoavoid
72

FreedomandResponsibility
Manypeoplesayonecantdoitatscale
Butsincegoingpublicin2002,whichis
tradi<onallythebeginningoftheendfor
freedom,weveincreasedtalentdensityand
employeefreedomsubstan<ally.

73

Summaryof
Freedom&Responsibility:
AsWeGrow,MinimizeRules.
InhibitChaoswithEverMore
HighPerformancePeople.
FlexibilityisMoreImportant
thanEciencyintheLongTerm
74

SevenAspectsofourCulture
ValuesarewhatweValue
HighPerformance
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
75

"Ifyouwanttobuildaship,don't
drumupthepeopletogatherwood,
dividethework,andgiveorders.
Instead,teachthemtoyearnforthe
vastandendlesssea."
AntoineDeSaintExupery,
AuthorofTheLiXlePrince

*transla<onusespeopleinsteadofmentomodernize

76

Thebestmanagersgureouthowto
getgreatoutcomesbysewngthe
appropriatecontext,ratherthanby
tryingtocontroltheirpeople

77

Context,notControl
Providetheinsightandunderstandingtoenablesounddecisions

Context

Strategy
Metrics
Assump<ons
Objec<ves
Clearlydenedroles
Knowledgeofthestakes
Transparencyaround
decisionmaking

Control

Topdowndecisionmaking
Managementapproval
CommiXees
Planningandprocessvalued
morethanresults

78

Excep<ons
Controlcanbeimportantinemergency
No<metotakelongtermcapacitybuildingview

Controlcanbeimportantwhensomeoneis
s<lllearningtheirarea
Takes<metopickupthenecessarycontext

Controlcanbeimportantwhenyouhavethe
wrongpersoninarole
Temporarily,nodoubt
79

Managers:Whenoneofyour
talentedpeople
doessomethingdumb,
dontblamethem.
Instead,
askyourselfwhatcontext
youfailedtoset.
80

Managers:Whenyouaretempted
tocontrolyourpeople,ask
yourselfwhatcontextyoucouldset
instead
Areyouar<culateandinspiring
enoughaboutgoalsandstrategies?

81

GoodContext
Linktocompany/func<onalgoals
Rela<vepriority(howimportant/how<mesensi<ve)
Cri<cal(needstohappennow),or
Nicetohave(whenyoucangettoit)

Levelofprecision&renement
Noerrors(creditcardshandling,etc),or
PreXygood/cancorrecterrors(website),or
Rough(experimental)

Keystakeholders
Keymetrics/deni<onofsuccess
82

WhyManagingThroughContext?
Highperformancepeoplewilldo
beXerworkiftheyunderstandthe
context

83

Inves<nginContext
Thisiswhywedonewemployee
college,andwhywearesoopen
internallyaboutstrategiesandresults

84

SevenAspectsofourCulture
ValuesarewhatweValue
HighPerformance
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
85

ThreeModelsofCorporateTeamwork
1. TightlyCoupledMonolith
2. IndependentSilos
3. HighlyAligned,LooselyCoupled

86

TightlyCoupledMonolith
Seniormanagementreviewsandapproves
nearlyalltac<cs
Lotsofxdepartmentalbuyinmee<ngs
Keepingothergroupsinagreementhasequal
precedencewithpleasingcustomers
Mavericksgetexhaustedtryingtoinnovate
Highlycoordinatedthroughcentraliza<on,but
veryslow,andslownessincreaseswithsize
87

IndependentSilos
Eachgroupexecutesontheirobjec<veswith
liXlecoordina<on
Workthatrequirescoordina<onsuers
Aliena<onandsuspicionbetween
departments
Onlyworkswellwhenareasareindependent
e.g.GE:aircrarenginesandUniversalStudios

88

TheNeGlixChoice
1. TightlyCoupledMonolith
2. IndependentSilos
3. HighlyAligned,LooselyCoupled

89

HighlyAligned,LooselyCoupled
HighlyAligned
Strategyandgoalsareclear,specic,broadlyunderstood
Teaminterac<onsareonstrategyandgoalsratherthantac<cs
Requireslargeinvestmentinmanagement<metobe
transparentandar<culateandpercep<veandopen
LooselyCoupled
Minimalcrossfunc<onalmee<ngsexcepttogetalignedon
goalsandstrategy
Trustbetweengroupsontac<cswithoutpreviewing/approving
eachonegroupscanmovefast
Leadersreachingoutproac<velyforadhoccoordina<onand
perspec<veasappropriate
Occasionalpostmortemsontac<csnecessarytoincrease
alignment
90

HighlyAlignedLooselyCoupled
teamworkeec<veness
isdependenton
highperformancepeople
andgoodcontext
Goalistobe
BigandFastandFlexible
91

SevenAspectsofourCulture
ValuesarewhatweValue
HighPerformance
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
92

PayTopofMarketisCoreto
HighPerformanceCulture
Oneoutstandingemployeegetsmoredone
andcostslessthantwoadequateemployees
Weendeavortohaveonly
outstandingemployees
93

ThreeTestsforTopofMarket
foraPerson
1. Whatcouldpersongetelsewhere?
2. Whatwouldwepayforreplacement?
3. Whatwouldwepaytokeepperson?
Iftheyhadabiggeroerelsewhere

Conden<al

94

TakesGreatJudgment
Goalistokeepeachemployeeattopof
marketforthatperson
Paythemmorethananyoneelselikelywould
Paythemasmuchasareplacementwouldcost
Paythemasmuchaswewouldpaytokeepthem
iftheyhadhigheroerfromelsewhere

95

TitlesNotVeryHelpful
Lotsofpeoplehavethe<tleMajorLeague
Pitcherbuttheyarenotallequallyeec<ve
Similarly,allpeoplewiththe<tleSenior
Marke<ngManagerorDirectorof
Engineeringarenotequallyeec<ve
Sotheartofcompensa<onisansweringthe
ThreeTestsforeachemployee

96

AnnualCompReview
Hiringismarketbasedatmanyrms,butat
NeGlixwealsomaketheannualcompreview
marketbased
Appliessamelensashiring

Essen<ally,rehiringeachemployeeeachyear,
forpurposesofcomp
Atannualcompreview,managerhastoanswer
theThreeTestsforthepersonalmarketforeach
oftheiremployees
Conden<al

97

NoFixedBudgets
Therearenocentrallyadministeredraise
poolseachyear
Instead,eachmanageralignstheirpeopleto
marketeachyearthemarketwillbe
dierentindierentareas

98

AnnualCompReview
Somepeoplewillmoveupincompvery
quicklybecausetheirvalueinthemarketplace
ismovingupquickly,drivenbyincreasingskills
and/orgreatdemandfortheirarea
Somepeoplewillmovedownorstayat
becausetheirvalueinthemarketplacehas
moveddownorstayedat
Dependsinpartonina<onandeconomy
S<lltopofmarket,though,forthatperson
99

Compensa<onNotDependent
onNeGlixSuccess
WhetherNeGlixisprosperingoroundering,
wepayatthetopofthemarket
i.e.,sportsteamswithlosingrecordss<llpay
talentthemarketrate

Employeescanchoosehowmuchtheywant
tolinktheireconomicdes<nytoNeGlix
successorfailurebydecidinghowmuch
NeGlixstockorstockop<onstheywantto
own
100

BadIdeas
ManagersetspayatNthpercen<leof<tle
linkedcompensa<ondata
TheMajorLeaguePitcherproblem

Managercaresaboutinternalparityinsteadof
externalmarketvalue
Fairnessincompisbeingtruetothemarket

Managergiveseveryonea4%raise
Veryunlikelytoreectthemarket
101

WhenTopofMarketComp
DoneRight...
Nearlyallexemployeeswilltakeastepdown
incompfortheirnextjob
Wewillrarelycounterwithhighercompwhen
someoneisvoluntarilyleavingbecausewe
havealreadymovedcomptoourmaxforthat
person
Employeeswillfeeltheyaregewngpaidwell
rela<vetotheirotherop<onsinthemarket
102

VersusTradi<onalModel
Tradi<onalmodelisgoodprioryearearnsa
raise,independentofmarket
Problemisemployeescangetmateriallyunderor
overpaidrela<vetothemarket,over<me
Whenmateriallyunderpaid,employeesswitch
rmstotakeadvantageofmarketbasedpayon
hiring
Whenmateriallyoverpaid,employeesare
trappedincurrentrm

ConsistentmarketbasedpayisbeXermodel
103

EmployeeSuccess
ItspreXyingrainedinoursocietythatthesizeof
onesraiseistheindicatorofhowwellonedid
theprioryearbutatNeGlixthereareother
factorstoonamely,theoutsidemarket
Inourmodel,employeesuccessisbigfactorin
compbecauseitinuencesmarketvalue

Inpar<cular,howmuchwewouldpaytokeepthe
person
Butemployeesuccessisnottheonlyfactorincomp,
sothelinkageofprioryearperformancetoraisesizeis
weak
104

GoodForEachEmployeeto
UnderstandTheirMarketValue
Itahealthyidea,notatraitorousidea,to
understandwhatotherrmswouldpayyou,
byinterviewingandtalkingtopeersatother
companies
Talkwithyourmanageraboutwhatyound
Minorexcep<on:interviewingwithgroupsthat
directlycompetewithNeGlix,becausetheir
mo<veisinpartconden<alinforma<on

105

Eciency
Bigsalaryisthemostecientformofcomp
Mostmo<va<ngforanygivenexpenselevel
Nobonusesjustincludeinsalarysomuchsimpler
Nofreestockop<onsjustbigsalary
Greathealthplanop<ons,buthighemployeecopay
Nophilanthropicmatch
Instead,putallthatexpenseintobigsalaries
Givepeoplebigsalaries,andthefreedomtospendas
theythinkbest
106

Op<onalOp<ons
Employeescanrequesttotradesalaryforstock
op<ons,iftheywish
Theop<onsarefullyvested,grantedmonthly,
andcostemployeesinpretaxsalary
approximatelyhalfofwhatsuchanop<onwould
costintheopenmarket
Op<onsul<matelyvaluableonlyifNeGlixstock
climbsoverthenext10years
Inves<nginNeGlixstockorstockop<onsletsone
par<cipateinNeGlixsuccessorfailureat
whateverleveliscomfortableforemployee
107

SevenAspectsofourCulture
HighPerformance
ValuesarewhatweValue
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
108

Insome<meperiods,insome
groups,therewillbelotsof
opportunityandgrowthatNeGlix
Somepeople,throughbothluckand
talent,willhaveextraordinarycareer
growth

109

BaseballAnalogy:MinorstoMajors
Verytalentedpeopleusuallygettomoveup,but
onlytruefortheverytalented
Someluckintermsofwhatposi<onsopenup
andwhatthecompe<<onis
Somepeoplemovetootherteamstogetthe
opportunitytheywant
Greatteamskeeptheirbesttalent
Someminorleagueplayerskeepplayingeven
thoughtheydontmoveupbecausetheylovethe
game
110

NeGlixDoesntHavetobeforLife
Insome<mes,insomegroups,theremaynot
beenoughgrowthopportunityforeveryone
Inwhichcaseweshouldcelebratesomeone
leavingforabiggerjobthatwedidnthave
availabletooerthem
Ifthatiswhatthepersonprefers

111

TwoNecessaryCondi<ons
forPromo<on
Jobhastobebigenough
Wemighthaveanincrediblemanagerofsomething,
butwedontneedadirectorofitbecausejobisntbig
enough
Iftheincrediblemanagerler,wewouldreplacewith
manager,notwithdirector

Personhastobeasuperstarincurrentrole
Couldgetthenextleveljobhereifapplyingfrom
outsideandweknewtheirtalentswell
Couldgetthenextleveljobatpeerrmthatknew
theirtalentswell
112

Timing
Ifmanagerwouldpromoteemployeetokeep
themifemployeewerethinkingofleaving,
managershouldpromotenow,andnotwait
Bothtestss<llhavetobepassed
Jobbigenough
Superstarincurrentrole

113

Development
Wedeveloppeoplebygivingthemthe
opportunitytodevelopthemselves,by
surroundingthemwithstunningcolleagues
andgivingthembigchallengestoworkon
Mediocrecolleaguesorunchallengingworkis
whatkillsprogressofapersonsskills

114

Development
Formalizeddevelopmentisrarelyeec<ve,
andwedonttrytodoit
E.g.Courses,mentorassignment,rota<onaround
arm,mul<yearcareerpaths,etc.

Highperformancepeoplearegenerallyself
improvingthroughexperience,observa<on,
introspec<on,readinganddiscussion
Aslongastheyhavestunningcolleaguesandbig
challenges
115

Individualsshouldmanagetheirown
careerpaths,andnotrelyona
corpora<onforplanningtheircareers
Likere<rementplanningsaferas
individualresponsibility

116

Individualseconomicsecurityis
basedupontheir
skillsandreputa<on
Wetryhardtoconsistentlyprovide
opportunitytogrowboth

117

SevenAspectsofourCulture
ValuesarewhatweValue
HighPerformance
Freedom&Responsibility
Context,notControl
HighlyAligned,LooselyCoupled
PayTopofMarket
Promo<ons&Development
118

Whyiscultureimportant?
Whatisourculturetryingto
support?

119

CultureisHowaFirmOperates
Whatprac<cesgiveNeGlixthebest
chanceofcon<nuoussuccessformany
genera<onsoftechnologyandpeople?

120

Con<nuousSuccess=
Con<nuousgrowthinrevenue,
prots&reputa<on

121

Needaculturethatsupports
rapidinnova/onand
excellentexecu/on

122

Needaculturethatsupports
rapidinnova/onand
excellentexecu/on
Botharerequiredfor
con/nuousgrowth

Thereistensionbetweenthesetwo
goals;betweencrea/vityanddiscipline

123

Needaculturethatsupports
eec/veteamworkof
highperformance
people

124

Needaculturethatsupports
eec/veteamworkof
highperformance
people
Highperformancepeopleandeec/veteamwork
canbeintensionalsostarshavestrongopinions

125

Needaculturethatavoidsthe
rigidity,poli<cs,mediocrity,and
complacencythatinfectsmost
organiza<onsastheygrow

126

Thisslidedeckisourcurrentbest
thinkingaboutmaximizingour
likelihoodofcon<nuoussuccess

127

Ourcultureisaworkinprogress
Everyyearwetrytoreneour
culturefurtheraswelearnmore

128