Source : INDIA TODAY NEWS
Netflix co-founder Reed Hastings has criticised the way some companies describe their workplaces, arguing that calling employees “family” creates expectations that businesses cannot always meet, especially when layoffs become necessary.
Hastings revisited his own experience at Netflix, which was still a DVD rental company in 2001 when the dot-com crash forced it to cut around one-third of its workforce. He said that episode changed how he viewed the relationship between companies and employees.
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“If you describe yourself as a family at a company, you better not ever do a layoff. You would never lay off two of your kids,” Hastings told Semafor on its The CEO Signal podcast.
Hastings says companies should work like sports teams
Rather than comparing a company to a family, Hastings believes it should be viewed more like a championship sports team. In such a setup, people are expected to perform at a high level, while the roster can change when the team needs different skills or stronger performers.
Netflix built this approach into its management culture through what it calls the “keeper test”. Managers are encouraged to consider whether they would fight to retain an employee if that person were considering leaving. If the answer is no, the company may decide to part ways.
Hastings said this approach is not simply about reducing the workforce or cutting expenses. The broader goal is to have people in the right roles so the company can compete effectively.
At the same time, Netflix has offered employees considerable flexibility, including unlimited paid time off and parental leave. The company has therefore tried to combine demanding performance expectations with employee benefits.
The debate over “family” language has also surfaced at other technology companies. Airbnb CEO Brian Chesky acknowledged during the pandemic that describing employees as family could create confusion when businesses were forced to make layoffs. Shopify CEO Tobi Ltke also argued that “family thinking” could make it difficult for managers to address poor performance.
He also explains his distance from Netflix
Hastings, who spent 29 years at Netflix, also spoke about his relationship with the company’s current co-CEOs, Ted Sarandos and Greg Peters. He said he has largely stopped giving them business advice since leaving Netflix’s board in June.
According to Hastings, he initially continued to send them occasional thoughts but eventually realised that the two executives already understood how he would approach major decisions. He said they could consider what he might think and then make their own decision.
“They can mimic me and conjure me easily. I’m very predictable in that way,” Hastings said.
His comments come as the technology industry continues to deal with layoffs and rising costs linked to heavy investments in AI. Zoho founder Sridhar Vembu has made a similar argument, saying companies are increasingly blaming AI for job losses when cost pressures and economic problems are also contributing to workforce cuts. Vembu has argued that the current AI investment boom cannot continue indefinitely and warned that companies should prepare for tougher economic conditions ahead.
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SOURCE :- TIMES OF INDIA
