November 28, 2019

Netflix’s former talent chief wants HR leaders to get smarter

Patty McCord calls for HR leaders to get real about how the workplace is changing, and why they need to take more ownership of their roles in driving the business forward.

Patty McCord doesn’t mince words. The former Netflix talent chief wants you to throw out HR’s buzzwords and so-called best practices, and get real about how the workplace is changing.

 

Her message to HR leaders? Own your role.

 

It’s not “radical” to disrupt old ways of thinking and working, McCord, who now consults with both start-up and enterprise companies, tells us. It’s logical that today’s world of work requires people leaders who challenge norms, and continually ask what’s best for the business from a people perspective.

 

Here, she discusses rethinking comp, the reality of alternative workers (spoiler alert: you’re not maximizing them), and why HR leaders need to make friends with the CFO.

 

Q: You mentioned a couple interesting things there: Organizational development and design. Being aware of what teams need at different times. Having a solid business understanding of how to fill roles. These are part of the conversation today about the changing role of HR. What do you think is the role that HR people play today in companies, and what should it be?

 

Patty: As HR professionals, it's our job not to just do the things we're functionally tasked to do, like recruiting, retention, compensation, and benefits. We have to really look at all of the systems in the organization and ask whether they align with what we need to do, in the order we need to do them, and in the time frame we need to accomplish them – as a business, not as an HR team.

 

When I was at Netflix, I used to tell my HR team, “We are a service organization, but it's not spelled S-E-R-V-A-N-T-S. The people we serve don't work here. The people we serve are your mom and your grocer and the guy at the laundromat. Those are the people that use the service. How we serve our customers is by making sure we create an environment with great people doing great work that matters to our customers.

 

That means having the muscle to be able to look forward and see what kind of talent you need. You also need internal ways to communicate to people about how well they're doing and how they're functioning. It’s also about having good feedback mechanisms that happen in real-time so that you know whether or not the job you're doing might be changing, or that the business or technology is changing. All the things I'm talking about are business things, they're not HR things, right?

 

It's also about making it easy for the great talent you hire to get amazing work done. It's thinking about whether or not your compensation and rewards systems actually reward the kind of behavior that you want. It's about looking at all of the things you do in connection to the business and its objectives and asking if there’s a conflict.

 

For example, if you say you reward freedom and responsibility, and want your people to be independent thinkers who take risks and have new ideas – but not unless they get approval from five people, those are contradictory statements.

 

Q: Right. Be an intel center for the organization.

 

Patty: Often we're the ones who have the insights. Most people think strategy is planning. But my definition of strategy is what you’re not going to do. When you really understand strategy, you realize there may be people in your organization that don't fit or might not fit in the future. You figure out how to manage that with dignity and grace, and not a surprise layoff.

 

Q: Say you’re the HR person who has this intel. How do you get in there to take action? How do you get that seat at the C-table?

 

Patty: Oh God, I hate that question.

 

Q: Why? [laughing]

 

Patty: It's so old. I'm so tired of us asking it. It feels whiny. How do I get a seat at the table? It's like, well, you earn it like everybody else.

 

Q: I thought you might say that. But I think a lot of people are still asking the question because they struggle with how to do it. Let’s frame it functionally – how would you explain what that person needs to be thinking about?

 

Patty: You have to be able to speak in the language of the business, with results. Do what everybody else in your organization does. You do not wait to be invited. Nobody else waits to be invited to the table.

 

Here’s an example. “This team will not produce the results that we need by the end of next quarter. It's the wrong team. Here are the goals and objectives of this team over the last four quarters, and they've missed them every time. My intelligence, insight, and deep dive into this shows that we don't have the right skill sets, because we don't have the right people. Here's my plan to increase revenue, profitability, and delivery on this team to assist management in getting the right team on board when we need it.”

 

You have to be able to talk about results. You have to be able to talk about business performance. You have to be able to talk about customer satisfaction, and not just about the happiness and well-being of the people that work there.

 

Go make friends with the CFO. You must be able to sit down and read the profit and loss statement. You must be able to understand what technology you're using, and how it's changing. You must be inside your sales organizations talking about where you're going, what you're doing, what product you’re selling, where the conflicts are. You must understand what your revenue goals are. And if you don't know those things, then go figure it out. I mean, you are working inside of a company, the answers are all there.

 

Q: You’re saying this is about taking a more active, strategic approach versus following traditional models and so-called “best practices.” What do “best practices” mean today, anyway?

 

Patty: “What everybody else says” is all it means. We’ve built a whole industry around proving what everybody else does. We say that according to a survey of our company practices on which we’ve spent thousands of dollars, we’re doing great because we’re doing the same thing as our competitors. Then why is revenue crap?

 

Q: Uncomfortable question.

 

Patty: “We're not responsible for revenue, we're in HR.” Yes, you are. [Addressing HR leaders] We can do better than this. You are all smarter than this.

 

Q: Now a question about broader culture.  People equate this word with lots of different things – from perks to attracting talent to core values. With all of these different associations, how do you know if you’re doing it right?

 

Patty: It's the HR “thing du jour.” I was at a diversity and inclusion conference the other day. Do we really have to call it D&I? It sounds like Linens and Things. Why do we reduce everything to a single buzzword?

 

If you want to think about culture in your organization, the first thing is to define what you mean. If it’s about having better craft beer than the company next door, then that’s a pretty shallow definition, and you’re going to attract a particular kind of employee.

 

Another thing I find really frustrating is taking an inordinate amount of time to create a beautiful culture deck, video, or description of what your values are and how you live them, and then finding out that the executives of the company don't ever do any of those things.

 

All this to say – the whole culture conversation means nothing without the actions that support it. That’s the first point.

 

The second point is that you already have a culture based on the actions that take place in your organization anyway. Culture is what people do when nobody's looking.

 

But mostly I've found that culture is most evident in the leadership. It's most evident in the way people who are in charge of making big decisions operate with each other. If you say you have integrity and are transparent but everybody knows you don't get any information out of the CMO unless you pry the information out of them with a knife, [then that’s not the case]. Holding the leadership team accountable for creating the kind of company you want to be is the core of what your culture is going to be, no matter how large your company.

 

Q: You now consult with different companies – start-up, high profile, all over the map. What are you hearing from these companies about their concerns around this nebulous future of work from a talent perspective?

 

Patty: I'm seeing a lot of blindness to reality.

 

I'm seeing a lot of conversations that are still about regular full-time salaried employees who come to the office every day. I get asked in interviews about how innovative it is to work from home – and these reporters are freelancers.

 

I recently read that one of the fastest growing trends is to work from home. That number is skyrocketing because we're able to do it now with technology. People want to do it. People aren't realizing that the workforce now is not just augmented by contractors and temporary workers and remote workers, but they’re part of our teams and have been for years.

 

We operate as if gig and freelance employees are a subset of the people that work in the corporation.

 

For me, there's a willful blindness about recognizing how we actually work, and having conversations that maximize the things that allow people to have good lives when working in different ways.

 

Q: Perhaps it’s the idea that work represents a structure. When that structure starts changing, or disintegrating, and the onus falls on employers to reinforce the business outcomes instead of the structure itself, they don’t know what that looks like or how to do it.

 

Patty: Instead of being concerned about people staying at companies for shorter periods of time – two years, three years – think about this instead: We’re going to have people who come into our firms with eight years of experience and four companies of breadth.

 

They're not going to expect to stay for eight years. It’s a wonderful thing. Things move faster, so terms will be shorter, and that's going to be just fine.

 

When I talk to managers, I say their job is to create revenue-worthy experiences. If you reframe your job – from thinking you have to keep your people at all costs, qualified or not – to putting together amazing teams that do incredible work that people are going to be proud of, however long it takes to do that work, it’s a whole different perspective. And when you have that different perspective, you can also see a different way of using systems to manage people.

 

Q: That also changes what it means to leave a company.

 

Patty: If the HR “cool thing du jour” this year was dignified goodbyes, that would change a whole generation of the way people work.

 

Q: A lot of what we talked about relates back to approaching decision-making differently. Last thoughts?

 

My experience with most HR professionals who are senior in the organization is they know what needs to be done, they know what the future looks like. They just don't know how to stop doing the stuff they've always done, or replace it with something better.

 

It’s hard. You can lead the way into the future, but you have to let go of the stuff that’s not working anymore.

 

This interview has been edited for length and clarity.

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