The Elevate Podcast welcomes back former guest Patty McCord. Patty is the former Chief Talent Officer at Netflix, where she developed a truly revolutionary company culture and became one of the world’s leading experts on culture. She also authored the now famous “Netflix culture deck” which has been seen by millions and Sheryl Sandberg called “the most important document to ever come out of Silicon Valley.” Patty is also a sought-after speaker and the author of Powerful: Building a Culture of Freedom and Responsibility.
Patty joined host Robert Glazer on Elevate to discuss misconceptions about company culture, cultural changes in the tech world, and how to have difficult conversations at work.
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Netflix Culture Deck Creator Patty McCord On Changing How Companies Think About Culture
The Importance Of Creating A Purposeful Workplace
Our quote for this episode is from Dan Pfeiffer, “If the person at the top of any organization does not reflect the values you want in the culture of that organization, it won’t work.” Our guest is one of my virtual mentors, Patty McCord. Patty is the former Chief Talent Officer at Netflix, where she developed a truly revolutionary company culture and became one of the world’s leading experts on culture. She also authored the famous Netflix Culture Deck 1.0, which has been seen by millions. Sheryl Sandberg called it the most important document to ever come out of Silicon Valley. Patty is a sought-after Speaker and the author of Powerful: Building a Culture of Freedom and Responsibility.
Patty, welcome back to the show.
Robert, it’s good to see you again.
Your first episode was way back in 2019, episode 54. A lot has gone on in the professional world since then. I’m curious. We’ll talk specifically about what’s changed since the pandemic but looking back on that culture deck and Netflix culture, what do you think the biggest impact on the broader business world has been?
I went to a goodbye party for a friend of mine I hired at Netflix. He was retiring from Netflix. Let me say a couple of things about the 1.0 Culture Deck. I didn’t write it. It was a collaboration. It usually started with the CEO and me, Reed and I, in our one-on-ones. He thought in PowerPoint. He and I would talk about it. He liked outline forms. Back in the day, we all used PowerPoint to do that. We’d write a chapter and run it by our executive team, the management team, and the rest of the company. Remember, it was PowerPoint.
PowerPoint has endured. In some of these online things, people who are presenting or speaking are scared to death that the internet will go out and that it won’t work.
I remember my son making a PowerPoint for me when he was seven years old. He had a product that was X-ray glasses that could see 100,000 miles and through buildings.
Those would go for a lot of money.
He had an org chart that had him as CEO. His vice presidents were Reed Hastings, my boss, and Bill Gates.
Shoot big.
The Evolution Of Netflix’s Famous Culture Deck
It was a collaborative process. It took us ten years to write the original Netflix Culture Deck.
I didn’t know that. It’s like 1 slide per 6 months.
No. It’s more like chapters. First, I didn’t want values or esoteric aspirational stuff because we didn’t have time. We didn’t have a product that worked or any customers. I was like, “I am not doing an offsite to wordsmith esoteric values statements. I’m not going to do it but I will write down how we wanted people to behave.” It was very much about behavior. That was the first chapter in that deck. We rewrote that chapter six times when I was at Netflix. The culture deck itself at Netflix went through a revision in 2024. That’s probably the tenth one.
I heard that. I haven’t looked at the new one, but I assume it’s a different organization.
It’s different. There’s a lot about culture and embracing international culture because Netflix is such a global business. That’s the first thing to learn. If you go through it and read it that way, you’ll realize that you can’t have the next chapter without the chapter before. We couldn’t have talent density without me spending five years revamping the recruitment strategy, the separation strategy, and the severance policy.
To have people work with freedom and responsibility, we had to have a high density of high-performance employees. Freedom and responsibility came after that. If you go back and read it, you’ll see the evolution of the company and the culture for the first ten years. The company started in ’97, so it’s been a while.
People keep pointing out. I saw on some deck where someone said, “When people say twenty years ago, I intuitively think it’s 1985 or 1990. I then realized it’s 2004.”
I do podcasts or meetings where the person interviewing me was born in 1990. “I was born in 2000.” I’m like, “You’re kidding me,” but that’s true. That’s question one you asked about. The second question is what’s changed, what’s evolved, and what’s stuck.
What is the biggest impact about that that surprised you? What’s the biggest mischaracterization? When these things take on a life of their own and everyone wants to do it, what do you think a lot of people got wrong trying to emulate it?
One of them is personal. For a long time, when people met me, they would say, “You’re pretty nice and warm. I expected you to be the Netflix hatchet girl who went around firing everybody like Trump like, ‘You’re fired.’” It wasn’t like that at all. The second thing that is profound looking back is one of the deeper aspects of it, which was something hard to articulate.
We’re going to trust you to be an upstanding, well-meaning adult who wants to come to work, make a contribution, and go home proud of the contribution you made. We’re going to use that assumption with everybody unless proven wrong on either side. I did Netflix, wrote the book, and spent a couple of years traveling the world doing keynote speeches, and then the pandemic happened.
No one was sitting in chairs.
At the beginning, it was wonderful. I had never been a public speaker before. I wasn’t particularly good at it in the company because I always came after Reed or somebody who was amazing. What I said resonated with people. I started to like that. The pandemic happens. Everyone works from home. All of a sudden, all the things I’d been saying for all those years come right to the top again.
I would do a talk and people would come back every single time and go, “What you say makes sense. It’s so logical. I would do it, but I can’t because we’re in Europe, my CEO won’t let me, my CFO doesn’t walk the dog, or we’re remote. We couldn’t possibly work from home.” Forty-eight hours later, we did. My message became, “You could have done that all along.” All of a sudden, we’re measuring people’s performance not based on who they suck up to, how they talk in meetings, who sees them at their desk, or all that stuff. We’re measuring their performance on output and deliverables, which we could have done all along.
I tell a story about a boss I had at one point. A lot of us had families at the business and were promised a fair amount of flexibility. He didn’t have a family yet and resented being the first one in and the last one out. It didn’t seem to matter what you did. I decided to come in earlier than him for an entire week and play video games on my computer for two hours. He was much happier with me and my work after the week. That stuck with me for the rest of my life like, “This is stupid.” A lot of what I talk to organizations about is if you measure inputs, you’ll get inputs. Since none of us can overcome the 80-20 rule, shouldn’t we focus on outcomes?
The other thing was the whole idea of most of HR is built around protecting the company from those evil employees who might sue you. If you don’t control them, they’re going to screw around and play video games. They’re not going to work. All of a sudden, we don’t care.
Most of HR is built around protecting the company from employees who might sue. If you do not control them, they will screw around.
A lot of companies still don’t have the metrics, dashboards, and accountability to do that. We were remote before COVID for almost ten years. I had friends in the business groups I was in. They looked at three heads and were like, “How do you know your employees are doing anything?” The average employee has the same amount of accounts. We distribute them equally. They have about the same amount of revenue. We look at is the program glowing, is the revenue growing, and is the client happy? If somehow they have $1 million of business that’s growing, the client’s happy, and they’ve figured out the three things to do that day, that’s the business we’re in. God bless them.
Who cares? It was interesting. I told you that I went to a Netflix goodbye party for an employee I hired years ago. He’s an engineer. When I think about AI, he was the original algorithm creator for our personalization algorithms. His big goodbye to the members of the current Netflix engineering team was customer. You can invent cool stuff that they don’t care about and then it doesn’t matter. Don’t get all caught up in the cleverness of it. Get caught up in the metrics that matter, which are, “Are people watching our shows? Are we creating good shows? Are they engaged in them? Do they come back? Do they cancel?” It was funny because 25 years later, that mantra is the one. You could see people taking notes.
Jeff Bezos has his chair in every meeting for the customer.
Those are the things that revived my being out in the world again stuff. It was to talk to people. 99.9% of the people in the world want to come to work, do good work, go home, and be proud of the work they accomplished. Pretty much that’s it. There has been interesting stuff about people wanting to come back all the time, and we can talk about that, too. A friend of mine who was a producer for TED Talks said, “Where people are getting it wrong on video meetings or big video meetings in particular is they’re using video to substitute in-person conversations.” Video is not in-person.
Better than a phone call but it’s not in-person.
Why Radical Honesty Matters In The Workplace
She was like, “If you want to make it engaging, there should be some music and humor. Produce it as if it’s television because, in some ways, it is. If you want human connection, then do real human connection for the things that matter. Just don’t trade one off for the other.” We’re still learning a lot of that stuff. You asked me what the biggest impact was. The freedom and responsibility is the biggest impact or it is the biggest impact I want to make. Robert, it still floors me how many people are like, “It’s so radical what you do.” I never did a radical thing in my life. I never invented anything. Here’s what I did that was radical. I stopped doing stupid things that didn’t matter.
That’s a good T-shirt. Let me prompt you on one of the misconceptions. In that culture deck, you were not trying to appeal to everyone. People liked the candor. The misconception, where people have gone wrong, and the madness we’ve had in the last few years, is trying not to offend anyone and say things that appeal to everyone. If you appeal to everyone, you appeal to no one. I had the Basecamp folks on here talking about how they almost lost their business when they said, “We’re not doing politics at work. We don’t want politics at work.” People have been so afraid to put these stakes in the ground. That’s the part that people missed.
Here’s the true origin story. It took us ten years to write. We used it as an onboarding document. Every quarter, we would take all the new hires. At the time, it wasn’t very many people. A big meeting was 30 people. We’d go in a room, Reed and me, and go through the culture deck and say, “Here are the promises we make to each other. You should understand this.” I would see people in that room gasp. There was a bad hire. I knew that if they freaked out during that meeting or didn’t show up, they were like, “I’m busy writing code. I can’t make it.” I’m like, “Really?”
We had that because we do an onboarding. I’m not operationally involved in the company but I still enjoy doing the onboarding and the culture deck. We had someone, the founder of the company. It’s a big company. I’m very approachable but they skipped three of them in a row. I said to the person booking, “There’s no way they’re going to be here in six months.” It goes against our values of owning it and embracing relationships. I saw them on the exiting list nine months later and it was the least surprising thing I had seen.
Have you ever been in a company where you could be in a room with twenty people and have a conversation with the CEO? You’re going to skip that.
You skip that last minute and don’t show up to meet with them. It seems like a not smart thing to do.
That’s why we used it. Reed and I are driving to work one day. We carpooled. He said, “I was at the swimming last night. She has this cool company called SlideShare and they share PowerPoint decks on the internet.” I said, “That’s a great idea. Wish I had thought of that. I wonder what people are going to put out there.” He said, “I put the deck out this morning.” I freaked. I was like, “Reed, you can’t do that. You’re going to scare away all of our candidates. It’s too edgy and weird. We think everybody should do this. You’re going to freak out everybody who wants to apply to work there.
He said, “Only the ones we don’t want.” That’s the crux of your point. We didn’t want everybody to love it and we didn’t need everybody to get it. We were saying that this is the promise we make to each other. If that doesn’t work for you, that’s cool. My son had his second child. The company he works for gives him three months of paid paternity leave.
I had kids too late for this new three-month thing. I had two weeks.
Allowance for his night doula. I said that sarcastically. It’s wonderful. It’s great for me because I get to see him more and all these kinds of things.
I’m jealous. I’m not even hiding that.
That wasn’t what it was when we wrote version 1.0. The demographics probably weren’t different but they seemed different in the startup world at the time. I had to fight this a lot. Startups were mostly single White guys who could work all the time. When I got rid of paid time off, I got rid of tracking paid time off. I didn’t get rid of paid time off.
I was going to say Marissa Mayer and her 130-hour work weeks.
That was a thousand years ago. When she did that, Yahoo was in another crazy fallout. Every time Yahoo changed CEOs, I would send my recruiters in. I’m like, “Go get the data science people.” Yahoo hired great people. “They don’t know who they work for. Just go get them. Go get this group and this group.” The deal was that when I interviewed Yahoo people, 2 out of 3 didn’t know who they worked for or what they were working on.
There was a lot of stuff going on. If you do 52 acquisitions in 5 years and they’re all worthless, it’s clear that you don’t have a good priority set.
It was clear she just wanted a headcount. There wasn’t anybody who was taking that seriously. Great for us. Here’s another helpful tip for your audience. Be very aware of the competition and what they’re doing. Do not gloat when they’re in trouble. Recruit. Go in there and get them, especially for Yahoo. They’re like, “Not again.”
We’ll talk about a bunch of things. The pandemic has dislocated a bunch of things and I have a whole bunch of questions related to this. Has the fear of upsetting people ruined the culture? Have companies watered it down in terms of not being willing to say what the Basecamp guys did or Coinbase? “This is what we’re going to do and what we’re not doing. If you don’t like it, we’ll love you and help you leave like you did. If you love it, great. We’re not trying to be everything to everyone.”
I don’t know. I’m not out there working for a company, so I’m speculating. After I left, I asked Reed Hastings, the former CEO of Netflix. Things were very politically correct all the time. “How would I do if I was back in the company?” He’s like, “I’d fire you in a hot minute. You would never make it.” That’s data point one. Data point two was, do you remember the guy at Google who wrote the treatise about women couldn’t be software engineers because they weren’t smart enough?
Yeah.
I had a call from USA Today or something. This was before they had decided what to do with him. I don’t know. They called me and said, “If you were at Google, would you fire him?” I was like, “In a hot minute.” No. Be googly all you want. That was a stupid thing to do. I said, “Hopefully, I wouldn’t have hired him.” You want to bet that guy was a twit in the interview. Were there women interviewing him? Other engineers interviewing him go, “I want to sit next to that guy.”
Those are the kinds of lessons. Pay attention to what other people do, both good and bad. That’s the crux of making the Netflix culture to be this be-all-end-all aspirational thing. It doesn’t work for everybody and it didn’t work as the company grew. That’s why there’s a different version of the deck. It’s not that the old one was bad. The old one was for a different company.
One of the things I ended up getting very interested in at our own company and the subject of my TED Talk and my book is that there’s so much focus on hiring well and good cultures. Everyone’s ignored this whole notion of leaving. It’s this cognitive dissonance, even with Google and Netflix. Look at the average tenure, particularly for someone under 35 who’s two and a half years at these companies. This is not lifetime employment but we’re running this playbook pretending like it is. We’re all insulted and mad.
I read your article prepping for the talk. I was like, “Let go.”
Why does leaving have to have so much animosity and lying?
Some of the things, to be honest with you, are in the words we use. I write and talk about this a lot. You and I are simpatico on this. When something happens with your competitor and things go bad, go in there and recruit because talent is there for everybody. I used to say all is fair in love, war, and recruiting. It’s an open market. We’re free agents because we keep promising it.
It’s the words we use. We say, “You’re fired.” There aren’t guns involved. There’s no blood. When you fire somebody, the emotion that happens is shame. What we’ve done, and you do this beautifully in your article, is we’ve turned the performance improvement plan into a hateful, horrible torture mechanism to get somebody out of the company in a way that we think covers our ass.
When you fire somebody, the emotion that happens is shame.
The Truth About Performance Improvement Plans
I’m not a lawyer and I know you agree with me on this. The biggest lie is that doing a performance improvement plan will stop you from getting sued.
Let’s cover two things. First of all, why do employees sue you? I’ve been involved in lots of people threatening to sue me because they were pissed. All of a sudden, they got all these great reviews, and nobody had a conversation with them about their performance in six months. They’re crap. They go back home and think, “This is so unfair. It’s got to be because I’m a woman. Nothing else makes sense. Nobody’s ever talked to me. I know other people who perform worse than me.”
You do that process, knowing you want to fire them in 30 days.
Everybody knows. Let’s do a smidge on the process. Every Tuesday morning, you and I are going to meet. You’re going to put it down in writing. By the fourth Tuesday, I’ve started drinking the night before and so have you. I come in and cry right off the bat because I know this is going to be another one of those meetings. You don’t want to be doing it anyway. You know I’m not happy. You’re not happy. You’re starting to hate me because every time you see me, I cry.
Here’s the biggest tax to this process that nobody pays attention to. Guess who’s watching? Everybody. You lower the productivity of the same people who came to you six months ago and said, “Patty isn’t pulling her weight. She’s not that good. The skills that she had are outdated. The new people we’re hiring are head and shoulders above her. We hate her and wish you’d get rid of her. When are you going to get rid of her?” Now, those same people are like, “She has a kid. She works hard. She comes in early. She remembers our birthdays. Why are you making her cry?” Take all that aside.
I leave Netflix, write my book, and start doing these talks. I’m on stage with famous coaches like the coach of the San Antonio Spurs. I’m in the audience. He gets done with his talk. Somebody in the audience says, “It must break your heart that you spend all year scouring the country for the most amazing players and best basketball players, coach them to brilliance, and they could lose their jobs. They could be gone. Doesn’t that break your heart?” He goes, “It’s professional basketball. They get it.”
When you’re part of a team, you get that. If you go for twenty, you’re going to ride the bench.
We can tell a 24-year-old guy that but we can’t tell a 40-year-old man at work. You played a good season. We couldn’t have won without you, but it was a different game and competition. You’re 60. I shouldn’t bring age into it but you know what I’m saying. Is that going to work? That’s one thing. The other one was I was on stage with the winningest coach in hockey history. He was the coach of the American guys who won all this stuff. Scott Bowman.
I go up on stage in Canada. I’m under the stage with him and he taps me on the shoulder. He goes, “Patty, we’re under the ice.” At this point, I’ve never spoken to any group bigger than 100 people. I go up on stage. They put a spotlight on me. I’m in a hockey stadium. My face is on the jumbotron. It’s totally weird. They clap politely and I take my seat. He comes out and people go crazy. I’m in Canada, in a hockey stadium with the winningest coach. People are screaming.
He comes down and the moderator says, “Patty McCord has said she doesn’t love the annual performance review.” I don’t. First, I said to him, “Mr. Bowman, how do you coach all your players to greatness?” He says, “We play an 80-game season. Every ten games, I sit down with each player. We go over what they’ve been working on, what drills they need to do, how they can best work with their teammates, who our competition is, the games that they’re playing and in front of us for the next ten games, what our strategy is going to be, and what that individual can do to perform so that we win.”
The moderator says, “Patty McCord, you hate the annual performance review. What would you do instead?” I’m like, “What he said.” I then say, “Do you realize what he’s talking about? It’s a performance improvement plan. What if we did that instead of this horrible ritual that we do? We know that you’re right. It’s a journey. You’re not going to be in the same place for the rest of your life.”
What makes someone mad is knowing you’re just doing this to fire them anyway. Do you know about the famous study that insurance companies did with doctors to determine who would get sued?
No.
It’s very instructive. Insurance companies wanted to figure out which doctors, surgeons, or whatever it was get sued more. They listened to all of their calls with their patients and looked at their performance in the operating room or wherever it was. The lawsuits had zero correlation to the mistakes they made. It was highly correlated to how they talk to their patients in the phone calls. They were rude and dismissive.
I have a pediatrician and I would never sue her. She’s been with us since we were younger. I don’t know what people don’t get about that. We’re giving that advice. We’re like, “We won’t get sued. You put them on a plan where you tell them you want them to get better but you want to fire them in a month anyway.”
The other dirty little secret that nobody talks about in the profession is more than half the time, we’re talking 70%, 80%, and 90%, you’d buy them off. Let’s say 50%, somebody’s made a mistake. “Here are the three things that you get wrong. Here’s why it doesn’t work out. One, you hired somebody who you thought could do the job and they can’t.” A lot of times, in startups, that’s because you don’t know what the job is.
People didn’t agree on what the job was. I had a guy call me years ago and he’s like, “We want to get your advice. We’re doing a sales and marketing hire.” I was like, “Red flag. Which one? I’m sure sales wants certain things. Marketing wants different things.”
That’s a classic as if they’re the same thing, which they aren’t at all, but everybody thinks they are. If you hire the wrong person who doesn’t have the skills to do the job, that is completely and totally your fault. You as a hiring manager hired the wrong person. They have no fault at all. You said you’ll be great. You talked me into it. You flatter me and send me flowers. I take the job, and all of a sudden, I’m shit. That’s because we made a mistake. You can do that. I have done hires where I’ve said, “We think you’re great and you’re the person to solve the problem,” but we don’t know, Robert. “Here’s the deal. You should know that there are red flags coming into this, but we’re willing to do it if you are.” You could choose. Six months later, you’ll know.
I have a limited set of data in our company over ten years. This was another thing I talked about in the book. You know after 2 to 3 weeks with most people, unfortunately. You lie to yourself for 4 to 5 months.
That’s one thing. You hire somebody because you love them and they fit the culture. I remember somebody said, “Do you love him?” I’m like, “I love him. I want to have beers with him. I want him to babysit.”
We can’t find any job they do well.
They don’t know how to do the job. They’re not qualified. We all agree there. I remember the folks going, “No worries. We’ll help him out. I’ll put in some time. Fred will put in some time. We’ll make him successful.” I’m like, “This is a great ROI for the company. I’m going to lose 1/3 of your productivity to hire somebody who’s only 50% to start with. This won’t work but go ahead. Hire whoever you want. You’re the manager.”
The second one is you hire somebody to do a job. They do a great job. It takes 6 months as a contractor but they could do it for 6 years. They do the job and then they’re done. You don’t need anybody to do that anymore or you change technology or the competition. In our case at Netflix, the DVD-by-mail people were amazing. There was not a bad performer in the bunch. They just didn’t know anything about streaming. They all wanted to do it but they couldn’t.
It wasn’t a desire thing. We could have brought them along and brought them up to speed, and then we would have lost the opening. There wasn’t time to do it. We had an opening. We had to do it. We had to do it right. It wasn’t the people that we had. We had to hire a new person. Third, things move around. The chemistry can suck. You hire a new manager. All the things that you were good at before are suddenly things you’re not good at now because they have a different perspective on the team. They have different KPIs. When you get up in the morning and you go, “I have to go to work,” go to work somewhere else.
The other important thing that I talk about a lot that’s important is leaving. If you see your job as a manager, which is to create a company that’s a great place to be from, then your job is to provide resume-worthy experiences. There can be many. It’s not a straight line up into the right path with little stairsteps that are the things you check off that get you the promotion. It’s the completion of something that makes a difference to the company and the customer.
If you want to know what you love to do, think about the time you got off the subway or you got home and got out of your car, or you hung up the Zoom call and went, “I killed it today.” That’s it. That’s what you love to do, and you’re extraordinarily good at doing it. If you don’t find that or if it’s not there anymore, then it’s your career.
I’ve heard this analogy. Sports teams do so many things well better than businesses from practicing. The coaches can’t go on the floor. The one with maybe some marriages or partnerships would be contracts. It’s a two-year contract and the contract’s over. We decide, “Do we want a new contract? Is it worth more? Is it worth less?” It gets away from this expected perpetuity.
I took a lot of my cues on compensation from a friend of mine who owned a PR business and how they did it. I saw this from her, where she said, “How much do you want to make?” You’re like, “I want to make $500,000 a year.” “Great. I can bill you out to a client at a 30-an-hour rate. Ten of that goes to overhead and your benefits. There’s another $2 that goes to profit because we got to make some money doing that. Do the math. I’m not sure there are enough hours in the day for you to make that kind of money.”
“If I could bill you at $300 an hour, then we might be getting closer to the ballpark. Here’s the difference between your billable rate now and your billable rate at $300 an hour. Here’s the difference in what the client gets for your services.” I love it. The second thing I learned because I’m in Silicon Valley is that when you quit thinking about comp, retention, and all the buzzwords, you start thinking about real estate. It’s whatever the hot new technology is. If you put AI on your resume, you’re golden, whether you’re lying through your teeth or not. That’s hot.
When you only start thinking about the current buzzwords and put them on your resume, you are golden right now.
It was blockchain in 2024.
It’s been around forever. It’s just new. Those folks who have real AI skills are going to be worth more than the person who doesn’t if your company needs AI. They are not worth more if it doesn’t matter. That’s the other part that people don’t get about compensation. There’s a market, which is important, and then there’s the value of that skill to your corporation.
It’s a great way to explain the financial realities. If you’re existing within a company or a team, you have to understand that. One of the struggles is a lot of people have this free-agent culture. “I want to work on what I want, where I want, and how I want to do it.” Go drive for Uber.
You can do that. It’s hard to master something in the short term but that’s okay if that’s what you like to do. I remember somebody saying to me when we were little, “Patty, everything’s different. It’s not the way I want. You and Reed don’t understand that culture and company are changing. I used to know everybody’s name and now I don’t.”
“We were 30 people. You’re making three times as much money.” I was the vice president at this point.
I said to him, “All that is, in fact, true. I agree.” He said, “You know?” I said, “Yeah, we’ve had this conversation seven times. I certainly know from you. Do you know why?” “Why?” “It’s because we’re successful. You know what we want to be when we grow up? A global corporation. It’s okay. You won’t be here. You’re a startup guy.”
Do you know that house you got with the stockroom when we quadrupled the last few years? You weren’t getting that with 30 people. People want these Franken jobs where they want to piece together the biggest and best parts of all of them.
We can do another whole compensation and equity.
I didn’t mean it that way. I meant that when they were trying to put it together, I missed that we were ten people in a garage.
I want my salary and you had benefits. You never went home either because you lived in the house with the garage. I did a talk one time back in Canada here. It was 900 CEOs. Most of them brought their HR people. I said, “Raise your hand if you’re in the job you had when you left university.” Zero hands. It’s 900 people. “How many of you think the most important metric for people is retention?” Nine hundred people raise their hands and all the HR people are like, “Raise your hand.” I’m like, “You’re the special exception. Everybody, what planet are you on? This hasn’t been true since 1962.”
When I coach people about their careers, I tell them, “Go to a place that you’ll be proud to be from and you think you’re going to learn something that’s resume worthy. Know that that’s your step to whatever you want to do next.” Google is a great example. You can say Google. They want you to stay forever. “You have a giant brain. Come to Google and do whatever you want.”
Google isn’t Google anymore. The only Google is about searching. When I talked to managers at the different alphabet companies, they’re like, “Robert’s worked on this thing for two and a half years. All of a sudden, he’s bored. We’re about to launch. He went to self-driving cars because we can’t.” It’s a different game. Back to your original question, why do you think we keep doing this? Part of the reason is that people are too afraid. They’re continuously taught that there’s this thing called best practices. Best practices are literally what everybody else does.
During the pandemic, for once, we didn’t care what Google did. We realized it didn’t matter because we weren’t them. I have a sleeping pod. It’s called my bedroom. When everybody went back to work, I thought, “How is every Silicon Valley engineer going to be able to eat breakfast without free cereal? What’s it going to be like, the horror?”
There’s something in what you’re saying. To get to these different outcomes, you need to have real and difficult conversations. One of your cultural principles is not shying away from these. It’s an essential management skill. There’s so little training for it. People suck at it. I told you last time we role-played these at our company. We created a scenario where someone does a 90-day review. The people who are doing the skit don’t know the other side of it. Other managers watch. We say, “Have a conversation.”
Patty has been there for 90 days and thinks she deserves a raise. Bob’s the boss. He has to tell Patty she doesn’t think she’s going to make it. It’s a crap show watching it. He says some compliments and does some stuff. She left, and we asked her, “Did you know your job was on the line?” She says no. “You understand why two weeks later when we have the discussion with Patty. Patty’s all mad.” They’re like, “I thought you had that call with her.”
I always tell the story of the manager who comes in to see me and goes, “I’ve had it with Patty. She sucks. I told you she sucks. I told her the next time she did this, that’s it. She’s fired. You need to figure out I’m going to fire her and it’s going to be on Friday. Tell me what to do.” I’m like, “Hold on, wait right here. Let me go ask her how she’s doing.”
They ask Patty, and Patty says, “Robert and I have worked together for seven years. Here’s how it goes. There’s always some stuff. My interdepartmental communication could use him. I never knew what he was talking about.” We get into this fight one-on-one. He yells at me and I cry. I avoid him and hide from him. It blows over. We have it again. “It’s no big deal. Don’t worry about it.” I say, “When was that last conversation you had with Patty at our last one-on-one?” “May.” “It’s November.” That’s a great way to do it.
There are two things I would say. One, I’ve never seen a difficult conversation put off that becomes less difficult. It’s like in a relationship. Everything you held back comes out at a later date.
I call it the toothpaste conversation. You leave the lid off the toothpaste and your new friend says, “I wish you didn’t leave the lid off the toothpaste.” A year later, you put the lid on the toothpaste. “Throw it away. I’m never going to do that.” “I don’t care.” They could have told you that week one. If that’s the dealbreaker in our relationship, the toothpaste lid, then we’re probably not going to make it.
They don’t have it soon enough. They don’t practice or don’t know how to do it.
Practice.
Every sports and theatrical team practices 5 to 1 at playing or 10 to 1.
You’re in finance and the numbers are wrong. It’s empirical. The other thing is that I wish I hadn’t called it radical honesty in my book. I stole it from Kim Scott. There’s nothing radical about being honest. I’m an old lady. I’ve been doing this for such a long time. People can hear anything if it’s true. What makes them crazy is the spin, like what you described. “Patty, how are you today? I love the new haircut. Looking good. Killer margaritas you made at the last. I wanted to talk about your performance.”
People can hear anything if it is true. What makes them crazy is the spin.
I can understand why they’re confused.
My two rules for termination were you couldn’t be surprised and you had to keep your dignity. If you’ve had conversations, it’s always a surprise. Nobody ever thinks it’s going to be the end. I remember when I broke up at Netflix. It devastated me. This is my company. I’d been married for fourteen years, and I was there. Was it painful? Yes. Do I want to talk about it? I don’t know. Do you want to talk about your last breakup? I don’t think so.
It wasn’t a surprise.
No.
Someone I know spoke to a group of people and was saying, “I’m dealing with this marketing person on my team. This has been going on for nine months.” We were all like, “This is so classic. You’ve been having this problem for nine months. We keep hearing about it. Do something about it.” We get a text three days later. The person quit. You thought they didn’t know. They knew it wasn’t working.
There’s another potential trap, though. I’ll torture them and they’ll quit.
I don’t think they tortured them. I think they thought this person didn’t know that it was going so badly.
It’s like the conversation was like, “You don’t know what the person next to you makes.” People don’t. It’s funny. When you’re an individual contributor, you show each other your paycheck every payday. As soon as you become a manager, you’re not supposed to share your salary. Everybody shares their salary.
There are websites devoted to it on the dark web.
It’s a given. Know that. It’s the same thing with performance. This is my experience talking. Remember that you are not just dealing with the person. You’re dealing with the team. If it’s big, the person is important, and everybody talks about them anyway, this is the best show on earth. Everybody’s tuning in and talking to everybody about stuff going down all the time. That’s called being human. We’re in a village.
I’m very anthropological about what I do. I like going from the hut to the village to the city. As those organizations and structures evolve, what changes about them? When people get promoted, I always say, “You get two things you didn’t have yesterday. One of them is if you still do business cards or you have your digital sign, you have a new word, like manager, vice president, or director. That’s pretty cool. The second thing is you become psychic automatically the next day. All of a sudden, you’re the boss and you should know.” Doesn’t the boss know? How come he doesn’t know he’s in charge? You realize that.
This is another thing you can teach. If you want to know how the other person’s doing, the only way to find out is to ask them. If you want to find out how to reward somebody and you love standing on stage getting an ovation, but I’m an introvert, and there’s nothing that I could think of that would be worse, then what I might need is for you to call me and say, “I heard you did something great today. I wanted you to know.” That could be all I need. That could be it for me. “The founder called me and I heard I did a good job.” The skills of being a leader are the most important, which is how to have a straightforward, honest conversation with people as part of breathing.
Starting Honest And Effective Conversations At Work
The more of these earlier, somewhat uncomfortable conversations you have, the less of the more uncomfortable conversations you’re going to have.
I loved your story because the people in the audience understood it too. The other thing is we don’t teach people very well how to hear them or what to say. It took me a long time to learn how to not be devastated, go away crying, and stop and think, “Tell me again what you mean. Can you give me an example? How might I do it differently? What’s the impact?” Those are all things you owe them.
Everybody thinks they’re going to have this difficult conversation. “I talked to her. She cried, but I had the conversation. Done. I’m crying because, once again, you’ve told me I have these interdepartmental communication issues, which I never understood what you were talking about in the first place. It’s getting worse. You don’t say to me, ‘It’s particularly critical between you and marketing. Could you go talk to them about what you could do better?’” It’s important that you guys work together. They’re all idiots. It’s probably a factor. It might have something to do with it.
The other way you can teach people, and you know this by writing some of it, is what you read, hear, and listen to podcasts like this. This is a hard thing working remotely. A lot of the ways that people figure out how to be great leaders is that they’re exposed to them. They see them. They see it at work. They see the people in charge acting in a way that reflects the company’s values. We spoke about that earlier. It’s not just walk the talk. It’s walking the talking. It’s the gesturing, frequency, words you use, and all those things. It’s not intuitive.
It’s not what’s on the wall.
That’s the other part. It’s not relationships. It’s not your spouse. Your pet might be different but your pet’s not going to factor in your promotion. The other thing we could teach people to do better is listen better. That’s the number one trait. There are two traits that I think after all those years of writing the values and all that stuff, which is the most important to be a great employee. One is active listening. Learn to be a good listener. The other one is curiosity. “How do you do that? What do you think about that? What leads you to believe that’s true?” That’s my favorite line in the world. “I couldn’t disagree with you more. Where’d you get that from?”
Curiosity. This is the story coming out of the election. You get wiped out and you’re not curious why. It seems like some people are curious and some people want to double down on it. It’s crazy.
Most people. That’s human nature. We keep looping back to how we started this conversation. Why do people keep doing this?
Morgan has this great new book focused on the things that don’t change versus the change of human behavior that never changes. That’s the moral of the story.
That’s a good one. I like that.
He’s a great writer. Here’s the last question for you related to this. Our politics are like a pendulum. Our employee-employer relationships over the last couple of years have been a pendulum. We go from COVID to the Great Resignation and quiet quitting, to not showing up to interviews, to terminating people suddenly back in. No one can get a job.
On email.
How do companies bring this to the middle? There are some thought leaders and even Seth Godin on this around people who are appreciative to talk about the company or the evil company. I’m like, “Companies are not objects. Companies are made up of people.” The same people who are ghosting the interview then have a job and don’t return to a candidate. It’s more that way. I don’t think it’s companies. How do we get people? Is the company a reflection of the people or are people a reflection of the company? That’s my question in those cases.
It’s both. I don’t know how this plays in the current politics. It’s too new and raw. What happened to be polite adults?
How do we get people back to it’s not the company winning or the employees winning?
Let’s keep it in the context of what we’re talking about here.
I wasn’t talking politics yet.
Let’s talk about the context of how we work, recruit, show up, and do it. Let’s do recruiting first, like getting back to people, responding, and all that kind of stuff. I was not a policy person. People would come into my team and the other people would be like, “Seriously, if you recommend a policy to her or a form, she will rip your head off. I’m not kidding. It will be ugly. We’ll see blood everywhere. Don’t do that.”
If you had a phone conversation with somebody and you did a phone screen with somebody and they didn’t work out, if you knew in the phone conversation, you must 100% of the time say, “I don’t think this is going to work out. I thank you for your time but here’s what we were looking for. We’ll remember you in the future.” After you get back to people, then a phone conversation is 24 hours. You have to get back. I don’t care if you text it or send a carrier pigeon. In-person interviews are one day.
This is a standard, not a policy.
It’s politeness. If you come in for an all-day interview and by interview number three, you’re not the person, that’s okay. Give your day back. It’s not a misnomer to forget. I interviewed a guy one time. He’s from Motorola. He had a pretty resume. He had a nice suit on with a tie. I never saw people like that before. The whole time I’m talking to him, he’s playing with his flip phone. I’m like, “Put the phone down. We’re having an interview.”
He’s like, “We’re going to watch movies on these someday.” I’m like, “BS. That is not going to happen.” He goes, “It is.” He tells me, “Here’s Moore’s law.” I’m like, “You believe this, don’t you?” He said, “In my bones. I’m good at this stuff.” I’m like, “We’re not there yet. Stay at Motorola. Suck their brains. I will not forget you. When and if that becomes true, you call me or I’ll call you.” I hired him seven years later because he was amazing.
Was he good?
Yeah, he was great. Plus, he had learned so many mistakes there. They lost and blew it. It’s a classic example. They rode the flip phone until way past. I don’t know how. Let’s talk about the politics of the employee relationship for a second. Back to real estate and supply demand, employees are like that when they have control.
Do they need to remember?
We have to show and teach them. If you think somebody is too arrogant, it’s okay to say, “You’ve got a bit of a toot here. I’m not sure that’s going to work that well for us because we tend to be collaborative. It won’t be. I’m not picking on you personally. The truth is you only care about yourself.” The other thing is on the company side, it’s foolish to bring everybody back to work. The best people have figured out how to get amazing work done without having to be at work all the time.
What about the fact that everyone says they’re lonely?
Why Companies Need Hybrid Work Models
A hybrid is probably the right example. What we haven’t figured out yet, which is the key to making this successful, is if you want people to come to work, make a reason for them to come to work. Come into work for a company meeting, team meeting, or brainstorming session.
If you want people to come to work, make a reason for them to come to work.
Not because we told you so.
You have to spend three hours in your car to sit in your cubicle. If it doesn’t make sense, it’s probably stupid. That’s my final words of wisdom.
Those are good final words.
If it sounds stupid, it just might be.
I’m going to ask you one last thing, even though I said that was. There are probably a lot of HR people or I know people close to the HR who read this. One of your secrets to success was to stop doing the stupid stuff that doesn’t matter. What is the most common stupid stuff that doesn’t matter?
Performance improvement plans. We’ll check that right off the top. The annual performance review. If the purpose of it is to give people feedback on their performance, it is the worst mechanism on the planet. Getting together to talk about your performance once a year and looking backward is stupid. It might be smart to review salaries annually. I tried to do it quarterly and when I was doing a lot of hiring in a particular area.
All of a sudden, I needed ten new finance positions and found out that everybody else was being paid significantly more than the people that I had, which meant that the people that I had could go get significantly more somewhere else. If I didn’t want them to leave, I should take care of that with money. The other one is binding yourself to a structure hurts you as a function more than it hurts everybody. That’s why people get so frustrated.
I’ve got a great employee. She’s incredible and the best person on my team. I hired somebody new. They’re making $50,000 more than her. She’s making less than I made when I took the job. We need to fix that. I don’t want to lose her and she’s underpaid. The HR person says, “Thanks so much for bringing this to my attention. Our annual salary review will be in nine months. We’re not doing any out-of-cycle.” You go, “We lost another woman engineer. The data shows that the women engineers are all leaving. Why could that be?” It’s about thinking the most important thing, particularly for it. You’re in the business. The team at the right place to do the right job and make customers happy will make us money. Done.
First principles.
That’s fun.
Patty, where can people learn about you, your book, and your work?
PattyMcCord.com is my website. I’m also doing a podcast with a colleague of mine, Jessica Neal. It’s called TruthWorks. We’re talking about some of the same stuff about telling the truth at work. You can get lots of tips there, too.
Patty, thanks for joining us again. I look forward to episode three one day. I can’t think of anyone I’d rather spend an hour talking about culture with.
Me too. See you around.
To our audience, thanks for reading. Thanks again for your support. Until next time. Keep elevating.
Important Links
- Patty McCord
- Powerful: Building a Culture of Freedom and Responsibility
- Patty McCord on Transforming the Conversation on Company Culture – Past episode
- TruthWorks
