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Vacation policy at Netflix: Take as much as you want
By Ryan Blitstein
Mercury News
San Jose Mercury News
Article Launched:03/22/2007 01:49:12 AM PDT
When it comes to vacation, Netflix has a simple policy: take as much as you'd like. Just make sure your work is done.
Employees at the online movie retailer often leave for three, four, even five weeks at a time and never clock in or out. Vacation limits and face-time requirements, says Netflix Chief Executive Reed Hastings, are "a relic of the industrial age."
"The worst thing is for a manager to come in and tell me: `Let's give Susie a huge raise because she's always in the office.' What do I care? I want managers to come to me and say: `Let's give a really big raise to Sally because she's getting a lot done' - not because she's chained to her desk."
Across America, executives are searching for ways to keep experienced Baby Boomers at their companies and attract younger workers, many of whom are used to controlling which songs they listen to and where they get their news.
Netflix's time off rules - or lack thereof - are part of a broad culture of employee autonomy instilled in the company when Hastings founded it a decade ago. The executives trust staffers to make their own decisions on everything - from whether to bring their dog to the office to how much of their salary they want in cash and how much in stock options. Workers are treated, as Chief Talent Officer Patty McCord likes to say, as adults.
"We want our employees to have great freedom - freedom to be brilliant or freedom to make mistakes," Hastings said.
That might sound like executive blather, but to hear employees tell it, on the way to almost $1 billion in sales last year, Netflix has made good on its promises to workers.
"There's an inverse relationship between how often a company talks about its values and how much those values are actually reflected in the workplace," said Heather McIlhany, a Netflix online marketing manager who took a three-week vacation to South Africa in November, just nine months after joining the company. "At Netflix... the freedom is inherent in how we work," McIlhany said.
Though cultural change is hard to measure, some of America's largest businesses are experimenting with unconventional time off rules and benefits. New Brunswick, N.J., healthcare giant Johnson & Johnson has an ever-expanding stable of work-life balance programs, including an extra week's paid vacation for new moms and dads, and for parents adopting.
Retailer Best Buy is implementing a plan to allow employees at corporate headquarters in Richfield, Minn., (and soon, for many in retail stores) to set their own hours and work outside the office. Flexible schedules are now available to 28 percent of full-time U.S. workers, almost twice the number in 1991, according to the non-profit advocacy group Corporate Voices for Working Families.
"Companies are trying to give people more responsibility, more freedom and more flexibility," said Carol Sladek, a principal at Lincolnshire, Ill., human resources consulting firm Hewitt Associates. "If you have more control, your life feels better."
To be sure, Netflix's time off policy is rare, and only applies to its 300-plus salaried workers, not the much larger hourly workforce. Experts said it's hard to imagine a bigger Fortune 500 company adopting the idea. As one Yahoo spokeswoman scoffed: "We're a grown-up company, with over 12,000 employees, and you have to have some semblance of process and procedure."
But even in perk-heavy Silicon Valley, what's happening inside Netflix's Tuscanvilla-style Los Gatos headquarters may be unprecedented.
American workers get a median of 10 vacation days after one year on the job and 15 days after five years of work, according to Hewitt. One in three Americans doesn't use all their vacation, and barely one in 10 takes a break for two weeks straight, according to the non-profit research firm Families and Work Institute. But at Netflix, it's estimated that most employees take off about 25 to 30 days per year, using the time to stay at home with the kids, travel to Cambodia, or visit relatives in India. It's "estimated" because Netflix does not record vacation time, said McCord.
"I've never terminated a salaried employee for being tardy or being absent," McCord said. "There have been issues when people didn't come to work - but the issue is the work, it's not the time off."
Among half a dozen corporate HR experts nationwide, none could name a company with such a widespread and successful unlimited vacation policy. Microsoft tried with executives in the 1990's, but few managers used more than a few weeks.
The roots of the Netflix culture grew partly from difficulties at Hastings' first startup, Pure Software (now part of IBM), where McCord served as director of HR. He made tens of millions at the company, but along the way, Pure lost its spark.
"We had this great early culture, but after we went public we had a lot more normal rules," Hastings said. "You didn't need a bathroom pass to go to the bathroom, but it kind of felt like that sometimes."
In 1998, Hastings lured McCord away from a four-day-a-week consulting gig to join Netflix, persuading her with a vision of "the company we always dreamed of." They've since created a billion-dollar corporation that retains the feel of a family business, where the CEO knows the majority of the 200 or so workers at headquarters by name, partly because he and McCord hold small group meetings with all recent hires.
At one such gathering a few years ago, an employee argued that it didn't make sense for Netflix to track vacation days. "You're not measuring my daily hours, so why are you measuring the number of days I work?" he asked. Hastings and McCord agreed, but the company's attorneys took some convincing.
As remarkable as the rules might sound, Netflix employees weren't surprised.
"We don't think of it as a perk - it's just emblematic of the way we work here," said John Ciancutti, a director of engineering who is traveling for several weeks in the Galapagos Islands with his mother this spring.
The company's work-hard/play-outside-the-office culture is one reason McCord believes Netflix avoided the post-public offering exodus that plagues many technology companies. Five years after the IPO in 2002, six of its seven top executives are still with Netflix.
The worker-oriented rules aid retention in the lower ranks, too; Ciancutti joined as a junior engineer in 1999. And the culture allows the company to hire independent, creative types like Director of Product Management Todd Yellin, who spent much of his first several months on the job traveling to Los Angeles to complete work on an independent film.
Yet open-minded treatment of workers isn't without its challenges. Chief among the problems at similar programs, according to Sladek, is that managers are inconsistent. Some might grant their team two months vacation and two days working at home per week, while others choose two weeks and no telecommuting.
At Netflix, roughly 340 employees in Los Gatos and Beverly Hills manage the company, write the computer code, design the Web site and strike deals with Hollywood studios. The other 1,000 are hourly workers at a customer service center in Hillsboro, Ore., and at DVD mailing hubs around the country. Those workers receive a free Netflix membership and DVD player after three months on the job, and the same healthcare benefits as salaried workers. But they have a fixed amount of paid time off.
Employees schedule time off within the rhythm of their jobs: finance managers stick around in early January to close the year's books; McIlhany front-loaded her work during the first week of November before she left for South Africa; Aroon Ramadoss, an engineering manager who spent five weeks in Europe last summer, took little vacation in 2005.
Still, few executives seem as ready as Hastings to buck conventional wisdom on how we work.
"We're the nation that takes the least amount of time off in the world. We have more rules and regulations that tie people to a clock than a lot of other nations," Sladek said. " where a lot of companies would like to be going. But in practice, they're still few and far between."
Contact Ryan Blitstein at rblitstein@mercurynews.com or (408) 920-5715.
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