Reed Hastings & the secret to building smart teams
Netflix CEO Reed Hastings swears by a surprisingly intuitive hiring secret: talent density. It’s the idea that your team’s success is directly linked to its concentration of incredibly skilled, irreplaceable people. He says you don’t need a big team, you just need a talented team. More talent density = more innovation, productivity, and growth.
Of course hiring these exceptional people would cost you: such professionals can earn 2-3x the salary of their peers. Still, it’s not a bad deal if you can hire someone who will outpace multiple average workers. In The No Rules Rules, Hastings suggests transitioning out even relatively good professionals to make room – and save money – for the best of the best.
Despite his compelling argument, few manage to stick to Hastings’s philosophy (ourselves included!). So we’re wondering, why is it so hard to embrace talent density?
The emotional toll on Managers, Directors, and Executives
It feels good to treat your team like family. Families are loyal and sweet and they certainly don’t “fire” their own. In fact the more a family member struggles, the more resources we tend to devote to their rehabilitation. Struggling itself legitimates keeping them around.
This approach is antithetical to the talent density method.
In a talent dense company, each member is tied to one another in pursuit of a common goal. If you are no longer helping to advance the goal, you are (kindly, respectfully) transitioned from the company. In this way it’s a lot like a championship sports team; everyone is expected to be passionate, committed, and to perform at an extremely high level. Trades are frequent and are not to be taken personally – they’re just another part of the game.
That brings us to your role. Leaders of talent dense teams are tasked with reshuffling the players on a regular basis – something that is easier said than done.
Hiring good people vs. hiring exceptional people
Let’s say you’re committed to Hastings’s talent density approach. How easy is it to actually find and keep an exceptional person, and how do you know if someone is exceptional in the first place?
One way is to review your team or company roster, person by person. For each individual ask yourself the following questions (and do this for yourself too – are you as valuable as you think you are?)
- Am I comfortable letting this person make important decisions?
- Are they more productive than 2+ of their peers, combined?
- Do my competitors want them? How much would I pay to keep them, if they got an offer elsewhere?
Hastings suggests cutting anyone who doesn’t meet these criteria, though some questions are certainly more revealing than others.
One more thing to consider – many businesses require professionals who are neither exceptional nor subpar. The people who are willing to do the heavy lifting and support the more creative members of the team. Every company is different and your decisions must take your culture and industry into account.
What to do with all your non-exceptional people if you don’t want to be a terrible person
It’s hard to let go of good people, especially when they possess so many excellent talents. The only problem is that their talents don’t align with the needs of your company.
The important thing to remember is this – teams are not families. Teams are a collection of people brought together under specific conditions in order to achieve a shared goal. If someone is not serving the goal, that doesn’t make them a bad person – doesn’t even make them a bad professional! It just means that at this time, they are not suited to this work at this company.
If talent density is your goal, even ‘okay’ or ‘good’ people should be replaced by those incredibly creative, free-thinking individuals who can propel your company forward and replace leagues of their peers. It’s a difficult decision that only you can make.
Where’s the middle ground?
Humanity and success don’t have to be mutually exclusive. Nothing is stopping you from prioritizing your company’s well being while also showing compassion. Just because someone is not the perfect addition to your team doesn’t mean they’re not perfect for another.
You don’t have to replace ‘culture’ with ‘talent density obsessed.’ There’s room for both.
With that in mind, we suggest being clear and upfront about your expectations. No employee should feel blindsided if circumstances don’t work out, and neither should they feel anxious about the future of their job. Candid feedback and performance updates are crucial. If you’re doing things right, Hastings says you’ll have a vibrant, cohesive team full of people who really believe in the business and want to contribute to its future. And at the foundation of this culture is a devotion to transparency and a striving for excellence.
Just remember talent isn’t everything – attitudes can be just as important to your team’s functioning. If someone doesn’t respond well to feedback or is quick to criticize their teammates, their negative influence is likely to infect the rest of your team. Holding on to such a person because they generate revenue may be more harmful than beneficial. Sometimes ‘talent density’ can involve cutting exceptional people if they don’t elevate the team as a whole.
Get in touch – we’d love to help you rebalance your team or offer tips to help you hire more exceptional professionals.