Misunderstanding the Netflix vacation policy

Netflix is widely regarded as the pioneer of the unlimited vacation policy perk for employees. Many companies have adopted this strategy, viewing it as a competitive advantage to attract and retain top talent.

However, this trend has faced criticism that employees will take less time off due to social pressure to work.

I believe both companies adopting this strategy and critics against it are mistaken.

Firstly, the unlimited vacation policy is just one aspect of Netflix’s cultural structure. They only hire “A” people, meaning they reward sustained “A”-level performance even if the effort is not always optimal. Sustained “B”-level performance is rewarded with a generous severance package.

The difference in effort between “A” and “B” level performers is not a joke. Netflix does not believe that spending more hours at work necessarily leads to greater results. They prioritize results.

Imagine an employee who strolls into the office one day, sits down, and suddenly has an idea. After weeks of letting the idea simmer in the background, the pieces finally click in their mind. They quickly write an email outlining the key decisions and it leads to the creation of a blockbuster TV series.

Netflix believes that individuals like this deserve all the vacation time they need.

Therefore, the vacation policy empowers “A”-level performers, who are aware that results are the primary focus.

Be careful when isolating ideas within systems. You may miss the forest for the trees.