Netflix tweaks famous “Keeper Test” in new culture memo

• Netflix has added a new line to its “Keepertest” in an updated version of its culture memo.
• The test involves asking a manager if he would fight to keep an employee on. If the answer is no, he gets fired.
• Netflix’s Culture Deck is known in the business world for its directness in presenting company values.

Netflix has revised its famous culture memo — and that means adding a new line about the “keeper test,” which managers use to decide whether they should fire an employee.

The Keeper Test was previously defined as follows: A manager asks, “If a team member left the company to take a similar position at another company, would the manager try to retain him or her?”

If the answer was “no,” the employee received a generous severance package and had his salary reduced so that a stronger replacement could be found.

Netflix has long been known for running its business like a sports team rather than a family, and the “keeper test” is part of that culture. It also means tenure can be short, as the company looks for top talent and quickly fires underperformers.

The keeper test is now: “If X wanted to leave, would I fight to keep him?” Or: “Would I rehire X with all the knowledge I have today?” If the answer is no, according to the memo, it is fairer if everyone separates.

So it’s the same idea, just worded a little differently – but now with a disclaimer.

“In theory, the Keeper Test can sound scary,” says the latest version of Netflix’s culture memo. “In reality, we encourage everyone to regularly talk to their managers about what’s going well and what’s not. This helps avoid surprises.”

In the abstract, the Keeper Test can sound scary. In reality, we encourage everyone to regularly talk to their managers about what’s going well and what’s not. This way, you avoid surprises. Managers also evaluate team members on their overall performance, rather than focusing on mistakes or bets that didn’t pay off. The Dream Team needs people who challenge the status quo and try new things. That’s why we stick with our employees even when there are short-term problems.

Netflix’s Keeper Test was first introduced in a 100-plus page memo from 2009. Netflix encouraged its managers to conduct the test once a quarter, said founder and former CEO Reed Hastings, who reportedly used it to fire his product chief and longtime friend after 18 years.

The memo, which was originally considered fairly blunt for a public corporate document, has been revised several times since its initial release and is now just five pages long.

Greg Peters, co-CEO of Netflix, said in an interview with The Verge’s “Decoder” podcast that the memo was shorter because the company could “better articulate” its practices.

In the interview published Monday, Peters said the original memo may also have falsely conveyed that Netflix was “a tough and perhaps unforgiving place,” which he said was not the case. In the three subsequent versions, Peters said the company may have swung too far to the other side of the pendulum and become too lenient.

The co-CEO said that in versions that followed the original, employees also misinterpreted the company’s “freedom and responsibility” statement – which essentially said Netflix employees are trusted to act in the company’s best interests and are not controlled to the smallest detail – and acted in ways that were inconsistent with the company’s collective goals. That section has since been deleted, and the new “People Before Process” section includes a statement about hiring “unusually responsible people who benefit from that openness and freedom.”

The new memo also states: “Not all opinions are equal” and given the company’s growth, it is no longer possible for everyone to have a say in every decision.

The latest memo was made public on June 24 and went through an eight-month review and 1,500 comments from employees, according to a New York Times report.

You can read the latest version of Netflix’s culture memo here.