How does a company in the midst of a big transformation find the right talent? Figure out what the team needs to do, put people with those skills in place—and be honest with them, says former Netflix personnel chief Patty McCord, pictured above during her B2B Next keynote.

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Patty McCord, former chief talent officer at Netflix, now principal at the PMC consulting firm.

Every company that’s changing how it’s doing business, such as a manufacturer or distributor shifting its focus to digital marketing and commerce, has to figure out how to put the right people in place to get the job done. Patty McCord has an answer: Throw out the personnel manuals and annual reviews and be honest with your employees every day.

Companies pay McCord for that advice these days because for 14 years she was the chief talent officer at a company that transformed entertainment, Netflix Inc. She became known for the phrase “radical honesty,” which she says just means being straight with people on a regular basis about what the company needs to do and their place in the process.

“The thing about honesty is it’s more efficient,” McCord said today during a keynote address to the second annual B2B Next conference in Chicago. “Talking to people about how they’re doing in the context of their business means those conversations, that radical honesty, isn’t radical at all, it’s just part of the natural flow of the business.”

Hire someone who can fix your problem rather than someone who fits your culture.

One of the big mistakes human resources organizations make, McCord said, is to hire people who “fit the company culture.” That leads to hiring people who are all alike, but who may not have the skills the company needs.

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Her approach is to figure out what the company needs to accomplish in a defined timeframe, such as six months. “Then figure out what you need to do that you don’t know how to do,” she said. “When you look at that delta, what needs to get done that’s not occurring now, you can figure out how to find the right person to solve your problem.”

And that person might not be the person you want to go out and have a beer with. “Hire someone who can fix your problem rather than someone who fits your culture,” she said. And, she noted, once the project is done, you need to have another conversation with that employee about whether their skills fit what needs to be done next.

Patty’s algorithm for success

McCord, now principal at her own consulting firm PMC, sums up that combination of the company’s need and the individual’s skillset with what she calls her algorithm for success: “Is what you love to do that you are extraordinarily good at, something we need someone to be great at?”

McCord wrote about her personnel-management philosophy in a book published last year and entitled “Powerful: Building a Culture of Freedom and Responsibility.” In her speech today, she urged companies to liberate employees to accomplish big goals by clearing away unnecessary obstacles.

For example, she pointed to an Australian bank she consulted for that required 30 layers of approval to start a major project. And it would probably have taken a year to get approval just to hire that project team.

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Even in Silicon Valley, companies build those kinds of obstacles into their internal policies. At Netflix, she says, at one time any expenditure of more than $10,000 required approval from the finance department. So what did engineers do when they needed to make a purchase to advance their project? They submitted two or three purchase orders for $9,000 each to get around that obstacle.

Eventually, Netflix hired finance people to be part of technical teams, and who could point out when a proposal would exceed the budget and suggest a discussion of how to deal with the problem. “That’s a different conversation than, ‘No, we can’t,’” McCord said.

She left the B2B Next audience with a final suggestion: Look at everything you do, figure out what’s not really necessary—and stop doing it. “Consider one little thing you do that you’ve always done that you could just throw away,” she said. “Here is what innovative companies do: They stop doing stuff that doesn’t work. There is stuff you do that you just don’t need to do anymore.”

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