[PaulHoule]

I think some of this is bizzare.

I mean, an employee is satisfactory, but only satisfactory, so they give him a generous severance package and go hiring somebody else. Really?

This sounds like "stack ranking" where they fire the bottom 60% every year.

[elq]

There are no regular firings at Netflix. If a manager is really happy with all of their team, there is no pressure to rank everyone and can the lower n%. This alone suggests that it's most certainly not like stack ranking.

[michaelochurch]

I mean, an employee is satisfactory, but only satisfactory, so they give him a generous severance package and go hiring somebody else. Really?

Netflix wants a high-performance team. That means that "merely satisfactory" in a sleepy, less demanding company would make someone an outlier.

You have to cut the "merely adequate" 4s and 5s if there's no way to turn them into 7+; what you should do is do it humanely. Personally, I think that a 3-5 month severance is (a) not that expensive, in the grand scheme of things, and (b) by far superior to the morale toxicity of the traditional PIP-- especially when you're talking about a good-faith employee who did nothing wrong.

[smackfu]

The tricky bit is successfully hiring high performance people. You have to have a pretty high success rate, and low turnover, or else you'll just be constantly churning through the "satisfactory" people and getting an occasional gem in there.

[michaelochurch]

I don't think it's that hard, if you have high-level people involved in the hiring process and you're not stingy with pay and benefits.

You need enough of a draw to get a competitive applicant pool, and enough people who have sufficient talent to judge it.

Most companies err by hiring based on specialty, e.g. "we need exactly 3 data scientists and that's it". If you're looking for generally good people and willing to accept the variability that comes with that, and you have a managerial environment that provides multiple avenues to success (which is the definition of a good management environment) rather than multiple ways to fail, I think it's not that hard.