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Reed Hastings: We Laid Off a Third of the Company. Then We Got More Done With Fewer People.

By Reed Hastings · Leadership · 1 min read

120 people to 80. We expected to grind to a halt. Instead we got more done. There was no more dummy-proofing necessary. Everybody was going fast and everything was right.

Key Points

After laying off a third, Netflix got more done with 80 people than they had with 120
With the right density of talent, there's very little process needed
The keeper test: if this person tried to quit, would you fight to change their mind?

With the right density of talent, there's very little process needed. That was the joyful thing.

120 to 80. More Done, Not Less.

Hastings: It was after we did this one-third layoff — 120 people to 80. We had expected to basically grind to a halt and not be able to make any improvements because it would take 80 people just to keep the lights on.

But in fact we got more done with only 80 people. We tried to figure out why. We realized — there was no more dummy-proofing necessary. Everybody was going fast and everything was right.

80 people got more done than 120. No more dummy-proofing necessary. Everyone was going fast.

Talent Density

Hastings: With the right density of talent, there's very little process needed. That was the joyful thing. But talent density matters so much.

So we figured — let's not do a layoff every year. Let's just do continued focus on talent density.

With the right density of talent, there's very little process needed.

The Keeper Test

Hastings: The big evolution we came to — managers have to each year testify for each of their people that if that person were trying to quit, they would try to change their mind.

Sometimes you find people working for you and if they quit you'd be like — oh, that's pretty good. In that case, we wanted to proactively — not wait for them to quit — but proactively give them a generous severance package.

If this person tried to quit, would you fight to change their mind? That's the keeper test.