Netflix Inc. is restricting some staff’s ability to see other employees’ salary information, people familiar with the matter said, a major shift for a company that has long offered a rare degree of transparency to its workforce.
For years, director-level executives at Netflix could look up colleagues’ compensation. But late last year, Netflix stopped letting them do so, some of the people said. Directors are senior managers with titles that rank below the C-suite and vice president roles.
Netflix co-Chief Executive Reed Hastings has long championed transparency as key to the company’s culture. “For our employees, transparency has become the biggest symbol of how much we trust them to act responsibly,” Mr. Hastings wrote in “No Rules Rules,” his 2020 book on the company’s corporate culture and practices. The company aimed to increase candor and let employees make good decisions without heavy managerial interference, he wrote, something that required “increasing organizational transparency and eliminating company secrets.”
The pay-transparency change was made in part because the number of directors had ballooned in recent years as the company kept growing, some of the people said. Some executives felt they should be paid more based on their title because colleagues at similar levels received higher compensation, even if their roles were different, some of the people said.
Netflix declined to comment.
Even after this change, Netflix continues to give employees broader access to corporate information than many publicly traded companies. Staff still have access to strategic documents, for instance. But as it has grown from a streaming startup to a global entertainment company confronting slower subscriber growth in a crowded industry, Netflix has been rethinking some of its other permissive policies, people familiar with the matter said.
Netflix has been working to rein in spending after suffering two consecutive quarters of subscriber losses for the first time in its history during the first half of last year. It laid off more than 400 workers in 2022, and has been scouring its operations for more opportunities to cut costs, including paring back its real-estate footprint, limiting corporate swag, and controlling cloud-computing costs. Netflix said it would keep its annual content spending at around $17 billion for the next few years.
The company reversed course on another long-held principle last year, when it launched an advertising-supported tier. Years earlier, Mr. Hastings had said he wanted Netflix to be a “safe respite where you can explore, get stimulated, have fun, enjoy, relax—and have none of the controversy around exploiting users with advertising.” He has since said that he is a pragmatist willing to change his mind when necessary.
The company has also said it would limit password sharing this year, after years of allowing it and even appearing to encourage it.
Despite the recent layoffs, Netflix has a significantly larger workforce than it did a few years ago. The company had 11,300 full time employees as of the end of 2021, the most recent period for which it has disclosed data, up nearly 60% from three years earlier.
Netflix has made other moves that put the company more in line with traditional entertainment companies. In early 2022, it began creating salary bands to create more consistent pay structures for similar types of roles, people familiar with those changes said. The Information earlier reported that change. Netflix had previously offered large pay packages to new recruits, a practice that can attract staff but contribute to outsize spending on pay and compensation disparities between people in similar roles with similar experience.
Netflix and other companies large and small are also subject to a wave of new pay-transparency rules in locations like California and New York City that require employers to post potential pay ranges for roles they are advertising. That has led to job postings with extremely wide salary ranges but is meant to give candidates a sense of what they can expect their compensation package to look like before they formally enter negotiations.
Write to Jessica Toonkel at jessica.toonkel@wsj.com and Sarah Krouse at sarah.krouse@wsj.com
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January 11, 2023 at 02:52AM
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