How Netflix fires employees with 'Respect'

Netflix Co-founder Reed Hastings

Firing someone is one of the hardest tasks for any manager. No one wants to deliver that news. But at Netflix, co-founder Reed Hastings has built a unique approach to letting people go, designed to be honest and respectful, not hurtful.

In an interview, he was put on the spot to demonstrate exactly how it works.

The conversation started with a direct challenge. The interviewer, Katie, asked Reed Hastings to fire her on the spot, pretending she was the Vice President of Content Strategy.

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Hastings began not with criticism, but with a sobering dose of honesty. He said he would tell her: "I can see that you’re really working hard and trying to make a big difference here. But if I'm really honest with you, if you quit to go somewhere else, I wouldn’t try to change your mind.”

This is the core of what Netflix calls the "keeper test." If an employee wants to leave for another job, would you fight to keep them? If not, they should be let go to make room for someone you would fight for.

Hastings explained that he would then give a brief, clear reason, about a minute of detail so the employee understands the substance behind the decision without feeling attacked.

But the most crucial part comes next: a generous severance package. Hastings told Katie, “My commitment to the company is that if I wouldn’t try to change your mind, then I have to give you a severance package.”

At Netflix, this package is designed to be a real safety net. Hastings revealed it is "typically around nine months of compensation these days, so it’s a lot."

The goal, according to Hastings, is to completely remove the personal sting from the situation. It’s not a judgment of someone’s character or morals.

He uses the analogy of a professional sports team. “It really sucks to get cut from the team, but it’s not an ethical judgment, or a moral judgment, or a judgment of you as a person.”

He points to stories like Mike Bloomberg, who was pushed out of Salomon Brothers only to start the global giant Bloomberg LP. Being let go isn't the end of a career; it can be the start of something new and great.

Interestingly, Hastings admitted that the large severance package also serves another purpose: it’s a "bribe to the manager."

Managers, by nature, often like their team members and dread firing them. The knowledge that the employee is leaving with a substantial financial cushion makes it easier for the manager to make the tough, but necessary, call for the company's health.

In the end, Netflix’s method is about shifting the culture. It frames firing not as a personal failure, but as a performance-based decision, handled with radical honesty and a genuine commitment to supporting the person on their way out.