VALUING TALENT: What Thais Can Learn from Netflix—Part 6 (Series on Thai Values 4.0)

Jul 13, 2021

Larry S. Persons, PhD


With no hesitation and not an ounce of shame, I am going to restate my argument. The national dream of ‘Thailand 4.0’ will become a disappointing reality unless scores and scores of courageous young Thais choose to challenge some of their most deeply ingrained and tenacious values.

‘Thai-ness,’ or khwam pen thai  (ความเป็นไทย), is a wonderful thing. Who can argue against the collective beauty of smiles, showing respect with a heartfelt wai (ไหว้), extending kindness to strangers, building trust through the reciprocity of bunkhun (บุญคุณ), or steering unseemly moments away from open confrontation?  There’s a beauty to all that.

But ‘Thai-ness’ is a wonderful thing until it isn’t.

I’m not trying to insult anyone. If you are Thai and you really care about the future of the Thai economy, you had better be ears wide open and eyes wide open on this one.

Certain deeply embedded Thai values represent a clear and present danger to our hopes of embracing innovation as a primary means of building a new economy.

Re-read that last sentence.

To refuse to adapt our values—to simply stay the course—will leave us sorely disadvantaged in our economic competition with other countries. Stay right where we are culturally, and we will stay right where we are economically. There are just too many values cluttering the pathway to explosive, creative innovation.

We need ‘Thai Values 4.0,’ a revamped and refreshed version of traditional values that looks to the future without rejecting the past.

I am not dictating those values. That would be unbearably presumptuous. But I AM calling attention to values and behaviors that are getting in the way.

Attracting and Keeping Talent

In another blog I argued that ‘talent density’—the amount of talent per employee in any organization, including yours—is an extremely important metric for any organization that is determined to innovate. We now circle back to this vital topic.

For your innovative strategies to work, you must do more than just have the right people in the right places. Your goal must be to have the very best people in the market on your team.

No, that statement is not complete. Your goal is to have the most talented people in the market in the right places on your team, and then to retain that talent in the face of fierce efforts by competitors to ‘cherry-pick’ that talent away from you. That’s how you build a team that is capable of outperforming all competitors.

But specifically, what does that look like?

Consider the real-world differences between an average employee and an exceptional one. Ordinary workers commit more mistakes, require frequent training, tend to be more distracted, and usually submit work that is satisfactory at best, although at times they may shine. For certain positions in your company, such as answering phones or cleaning floors, this standard may be acceptable. Just learn the routine and get it done in a timely way.

But for creative tasks, especially those central to your core business model, ‘good enough’ just isn’t good enough.

Reed Hastings in his book No Rules Rules: Netflix and the Culture of Reinvention (2020), lays out a shocking hiring strategy: “Hire one exceptional employee instead of ten or more average ones. If you can’t afford to pay your best employees top of market, then let go of some of the less fabulous people in order to do so.”

Whaaat? Yes, he’s dead serious.

He continues: “For all creative jobs we would pay one incredible employee at the top of her personal market, instead of using the same money to hire a dozen or more adequate performers.”

This is because highly talented employees get more things done and faster. Managing mediocre employees is difficult and time consuming, and in the race for innovation time is perhaps the scarcest of all resources.

Let’s Get Practical

We are going to do an exercise together.

Let’s suppose your new Thai company is hell-bent on becoming a leader in innovation. In fact, it’s a matter of survival. You absolutely want to attract and keep great talent, and you’re “all in” with adopting the bold principles that Netflix recommends. Here are the things you would do.

   1. Separate jobs into operational and creative roles.

In operations, ‘good enough’ is often able to deliver. When hiring for these operational roles, you decide to pay middle of market salaries.

 2. For creative roles, pay top-of-market salaries.

Now everyone’s thinking, “How the heck are we going to be able to afford that?”

But before we address that question, let’s ponder three questions you can ask yourself when considering an expensive hire:

  • Are any of the members of your present team able to take the job this person would be leaving to come to you?
  • Would three of your current employees collectively be able to make the same contribution this person could make?
  • If you could swap a few of your current employees for the new hire, would that be good for the company?

See, if you get a glimpse of the true market value of a candidate’s expertise, it’s easier to muster the courage to pay a shockingly high salary.

Still, it may feel like you can’t afford it. You don’t necessarily have to go raise more investment capital. To fund the new hire, consider letting go of some ‘average’ employees who do little to raise your performance standards. (Ouch.)

Another thing.

Pay your people across the board according to actual value, not according to seniority. (Ouch again.)

The practice of using ‘raise pools’ or ‘salary bands’ to determine raises worked back when a person’s employment was for life and a person’s market value wasn’t likely to skyrocket in a matter of months. But for today’s creative companies, you’ve got to pay according to the true market value of each employee.

You make this move not just because it keeps your company highly competitive, but also because it helps you to retain top talent. “It costs a lot more to lose people and to recruit replacements than to overpay a little in the first place,” says Reed.

When recruiters come calling, you encourage your employees to take calls from them and then share with their line managers what they learned about their own market value. If it becomes clear that an employee is being underpaid, you adjust her salary upward. The goal is to give raises before your people get offers.

To have a prayer of being successful with all these measures, transparency is essential (the topic of my next blog).

You let all your employees know you will be fair in assessing how future salaries will be determined. By giving candid and frequent feedback on their performance, they will always know where they stand.

Externally, because the word gets out that you’re looking for stars and will pay accordingly, you can recruit new candidates who feel that their talents are not truly valued elsewhere. And by giving generous raises where merited, you can keep your best talent without fear of losing them to competitors.

       3. Don’t pay bonuses; put the money into salary instead.

Motivating people with the promise of a bonus works for sales or for routine tasks, but it can actually inhibit creativity. With their eyes laser focused on pre-established KPIs, employees may struggle to pivot their focus when they need to—like in the middle of a quarter. And in your line of work, you can’t afford that lack of agility.

“Creative work requires that your mind feel a level of freedom,” says Reed. “If part of what you focus on is whether or not your performance will get you that big check, you are not in that open cognitive space where the best ideas and most innovative possibilities reside. You do worse.”

So, you’ve learned that big salaries, not merit bonuses, are good for innovation. Check that box.

       4. To cull your work force, don’t use firing quotas like vitality curves or ‘rank and yank.’

You may have heard of other companies that rank their employees every year from best to worst and then let the bottom 10 percent go to keep performance levels high.

Not you. You have learned that this approach undermines the collaboration essential for innovative teams because it incites internal competition, where people will openly sabotage a colleague’s efforts.

    5. Never use performance improvement plans (PIPs).

When addressing underperformance, you have observed that PIPs rarely help employees improve. Quite often they simply delay the firing by many weeks.

PIPs were conceived as a means to: a) to prevent employees from losing their job without getting constructive feedback or having the opportunity to improve, and b) protect the company from lawsuits. But in your culture of candor, employees are getting loads of feedback every day, and exiting employees are granted a generous severance package and asked to sign an agreement not to sue, rendering the PIP obsolete.

     6. Evaluate performance frequently by employing ‘The Keeper Test.’

Remember something. You have abandoned a conventional standard rarely questioned by other companies: that someone must be inadequate or do something wrong to lose his or her job. Not in your company. Why? You are looking to hire and keep the best talents out there. You are looking for ‘rock stars.’

“If a person on your team were to quit tomorrow, would you try to change their mind? Or would you accept their resignation, perhaps with a little relief? If the latter,” says Reed, “you should give them a severance package now and look for a star, someone you would fight to keep.”

Your managers have been trained to ask the following question on a regular basis: “Which of my people, if they told me they were leaving for a similar job at a peer company, would I fight hard to keep?”

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This question is something of a mantra, a guide for your business. By identifying which employees are ‘keepers’ and which aren’t, you can discern who you must let go so you can hire a highly talented employee.

   7. Train all your employees to practice the ‘Keeper Test Prompt.’

Your high-performance standards are creating high levels of anxiety among some employees. I mean, how can they not feel like the axe might drop at any time?

This is not entirely healthy. Employees can lose focus because they’re spending hours of their day wondering if they are in the good graces of management. Even worse, envy and cynicism can creep in among employees who resent decisions made by management. That can’t be good for creativity.

You combat this very real problem by having your line managers give lots of frequent, candid feedback to their direct reports. No one should be completely surprised when they are let go.

For employees fighting feelings of uncertainty, you encourage them to ask their boss the ‘Keeper Test Prompt’: “If I were thinking of leaving, how hard would you work to change my mind?” A sobering answer opens the opportunity for discussions around areas for improvement. A positive answer helps the employee to put free-floating anxiety to rest.

      8. Always part ways with employees by granting a generous severance package.

There is no doubt that your firing practices are at odds with most other Thai companies. You will probably appear somewhat heartless in your approach. But you do something they don’t do. You demonstrate generosity by exceeding the government’s requirements for severance so that those employees have a financial cushion to find a more suitable job.

Penguins and Elephants

 Whew! Can such a thing ever happen in Thai companies?

“Sure,” you say. “On the day when Thais stop eating rice, something like this could easily happen.”

There is no doubt that Netflix’s approach to valuing talent feels more like a burr in the sock of most Thai companies. It rubs against many of the conventional HR practices for hiring and firing. It just seems overly harsh. Thai ways, after all, are gentle.

You’ve seen those nature shows. You sit in horror as a group of penguins chooses to abandon a weak and struggling member of their waddle. Then your heart is warmed as you watch a herd of elephants rallying to nurture one of their own back to health.

“Thailand is the land of elephants,” you say. Literally and figuratively.

In huge sectors of the Thai work force, employees can coast along on past achievements and average performance, secure in the knowledge that their careers will continue uninterrupted unless they make some egregious mistake. Seniority and hierarchy rule. This phenomenon is especially prominent among many Gen-Xers.

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Most Thai companies embrace the identity of being one large family. This fosters a sense of belonging. Comfort. Commitment to helping one another over the long term. This atmosphere is reinforced by the widespread use of familial pronouns. It feeds a reluctance to fire people outright. It plays out in the common phenomenon of an entire team of subordinates resigning because their line manager either quits or is fired. This tribalism emerges from strong themes of ‘family loyalty.’ It’s not right to just kick someone out of the family. Is it?

Also, some companies may fear the reputational cost of dismissing employees whose work has never been sub-standard. It’s hard to swim against the current.

And can you imagine a Thai employee asking his boss, “If I were thinking of leaving, how hard would you work to change my mind?” The stakes in that conversation are so high that most Thais would shudder at the very thought.

Furthermore, paying your people according to actual value, not according to seniority is highly threatening to intrenched hierarchical values. It’s going to offend a lot of people in high places.

Embracing the Future

I get all that. I really do. But aren’t we forgetting something?

In the new economy we want to see an explosion of creativity and innovation in Thai companies. We must grasp that, in the words of songwriter Bob Dylan, “The times they are a changin’.” And if times really are a changin’, our values better be shifting as well.

You must make tough calls if you want high talent density. You must be willing to let a good employee go when you think you can get a great one. That’s how much you value talent.

A high talent density work environment is not a family. It’s just not. Just putting in the effort is not enough.

It’s more like a professional sports team. Oh, there’s collaboration and trust—a sense of ‘we.’ But the organization demands excellence. It trains to win. It gives and receives candid feedback.

So, let people know that your business is on a mission to lead its industry, and you have a very specific plan to reach that goal. Not everyone will be a perfect fit for that plan, and that’s okay. You’re looking to recruit the very best so you can let them loose to create powerfully innovative products and services.

This will take great courage. But your clear commitment to valuing exceptional talent will be greatly rewarded. You will build a truly innovative team that knows how to win.