I used the Netflix Keeper Test. It was brutal.

In November 2021 I used the Netflix ‘keeper test’ in my business.

It was brutal but it saved my company.

Today, I want to share why you should be using it.

Back on 19 November last year I received a long-winded email from our Financial Controller.

There was a sentence in bold near the top that said:

"The main information to take away from this spreadsheet is that our cashflow for the past 4 months has been approximately $100,000 more per month than our revenue - before taking into account any new asset purchases, repayment of outstanding accounts payable, and the establishment costs for the 2 bakery sites."

My heart sank…

We were losing $30k a week. (Yep, you read that correctly).

We were in and out of Covid lockdowns and switching between entirely different business models. From brick-and-mortar stores to home delivery and still running a large region of wholesale supply.

To move at speed we employed dozens of people to pack and deliver. We paid each person a per kilometre rate to use their own cars for delivery which worked well during busy times but caught up to us as the delivery runs became sparse. And we had many (many) people doing things that weren't adding any value to the company.

We reached breaking point with wages topping out at 69% in one week. 

And others weren’t much better. 

As a result of the constant change and the rapid pace we’d been moving at, we'd lost touch with the financial metrics we normally relied on to operate our business. Instead, we were obsessively focused on getting the product out the door.

After being slapped in the face with the horrifying discovery that we were making massive losses from carrying dozens of people and operational costs we simply couldn’t afford we called an emergency leadership meeting.

We needed to urgently remove at least 30 people from our organisation in order to survive but still maintain revenue and a high level of customer service. 

We were forced to decide who should stay and who should go. 

Today I want to share how we decided on this.

It’s something Netflix refers to as their “Keeper Test”.

At Netflix, every manager is asked “if a team member was leaving for a similar role at another company, would you try to keep them?”

Within Netflix, anyone can ask this question (would you fight for me), anytime. Now, in our situation last November we didn’t have a culture of transparency like Netflix. It takes years to build that level of open candour within teams. 

But I believed it could help us with the challenge of deciding who should stay and who must go because no one had done anything wrong. 

Here’s what we did:

We began by having (many) individual conversations with our leadership team to outline the size of the problem and the impact it would have on their team. 

We introduced each one to the concept of the Keeper Test and explained it would be useful to help decide who stays and who goes because it divides the teams into two categories:

1. Who are the superstars that you would fight to the death to keep on your team?
2. And who is everyone else?

The Keeper Test cuts out all of the noise, indecision and subjective ranking that typically comes with a process like this and helped us remain objective. 

There is no space for ‘sort of’ or maybe. If a manager was saying ‘maybe’, they fell into the ‘everyone else’ category.

Eventually, it was time to have the dreaded face-to-face discussions.

Due to our swift action, these conversations were going to appear out of the blue for all 30 people being notified. So we kept it discrete and highly empathetic. 

We absolutely adored our team and we wanted great things for them but we couldn’t afford to keep them on. Each section leader was present to deliver the news and discuss how we could help them land jobs elsewhere.

To their credit, 95% of them took the news incredibly well and were happy to exit the business immediately to help solve our imminent financial crisis. 

This was also largely down to how the conversations were handled by our team.

But in a nutshell, the Keeper Test formed the backbone of our decision-making process to get us to the point of taking thoughtful, swift action. 

Here are some other hidden gems that helped during the process.

For those who stayed we:

• Involved managers in every step to be fully transparent and offer learning opportunities.
• Massively increased communication across teams to offer certainty and stability. 
• Built a praise model to recognise people who were going above and beyond now that the team was spread thin.

For those who left we: 

• Made them feel valued and thanked them for their efforts.
• Stay in touch to keep them in our ecosystem for the future. 
• Did our best to help them land placements in other businesses. 

Having had time to reflect on that period now, here's what's happened since.

Firstly, we survived!

Largely due to acting swiftly to bring costs back into line.

It did mean pausing on all business functions that weren’t essential and asking management to spend more time back on the tools alongside the team. 

Seeing everyone step in to help get through it deepened connections and established rapport among our teams. 

Our entire organisation was stronger because of it. 

From there on, it actually took us 6 months to turn the ship around because revenue fluctuated over Christmas and we were relocating one of our retail stores which left us seriously short on revenue. 

We looked for every efficiency we could find in our production to allow us to achieve the same output with fewer people as things started to stabilise. 

Employing the Keeper Test mentality also made our managers hyper-aware of who they would add to their teams in the future. 

They started to think, are they a superstar, or are they everyone else?

This has continued to help us to grow and level up our teams over the time since.

Pro Tip:

It's not about always removing people from your organisation, it's about recognising where they sit and coming up with a plan to get them to a higher level.

TL:DR

1. Netflix Keeper Test - Ask your leadership team if (insert team member) was leaving, would they fight to keep them?

Who would you fight to the death to hold onto?

2. Divide your team into two categories: Superstars and everyone else (no maybes).

There is no space for ‘sort of’ or maybe. If a manager was saying ‘maybe’, they fell into the ‘everyone else’ category.

3. Your goal is to get more people from the 'everyone else' column to the Superstar column.

It's not about always removing people from your organisation, it's about recognising where they sit and coming up with a plan to get them to a higher level.

That's it for today.

I hope this helps.

If you liked this email, you might like following me on Linkedin and Twitter for daily posts. See the links below. 

Whenever you're ready, here are 3 ways I can help you: 

1. Add Hidden Revenue To Your Business Using Email Marketing.
2. Rewrite Your Website Landing Page To Convert Page Views to Revenue.
3. Work 1:1 To Find Growth Opportunities and Steal My Playbook