Reed Hastings is leaving Netflix. These are 3 of the biggest takeaways from his leadership book.

Colleagues at a company are often compared to a family unit, but this can be a faulty metaphor, Hastings wrote. While families are often seen as a lifetime commitment, Hastings approached Netflix as a sports team, where the coach can swap and trade players periodically to make sure that they’re all the best fit for their positions.

That’s why one of the most controversial parts of Netflix’s pitch deck, under Hastings, read: “Like every company, we try to hire well / unlike many companies, we practice: adequate performance gets a generous severance package.” As in: If an employee is simply adequate, rather than exemplary, they’re cut from the company and replaced with someone who can perform even better.

It seems like such an approach would prevent employees from feeling safe enough at the company to take risks. But this was a pillar of Netflix’s ethos since the internet bubble burst of 2001, when the company had to lay off a third of its workforce. Hastings found that, after cutting the less-than-stellar performers, the best workers spurred each other’s best work. Performance, after all, is infectious, and adequate performers could encourage adequate work from other employees.

The company’s 2024 culture memo does not mention severance, but emphasizes “maintaining a high-performance culture.”

Hastings wrote in the 2020 book that at companies like Walmart, people greeters are primed to think of themselves as part of the “Walmart family.” And a former National Public Radio employee said in the book that NPR employees who stayed for more than 3 years were usually there for life.

This also means that when employees begin to fall short or lose their excitement about their jobs, they still stay on at the company and do less-than-stellar work — and their attitudes can spread to their colleagues.

“A fast and innovative workplace is made up of what we call ‘stunning colleagues’ — highly talented people, of diverse backgrounds and perspectives, who are exceptionally creative, accomplish significant amounts of important work, and collaborate effectively,” Hastings wrote. And the best way to cultivate a workplace of stunning colleagues at Netflix? Cut the employees who fall short of that.

The takeaway: An effective people strategy is not purely about retaining talent, but optimizing talent.