Via Invest Like The Best

On the Keeper Test: “There’s [a few] parts to it.

• One is to release the moral thing. Most managers, they’re people managers. They like people, they don’t want to hurt people. So it’s very difficult for them. And so one of the best things is to do large severance packages (like four to nine months of salary). It feels expensive at first, but it makes the person who’s let go feel a little bit better because they’ve got a bunch of money in their pocket.
• Two, it helps the manager do their job because then they don’t feel as bad in letting the person go. […] It just sets up a much better mutual feeling.
• Then the third [point] on the terminations is setting a context where it’s not a moral issue. You didn’t fail. It’s just like a professional sports player. We think we can get someone better here. [Yes,] it’s a pity for the person, but it’s seen as natural as opposed to a failure. […]

The test that we encourage people to use is: if someone were quitting, would you try to get them to stay, to keep them? Because that turns out to be a good test relative to all the relief we sometimes feel when someone not great moves on.”

— The Netflix Culture Code That Changed Entertainment Forever | Reed Hastings Interview, at 9:34 and at 11:24

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The Keeper Test became Netflix’s core framework for maintaining talent density. Reed Hastings (co-founder and Executive Chairman of Netflix) describes it: “If someone were quitting, would you try to get them to stay to keep them? Because that turns out to be a good test.”

How the test works in practice:

• Managers ask themselves: “If this person told me they were quitting, would I fight to keep them?”
• If the answer is no, the company is obligated to let that person go with generous severance
• This removes the moral dimension—it’s not about failure, it’s just about finding the right fit
• Large severance packages (4-9 months) help both the departing employee and the manager feel better about the transition

How the typical conversation would go: “You’re working really hard. You’re trying. I’m so sorry to tell you that, honestly, if you quit, I wouldn’t try to change your mind to stay. And the way the company is set up is, if I wouldn’t work to keep you, then I’m supposed to let you go.”

By executing on an agreed-upon framework, the people management decision becomes less personal and more systematic.