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Netflix has abandoned a pay transparency experiment among its most senior staff after finding that open access to compensation figures created rivalry and distraction inside the business, according to co-founder Reed Hastings.
Speaking on the Invest Like The Best podcast, Hastings said the company had allowed its top 500 employees to view compensation data across the organization for several years. He said the initiative was intended to build trust and reduce bias around pay decisions, but Netflix concluded that its “net costs were negative” and dropped the practice.
The pay practice was reportedly implemented by chief content officer Ted Sarandos in 2017 so employees could determine if they're fairly compensated, and was originally designed to remove ambiguity and strengthen credibility with employees.
Reactions to the policy introduction at the time were extreme.
"Everyone is always looking. It's, 'Holy s**t, they got a $2 million raise last year? What happened?!'" one employee told the Hollywood Reporter. "We were all like, 'F**k, this is crazy,'" said another.
Reaction to pay transparency
Senior staff reacted by comparing their salaries with peers who earned slightly more, in some cases by only $10,000. Hastings said even high-performing, well-paid employees became fixated on their pay status once the figures were visible, creating petty rivalries that became “pretty distracting.”
He called the project “an experiment in human nature,” adding that while the underlying theory was sound, it invited internal comparisons that became hard to ignore. The company’s retreat from full visibility demonstrates the quandary organizations face when attempting to achieve transparency while dealing with the downside it creates.
Other employers have reported similar trade-offs while adopting open pay policies. The social media platform Buffer has publicly shared its salary information for a decade. Co-founder and CEO, Joel Gascoigne, said in 2024 that the approach brought “some discomfort” and created concerns that competitors might “poach” employees.
