We are a filmmaker-driven studio, which means that our goal is to let the creative people guide our projects. But when a movie gets stuck and it becomes clear that not only is it broken but its directors are at a loss as to how to fix it, we must replace them or shut the project down. You may ask: If it is true that all the movies suck at first, and if Pixar’s way is to give filmmakers - not the Braintrust - the ultimate authority to fix what’s broken, then how do you know when to step in?
The criteria we use is that we step in if a director loses the confidence of his or her crew. About three hundred people work on each Pixar movie, and they are used to endless adjustments and changes being made while the story is finding its feet. In general, movie crews are an understanding bunch. They recognize that there are always problems, so while they can be judgmental, they don’t tend to rush to judgment.

Still, people felt vulnerable - and that bred suspicion. More and more, I began to think that many of our employees viewed any change as a threat to the Pixar way (and, as such, to our ability to be successful going forward).

One thing that struck me about Bob was that he preferred asking questions to holding forth - and his queries were incisive and straightforward. Something unusual had been built at Pixar, he said, and he wanted to understand it. For the first time in all the years that Pixar and Disney had worked together, someone from Disney was asking what we were doing that made our company different.

In those first months, we also moved to bolster trust within the studio in another way: Just as we had refused to sign employment contracts, we now moved to eliminate contracts for everyone. At first, many people thought the move was an attempt to wrest power away from the employees and give them less security. In fact, my feeling about employment contracts is that they hurt the employee and the employer. The contracts in question were one-sided in favor of the studio, resulting in unexpected negative consequences. First and foremost, there was no longer any effective feedback between bosses and employees. If someone had a problem with the company, there wasn’t much point in complaining because they were under contract. If someone didn’t perform well, on the other hand, there was no point in confronting them about it; their contract simply wouldn’t be renewed, which might be the first time they heard about their need to improve. The whole system discouraged and devalued day-to-day communication and was culturally dysfunctional. But since everybody was used to it, they were blind to the problem.
I wanted to break that cycle. I believed that it was our responsibility to make sure that Disney Animation was a place that people would want to work; if our most talented people could leave, then we would have to be on our toes to keep them happy. When someone had a problem, we wanted it to be brought quickly to the surface, not to fester. Most people know that they don’t get their way on everything, but it is very important that they know they are being dealt with straightforwardly and that they, too, will be heard.

This corporate détente, if you will, wouldn’t have been possible, I think, without the Five Year Compact.
The document, while providing great comfort to Pixar employees, prompted several complaints from the Disney Studios human resources department. The complaints boiled down to the fact that they didn’t care for the exceptionalism that our carefully guarded policies implied. My response to this stemmed less from a loyalty to Pixar than from my commitment to a larger idea: In big organizations there are advantages to consistency, but I strongly believe that smaller groups within the larger whole should be allowed to differentiate themselves and operate according to their own rules, so long as those rules work. This fosters a sense of personal ownership and pride in the company that, to my mind, benefits the larger enterprise.