CLOUDFLARE, INC.: RUNNING HOT?

SUBMITTED TO: Prof. Shailendra Nigam

Group 11

Roll No Names

22PGDMHR01 Aarushi

22PGDMHR12 Deepanwita Chowdhury

22PGDMHR24 Kritika

22PGDMHR38 Ravdeep Singh

22PGDMHR51 Siddhartha Bindhyeshwari

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 ACKNOWLEDGEMENT

We would like to thank our professor, Prof. Shailendra Nigam, for giving us the
chance to understand and suggest solutions on the case CloudFlare, Inc.:
Running Hot and for his ongoing support as we worked on this project.

We worked together on this endeavor and are all appreciative of one another. We
were able to have a thorough comprehension of the topic thanks to this experience.

Special Thanks to our institute, IMI New Delhi, for providing us with this Learning
opportunity.

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About CloudFlare Inc

CloudFare Inc, A technology based business provides a number of services targeted at enhancing
the security, functionality, and dependability of websites and online applications. Matthew
Prince, Lee Holloway, and Michelle Zatlyn launched the company in 2009. With its extensive
global network of servers, Cloudflare is able to offer services including content delivery, DDoS
protection, web application firewall, and DNS management.
The major area of profit was through webmasters who expressed a deep sense of frustration,
unable to protect their sites from external threats and access.

Services Offered

CloudFlare offered two types of services to its clients.

1. An evolved combination of delivery, caching and optimization which helped load
websites faster with a reduced bandwidth cost
2. High security to websites by identifying potential threats in the form of spams, bot
crawling and others

Target Client: Small to medium sized websites with comparatively low budget to afford security
than the giants in the techspace like Google.

How CloudFlare worked

With the advent of cloudFlare, a customer’s request for information was sent through an intense
global network wherein every visitor’s IP address was looked into following which the extent of
suspicious activity was judged as per the desired level of security set by the customers.
The service offered by the company could be taken up by signing up with an option for a free
service followed by a premium service.

Cloudflare aimed to provide assurance and a big network operation to every webmaster
irrespective of their profit margin or size.

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Technology Advantages

CloudFlare had a competitive advantage over others in terms of technology in the following
areas:
1. Bandwidth cost had been declining for years
2. Shift from spinning disc to flash memory
3. High capacity servers with multicore processors which accelerated the commands

Issues faced at CloudFlare

From the organizational and HR perspective, the organization had multiple issues ranging from
poor formalization of the entire process from recruitment to promotion as well as lack of an HR
manager if not a proper designated team.

1. Leadership style: When employees are working long hours and performing grueling
tasks, they need to be compensated for their efforts. There is a complete absence of a
formal performance appraisal process which leads to a mismatch of expectations and the
actual compensation.
2. Ambiguous nature of work: Without a proper structure and understanding of the roles
to be performed by the employees, there is a scope of confusion. There is no product map
and meeting every three weeks to decide the way forward can be hard to understand for
certain groups of employees.
3. No HR Policies and Practices: No stipulated HR policies in the company leads to a lack
of recognition of true talent and a poor foundation to set the company’s culture and
values. There is no formal recruitment team or CV shortlisting which might lead to a loss
of rich talent. There is an absence of follow-ups with the potential candidates with an
unstructured interview process. All in all, there is no mechanistic handling of the process
of recruitment or selection of the candidates.

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Retention Challenges

CloudFlare received a number of resignations which indicates both a retention problem and the
normal overturn that occurs within a company.

1. Lack of Organizational structure especially a lack of middle management

2. Inconvenient timings for company meetings
3. Lack of consistent salary adjustments
4. Lack of referral bonus structure or incentives
5. Lack of formal procedure for onboarding new hires
6. No HR Function and no official HR policies and processes

Maintaining its current approach, Cloudflare would find itself without a formal onboarding
system for fresh hires in the marketing, sales, and affiliate program domains. Given that these
roles are novel, there would be no existing standards for existing staff to guide newcomers. This
absence of organization carries a range of potential drawbacks.

Primarily, there's a concern related to recruiting regular staff. Cloudflare lacks a designated
entity accountable for this duty and doesn't take part in external recruitment or job advertising.
This strategy confines their access to a broader array of candidates and leaves them open to
potential challenges in locating fitting employees.

Furthermore, during the establishment of a fresh department, the company's heavy reliance on
internal referrals or recommendations might pose issues. This inward-looking approach might
not yield candidates possessing the desired proficiency and output.

Minus a well-defined interview process and systematic methodology, there's a possibility of

inconsistent assessment of candidates. The deficiency of structured interviews might lead to
difficulties in pinpointing the right candidates who harmonize with Cloudflare's principles and
job prerequisites.

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Moreover, the absence of a streamlined recruitment procedure could elongate the time needed to
construct a complete team. This delay could result in periods of inadequate staffing, impacting
the company's operational efficiency and expansion.

In conclusion, sticking to its present practices might place Cloudflare in a predicament where
effectively integrating new staff, sourcing talent, creating new departments, and conducting
methodical interviews become challenges. These challenges could impede their ability to draw in
high-performing staff and assemble teams within their customary timelines.

These issues were reflected in the employee resignation exit interviews. There is a need to
internalize the implications of these resignations that have signaled a need for corrective actions.

Solutions

1. Need of middle management

Prince and Zatlyn need to alter CloudFlare’s company culture, organizational structure, and
management processes, beginning with Prince’s leadership style. CloudFlare needs to build an
organizational structure that has middle management that not only advocates for their teams but
also helps delegate and manage the workloads of their employees to help prevent burnout.

Due to a lack of middle management, the company is unable to identify those employees who
might be considering leaving.

2. Compensation linked to long working hours

A common aspect of employees who resigned was that they were not satisfied or passionate
enough about their work to compensate for the long hours and difficult challenges that come
with the job. Hence, CloudFlare must properly compensate and have continuous motivation to
succeed.

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3. Innovation Metrics and Evaluation:

● Develop metrics to measure the success of innovation initiatives and track the impact of
innovative projects on the business.
● Regularly assess the effectiveness of HR strategies and programs related to innovation.

4. Unique titles for the middle management:

Instead of giving them the title “managers”, the company can come up with unique titles such as
performance escalation specialists or pioneers so as to build trust among employees for them.
They will be presented as someone who is hired to provide thrust or support to the current
employees in order to enhance their performance.

5. Formal documentation

Since, employees were leaving without getting ESOPs, there may be a chance that they do not
really know what they are compensated for. Also, there is no performance appraisal system or
recruitment system in place. All these HR policies need to be documented so that everyone
understands what they are working for.

6. Recruitment through innovative methods

CloudFlare can opt for innovative methods of recruitment like coding challenges, hackathons,
which do not require a HR function to work. They just need to make a problem statement and
upload it to a website.

7. Clear Job Descriptions

Clear JDs should be formed and circulated with the employees before the interview so that they
understand the roles and responsibilities of the position they are applying for.

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8. HR Planning

As the employees are feeling burnt out and the stress levels are all time high, there needs to be a
proper need analysis and on the basis of which recruitment should be handled so that burden
doesn’t come on just 1 or 2 people and work can be divided.

How can we apply Change Management Principles to CloudFlare?

Step 1 - Establish a sense of urgency

Some of the areas that require urgent changes are – organizing sales forces to meet competitive
realities, building new organizational structures to enter new markets or explore new
opportunities. The leader needs to convince the managers that the status quo is far more
dangerous than the change efforts.

Step 2 - Form a powerful guiding coalition

New leaders need to tap in the talent of the existing managers and integrate them in the change
management efforts. This will form a powerful guiding coalition that not only understands the
urgency of the situation but also has the trust of the employees in the organization. If the team is
able to explain at the grass roots level what went wrong, why organizations need change, and
what will be the outcomes of the change efforts then there will be a far more positive sentiment
about change efforts.

Step 3 - Create a vision

The most critical role of the leader who is leading the change efforts is – creating and
communicating a vision that can have a broader buy-in among employees throughout the
organization. The vision should not only talk about broader objectives but also about how every
little change can add up to the improvement in the overall organization.

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Step 4 - Communicating the vision

Leaders need to use every vehicle to communicate the desired outcomes of the change efforts
and how each employee impacted by it can contribute to achieve the desired change. Secondly
the communication efforts need to answer a simple question for employees – “What is in for
them”. If the vision doesn’t provide an answer to this question then the change efforts are bound
to fail because it won’t have buy-in from the required stakeholders of the organization.

Step 5 -Empower others to act on the vision

Once the vision is set and communicated, change management leadership should empower
people at every level to take decisions regarding the change efforts. The empowerment should
follow two key principles – it shouldn’t be too structured that it takes away improvisation
capabilities of the managers who are working on the fronts. Secondly it shouldn’t be too loosely
defined that people at the execution level can take it away from the desired vision and objectives.

Step 6 - Plan for and create short term wins

Initially the change efforts will bring more disruption than positive change because it is
transforming the status quo. They should carefully craft short term goals, reward employees for
achieving short term wins, and provide a comprehensive understanding of how these short term
wins fit into the overall vision and objectives of the change management efforts.

Step 7 - Consolidate improvements and produce more change

Short term wins lead to renewed enthusiasm among the employees to implement change efforts.
Management should go ahead to put a framework where the improvements made so far are
consolidated and more change efforts can be built on the top of the present change efforts.

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Step 8 - Institutionalize new approaches

Once the improvements are consolidated, leadership needs to take steps to institutionalize the
processes and changes that are made. It needs to stress how the change efforts have delivered
success in the desired manner. It should highlight the connection between corporate success and
new behavior. Finally organization management needs to create organizational structure,
leadership, and performance plans consistent with the new approach.

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