Strategic Human Resource Management – 5340
FINAL CASE ANALYSIS
Box: The Evolution of Management Practice in a Start-up
YenHsiang Wang (1001130396)
Give a short overview of Box.
Aaron Levie and Dylan Smith founded Box.Net in 2005. Box is a web-based service that is easy to use which help Box quickly gained customers. After an investor provided cash of $350,000, Box began to take off and moved to Silicon Valley, and in July 2006. Box used a web-based distribution model, Software as a Service that users could pay a subscription fee rather than paying large amount of money. Levie and Smith wanted to grow faster, so in 2006 they announced a “freemium” model. Customers received 1 gigabyte of cloud storage for free. Although, at the time it was a new strategy and some investors considered it a risky move but the freemium model became more common, and also let Box’s consumer base grew rapidly.
In 2007 there was more competition, so Levie and Smith decided to re-evaluate their focus on the consumer cloud storage market. They decided to alter the strategy and focus on the enterprise market. In 2008, small and medium-sized companies became their main customers, and in 2009 larger companies began to use Box. By 2011 Box began gaining traction with the enterprise market. Box enabled clients to access and share data on their mobile devices through iOS, Android and Windows Phone systems. Levie and Smith understood that larger enterprise software companies could begin to offer similar products but in lower prices or for free. Therefore, Box developed an all-inclusive enterprise platform that companies could access their data and do workplace collaboration, content management and editing.
In 2013, Box began to reposition itself and emphasize its platform in addition to its application. An important step for Box was integrating its portfolio with large tech companies such as Google, Salesforce.com and Netsuite. Box continually innovates new ways to utilize the platform and persuade customers to build their data on top of it.
In March 2014, Box filed for an IPO, but they postponed the IPO until July. Box raised the total investment to over $560 million and was one of the fastest-growing software companies in the world. To continue the growth, Andrew Smith’s main go-to-market business challenges was to accelerate existing growth engines, and he was constantly looking for new products and markets.
Describe Box’s strategy. How does Box compete?
At the beginning, Box used freemium model that gave every customer 1 gigabyte of storage for free and this strategy became successful, and also let Box’s grow quickly. And then, they decided to change strategy and focus on the enterprise market in 2008, Box started to focus on small and medium-sized companies, and only in one year that larger companies began to use Box. In 2011 Box changed their business strategy again which was gaining traction in the enterprise market. Box developed an all-inclusive enterprise platform for the companies could access their data and do their business on Box platform. Finally, Box integrated its portfolio with top tech companies such as Google, and Netsuite with this new strategy Box provides more services to their clients and also creates energy that help Box gain more competitive.
Describe the culture at Box. What are its basic values and operating principles?
The culture at Box is having employees who were self-starters and entrepreneurial and who wanted to grow their careers quickly and make a big impact. Box is teaching their employees the skills that they will need one day they want to leave and start their own business. Box believed that their employees are not going to spend their entire life at this place because a part of the Box culture is to help them develop future career.
Second, at the beginning almost all Box employees were under 30 years old. However, in 2014 the average age was 33 because Box was more heterogeneous than before. Furthermore, the company started put focus on employees’ families since more elder employee joined the company. Moreover, they did not have an employee engagement survey before since they felt it went against Box’s entrepreneurial culture. But they created an employee engagement survey called Soapbox, which was accepted by everyone later. In short, Box’s culture also embraces changing and diversity that gave them more strength to face the fast changing environment.
Next, Box was started in a small room and throughout growth, Box had a bigger office but they did not add private offices to its workspace because the open door policy. The company culture was designed to increase collaboration and transparency. As the company grew bigger and bigger, Box was still trying to preserve this collaborative and transparency culture even the internal communication had changed. Because they want to preserve some of the customs that involved everyone.
How is Box’s culture evolving as it grows and matures?
As mentioned before, Box began to change their strategy from consumer-facing company to a business and enterprise-facing company. Next, the company began selling to small and medium business, and then it started gaining traction in the enterprise.They were huge shifts between these decisions, and Box had to keep change their strategy in order to survive in this quick change industry, which fit with Box’s culture that they want to keep improving their services, learning new knowledge, expanding new markets, and making big impact to the society.
To keep growing, Box had to find new markets and lines of business because they knew they were facing more and more competition. So Box was always looking for something new to the markets and creating new products that complemented its goods and core products. Just like Box’s culture, they like changes and they can act faster than other opponents that are why Box can maximize their market potential while creating an environment where people feel ownership and enabling entrepreneurship to go to build and fuel further growth. What Box does is continuing to go fast, and to be operating at an executive level to keep great talent interested and let everyone get involved.
How do Box HR practices fit with the corporate strategy and culture? Asses the evolution of HR practices as the company has grown and matured.
There are four parts of HR practices that used in the development of Box. First of all is hiring new talent members. Box was growing very fast which needs to hire more employees to support the operation. When Box was founded in 2005, they only had few members and did not need a recruitment team to consider this topic. But as the company grew, Box needed to construct a recruiting team, create a clear business strategy and figure out what kind of company culture that was the most important value in the Box. And also, set criteria that what kind of people will fit in the company, and then develop a formal hiring process. However, I believed Box chose differentiation as their business unit strategy, which is hard to attract talented engineers. At the beginning, Box recruited people through their own networks, but that was not yielding enough quantity and qualified people. The only thing they can persuade talented people to join them was their CEO, Levie a new future superstar in silicon valley. After Box grew into a large company, they started to focus on why people choose Box, whom to hire, and what human resources they can find. I think the recruit team did the competency modeling that gave them three main characteristics for people considering working for Box, such as working on interesting and complex problems and finding stimulating work, having a good team work, and having a stable high-growth environment.
When Box was considering what kind of people is suitable for the company, they decided that the candidates who can fit into the company culture were the first choice. Next, due to talented employees were hard to find, Box recruited some managerial positions by using internal hiring. This strategy was good because Box not only retains the best people by keeping them engaged, but also giving them the opportunity to do something else within the company.
In short, the HR team needed to practice hiring process which started from developing a hiring rubric. I think the team did the skills inventory that helps them to understand what skills, education, and experience of current employees had, and then outline the KSA that fit with the company’s need and finally created their job descriptions. Moreover, when Box was hiring new employees, they liked to bring other team members into the hiring process, which also met the company’s culture that they want everyone involved in everything includes recruited new members.
Next, the second parts of HR practices were compensation. In Box’s early stage, many new employees were focused on building a large and successful software company. Instead of chose cash compensation and benefits they would like to gain more responsibilities to the company. However, Box expanded into a big company the company compensation shifted to cash package. Here was the problem that new team members were getting paid more than old employees, but Box needed to offer more salary than other companies due to the extremely competitive environment, or they might lose talented people. In addition, when Box was trying to recruit more established and executive talent. They started to think about the benefit packages because they need to change their HR strategy for those new talent candidates who saw benefits were important elements when working in Box.
To sum up, Box wants to reward the highest performers and drive the right behavior in the company by giving them these cash compensation or benefits. Moreover, Box also weed out low performers quickly. In order to fulfill these processes, they established a rating system that correlated to what an employee’s pay, along with market-driven ranges and benchmarks. The evolution of compensation which met with Box culture that they want current employees have high performance and attract new high performed members when the company grew, so they change the compensation system quickly to satisfy everyone’s need.
The third HR practice was changing their promotions process. When Box started in 2008, the company was going through rapid growth, and the promotion cycle was also rapid because it kept people engaged. Nevertheless,, these quick promotions also caused some problematic, for example, someone did not have the experience to know the different scenarios and to have a plan on how to fix some specific problems. So they slowed down the promotion cycle slowed because Box was able to recruit external and experienced people. Also, Box HR team realized that instead of training employees to develop the new skills, which were time consuming, they would like to allocate them in the other role that might let these people became A players in specific positions. HR team also created a more new formal promotion process, which made everyone participate in promotion decisions, and which met with the company culture. Moreover, HR teams created career paths for employees. The career path work was helping employees understand and make them feel good that there is a career plan for them. This kind of practice will also help Box to increase the strength of company culture by training their employees during their career plans.
Finally, the last HR practice of the Box was changing their performance evaluation process. Due to the company’s rapid growth, they need to evaluate employees’ performance, which could understand if they were all working in the same direction. Performance evaluation metrics were traditionally by using a rating system to measure each individual’s performance, but also compared their performance with past years. In addition to these evaluations, Box started processing performance evaluations across the whole organization. All managers got together and talk about what excellent performance meant for the company. The company cultures showed up even in the evolution of performance evaluation, which Box wants their employees have high performances that can grow their own careers faster through performance evaluations that tell employees what kind of behaviors fit with the company and what performance that the Box is looking for. Moreover, performance evaluation processes involve many mangers because Box’s cultures said they want every member participates all of their activities.
What are the biggest HR challenges that Box faces with growth? Make some HR practice recommendations.
I think the biggest HR challenges for the Box are recruiting qualified highly talented employees, keeping old members stay and provide high performance, and revising company cultures then reinforce them. Box needs to be special if they want to compete with other companies such as dropbox and Google Drive, but the talent candidates are rare in this market. I think Box can increase their based pay and provide better benefit packages when recurring people. And with some incentive bonus which can also tell those candidates that the opportunities to have a successful career is achievable.