Uber: 3 management lessons we can learn from the scandal | Ladders

Uber made every mistake so your company doesn't have to.
News

3 management lessons we can learn from the Uber scandal

On Tuesday, Uber CEO Travis Kalanick announced an indefinite leave of absence on the same day his company released the recommendations of an internal investigation into its workplace culture, especially around its treatment of women.

The company started the investigation after a former engineer at Uber, Susan Fowler, alleged sexual harassment, discrimination — and a human resources department that ignored these claims.

Kalanick, 40, has won a reputation for brash leadership and overgrown-bad-boy behavior— including nicknaming the company “Boober” for how it boosted his dating life. The company has been looking at how Kalanick’s behavior has the tendency to trickle down to other executives, and as a result he had been working with an executive coach and taking up meditation before he went on leave this week.

Kalanick’s stamp on Uber is unavoidable, demonstrating the power of an executive’s approach to form the culture of a company. Uber is almost a $70 billion company, and it got there through Kalanick’s management style of not letting anything—class-action lawsuits over labor practices for drivers, “God view” surveillance of its users’ private data, repeated sexual harassment allegations by its executives, and government regulations— stand in the way of the company’s growth.

Now, the company is paying for it. Here are three lessons we can learn how we can use Uber as a case study on avoidable mismanagement.

1. Create values you can be proud of and live up to them

Uber had a set of values. Unfortunately, they were pretty aggressive and incentivized employees to treat each other badly in the pursuit of their own personal success. These abrasive mottos inspired employees to act with impunity.

Among those values, which sound ripe for conflict: “Let Builders Build,” “Always Be Hustlin’,” “Meritocracy and Toe-Stepping,” and “Principled Confrontation.”

One of the recommendations from the Eric Holder-led investigation was to “eliminate those values which have been identified as redundant or as having been used to justify poor behavior.”

It’s not surprising that under the workplace culture of “Meritocracy and Toe-Stepping,” a top Uber executive would feel compelled to obtain and keep the medical records of an Uber driver’s rape victim he believed may be lying. That executive was among the dozens of people the company fired after the law firm’s investigation uncovered multiple instances of sexual harassment, retaliation and unprofessional behavior.

What’s significant about that: the high number of people being reported and fired shows that this toxic work culture was encouraged and enabled by Uber’s aggressive culture.

And for the decent people that remain at Uber, working in this environment still affects their present mood and future employment opportunities. New York Times‘ reporter Mike Isaac said hiring managers were wary of hiring people who worked at Uber after the scandals.

It’s a reminder that even when you’re not directly contributing to its toxicity, a bad workplace culture still directly impacts you.

2. Listen to your employees’ concerns early and often

This headache of an internal investigation could have been avoided if management had listened to Fowler’s concerns sooner.

She went through the proper channels to be heard and said she was dismissed and ignored. When she reported an employee who was pressuring her to have sex with him, she was told by HR that they wouldn’t do anything because he was a “high performer.”

To fix this  behavior, Uber would need to change how it treats criticisms and complaints. It would need to create an empowering environment where employees like Fowler could step forward without fear.

Now Uber has to create that culture anyway — but in a seriously weakened position they could have avoided if they had just listened in the first place. Uber’s solution: The internal investigation recommended implementing “a robust and effective complaint process” that would include “multiple avenues for lodging a complaint, including an employee’s immediate manager or next-level manager, the organization’s Human Resources Business Partner, or the Integrity Helpline.”

3. Have zero tolerance for misbehavior, especially at the top

Creating zero-tolerance policies for harassment and discrimination is a basic human resources practice that should be easy enough to follow, and it was what the investigation recommended.

But as one Uber board member showed, behaviors don’t change overnight.

In the immediate aftermath of the recommendations being released, board member Arianna Huffington discussed what Uber policies could be changed in front of employees. When she said that adding more female board members leads to more women joining boards, her fellow board member David Bonderman responded with a sexist remark: “Actually, what it shows is that it’s much more likely to be more talking.”

Bonderman resigned from the board hours after audio of the exchange had been leaked. The quick response to his remarks shows that post-investigation, senior leadership is going to be held more accountable in public. That’s a good thing for Uber, although Kalanick still remains CEO. Although Kalanick himself was not recommended to resign, the investigation concluded that Uber should reduce his responsibilities.

Overall, the recommendations are a cautionary tale of what happens when you let founders and “high performers” get away with bad behavior for far too long. With the release of its recommendation, Uber is signaling that it’s willing to change. Time will tell if these written promises will lead to action.

For now, cleaning up your act means cleaning house.