eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
The management disorder at Uber showed few signs of abating this week, even as the ride sharing company’s board of directors decided to adopt 10 recommendations for improving corporate governance that was drafted by an investigative team lead by former U.S. Attorney General Eric Holder.
Uber board member David Bonderman resigned on June 13 reportedly after making comments demeaning to women in response to a comment by fellow board member Arianna Huffington, co-founder of the Huffington Post news website.
The board was discussing the addition of a new female board member, Wang Ling Martello, executive vice president of Nestle in South Asia. Arianna Huffington reportedly said that the presence of one woman on the board would eventually lead to more. Bonderman reportedly retorted that “actually what it shows is that it’s much more likely to be more talking.”
Earlier the same day, Uber released the 10-point list of recommendations prepared by Holder and his team with the law firm of Covington & Burling. The recommendations consist of a basic course in corporate governance, along with specifics aimed at Uber and its leadership. Those recommendations include a process for improving workplace diversity and preventing sexual harassment.
Also that same day, Uber CEO Travis Kalanick announced that he was taking a leave of absence.
In an email to employees, Kalanick said that he was taking time off to mourn his mother, who was killed in a boating accident and to consider what to do to bring about “Uber 2.0.” He also said that before that, he needed to create “Travis 2.0.” Kalanick said that the company would be run by his direct reports and that he would be available as needed.
However, the Holder report, which the board had already adopted, specifically identifies Kalanick as part of the problem. The first line of the report begins, “Review and Reallocate the Responsibilities of Travis Kalanick.”
The second point calls for the appointment of a chief operating officer who “will act as a full partner with the CEO, but focus on day-to-day operations, culture, and institutions within Uber.”
The recommendations also include ways to hold senior leaders accountable through the performance review process and compensation. This would include metrics on diversity, responsiveness to employee complaints, employee satisfaction and compliance. The recommendations call for a more senior role for the company’s head of diversity and head of human resources.
In addition to giving Uber’s board of directors more authority and independence, the Holder report calls for an oversight committee. But perhaps more important, recommends that Uber hold leaders accountable through their compensation through a set of metrics where meeting goals can directly affect their income.
The recommendations call for holding key members of senior management accountable for their performance and withholding all or part of their pay if they fail, even to the point of losing their jobs.
Some of the recommendations make it clear just how far outside the norm Uber was operating. For example they call for Uber to appoint an audit committee that can enforce compliance with internal controls and for the company to implement HR record keeping, (apparently a new concept for Uber). There’s a recommendation that Uber find a way to track agreements with employees, another element of corporate governance practice that Uber was apparently missing.
One critical recommendation is that Uber’s 14 Cultural Values be reformulated to “eliminate those values which have been identified as redundant or as having been used to justify poor behavior, including Let Builders Build, Always Be Hustlin’, Meritocracy and Toe-Stepping, and Principled Confrontation.” Uber’s senior leaders should be encouraged to exhibit the reformed values “on a daily basis and to model a more collaborative and inclusive Uber culture.”
One key change is mandatory leadership training for key senior management, as well as mandatory HR training and manager training. This regimen should include mandatory interview training to eliminate bias.
Holder recommended that Uber adopt a version of the NFL’s “Rooney Rule” that requires job postings be distributed company-wide and that interviews for each position must include at least one racial minority and one woman or other under-represented minority group.
One very telling set of recommendations would require compliance with federal equal opportunity rules. Other recommendations would prohibit intimate or romantic relationships among people in the same reporting chain and prohibit the use of alcohol and non-prescription drugs in the workplace. The recommendations wrap up with a call for review and revision of the company’s pay policies that appear aimed at paying women and minorities less than others.
The recommendations are in reality a good set of guidelines for companies in general, especially those in Silicon Valley and other tech corridors. While some are aimed directly at Kalanick and his senior managers, most could be adopted by nearly any company.
It is, however, sad that Uber had to be told all of this, or that this set of recommendations would be useful throughout the tech industry. But the reality is that much of the tech industry will forgive nearly anything in the name of producing good results.
The problem lies with the fact that eventually start-ups must learn how to do more than just grow rapidly. Sometimes that doesn’t happen until a start-up is acquired by a larger company where corporate governance already exists and the start-up staff is exposed to the reality of operating the company inside a larger corporate framework.
But for start-up companies that plan to stay independent the time must come when management and staff have to deal with the reality of operating and growing within generally-accepted rules of conduct and governance.
That’s when the corporate leadership needs to act like grown-ups even if it means replacing the original leaders.