Sweeping changes announced for Uber HQ – including CEO’s extended leave

Ride-hailing giant Uber Technologies Inc. has chosen to unanimously adopt a series of 47 recommendations aimed at repairing its tarnished public image – including an extended leave for controversial CEO Travis Kalanick, the company revealed Tuesday.

In a June 13 statement Uber’s chief HR officer, Liane Hornsey, publicly released the recommendations, submitted by international law firm Covington & Burling LLP and approved by the company’s board of directors on June 11, in PDF format after discussing them with employees.

The changes, developed by Covington & Burling partners Tammy Albarrán and Eric Holder, a former U.S. attorney general, will affect virtually every facet of Uber’s executive structure, including but not limited to:

  • Mandatory leadership training for senior management;
  • Implementing a comprehensive process for employee complaints;
  • The naming of a chief diversity and inclusion officer (presently the “head of diversity”) who will report directly to the chief executive or chief operating officer;
  • Adopting a version of the NFL’s “Rooney Rule” – interviewing at least one woman and one minority candidate for all senior positions;
  • A ban on sexual relationships between managers and subordinates;
  • A reduced leadership role for its CEO;

“Implementing these recommendations will improve our culture, promote fairness and accountability, and establish processes and systems to ensure the mistakes of the past will not be repeated,” Hornsey wrote. “While change does not happen overnight, we’re committed to rebuilding trust with our employees, riders and drivers.”

While still worth an estimated $70 billion (all figures USD), Uber’s reputation has taken an undeniable cultural – and financial – hit in recent months, including but not limited to the viral blog post by former engineer Susan Fowler depicting a workplace culture of sexual harassment that led to the company’s present soul-searching in the first place; a viral video of Kalanick harassing an Uber driver over declining fares; the public resignation of a president appointed to change course; and even a self-released report acknowledging that so far, Uber’s efforts to diversify its 64 per cent male (and more than 50 per cent white) workforce were falling short.

According to Bloomberg, while Uber’s losses narrowed in its most recent quarter, they remain substantial – $708 million in the first quarter of 2017, versus $991 million in the fourth quarter of 2016.

And though the company’s quarterly revenue increased from $2.9 billion to $3.4 billion during the same period, there is evidence that along the way it unwittingly ceded part of the U.S. ride sharing market to rival Lyft, which rose from 18 per cent of the market at the beginning of the year to 25 per cent, according to analytics firm TXN.

The recommendations come on the heels of several similar steps recently taken by Uber, including the dismissal of more than 20 employees in response to an unrelated sexual harassment probe by international law firm Perkins Coie LLP, and yesterday’s resignation of Emil Michael, a longtime confidant of Kalanick’s who served as the company’s senior vice president of business.

Length of CEO’s absence uncertain

In an email sent to employees and obtained by The Washington Post, Kalanick revealed he would be taking an unspecified leave of absence in response to the company’s recent controversies, without naming a temporary replacement or mentioning when he might return.

He did, however, note that he would remain in contact with the company’s leadership “as needed for the most strategic decisions.”

“The ultimate responsibility, for where we’ve gotten and how we’ve gotten here rests on my shoulders,” Kalanick wrote in the email, according to the Post. “There is of course much to be proud of but there is much to improve. For Uber 2.0 to succeed there is nothing more important than dedicating my time to building out the leadership team. But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.”

As for the company’s leadership team, “I will be empowering them to be bold and decisive in order to move the company forward swiftly,” he added.

Kalanick’s leave is also related to the recent death of his mother, whose funeral he attended on June 9.

A reduced role

Regardless of when Kalanick returns, the report recommended that his role be reduced.

“The Board should evaluate the extent to which some of the responsibilities that Mr. Kalanick has historically possessed should be shared or given outright to other members of senior management,” Holder and Albarrán wrote, alluding to the company’s search for a chief operating officer, a role Uber has been actively recruiting for but has yet to fill.

Whoever becomes COO, the board of directors should develop a position clearly distinct from Kalanick’s role as Uber’s CEO, they continued, with focus given to the future COO’s role (and ideally experience) in diversity and inclusion; labour relations; and improving company culture.

While some analysts had speculated Uber might fire Kalanick outright, in an arrangement typical of Silicon Valley firms he, co-founder Garrett Camp, and founding CEO Ryan Graves control an outsized share of company votes, making Kalanick’s dismissal unlikely unless his colleagues oust him or he voluntarily leaves.

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Eric Emin Wood
Eric Emin Wood
Former editor of ITBusiness.ca turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

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