Uber’s freewheeling corporate culture may have sparked rapid growth, but it has also left the firm’s senior leadership talent in tatters. What can other firms learn from this chaos?
Who’d have thought it – now Uber needs a taxi out of town. In a move that has upset commuters, tourists and frequent night-time travellers, Transport for London (TfL) has refused to renew the app-driven cab service’s licence to work in the UK Capital. Meanwhile, behind the scenes, the company founded by the combative Travis Kalanick is suffering from a serious exodus of senior talent… one that, in the summer, even claimed Kalanick himself.
It may seem on the surface that the two developments have little to do with each other – the first being a local difficulty, and the second being a whirlpool of internal politics at the US head office. But in fact, they are intimately linked. To uncover the connection between Uber’s regulatory and commercial nightmare in London and its wave of talent departures back in Silicon Valley, we need only explore the reasons that TfL provided for banishing the firm from such a lucrative market.
Two of those reasons in particular stand out:
- Uber’s use of Greyball software This refers to the company’s deployment in London of a technology that enabled it to a) find out which of the phones accessing its app were owned by regulatory agents, and then b) re-route those phones to dud Uber landing pages with no information on them. As a result, those agents could no longer track the firm’s pattern of business, or find out more about how it works.
- Uber’s approach to reporting crimes In this case, TfL is alluding to Metropolitan Police inspector Neil Billany’s “significant concern” that Uber has been selective about which criminal allegations concerning its drivers that it has reported to the police. According to Billany – who leads the Met’s taxi and private hire unit – the firm has “allow[ed] situations to develop that clearly affect the safety and security of the public”.
Defining a culture
All sounds rather underhand, doesn’t it? Indeed, there seems to be quite a lot in common between Uber’s conduct and the kind of moral lapses that stoked the flames of News International’s phone-hacking scandal. If you consider the improper use of technology directed at mobile phones and the alleged concealment of criminality, you have two very distinct parallels straight away. So, what is the natural connection between these aspects of Uber’s activity and its talent exodus? Simply put: people.
It was people who decided to use Greyball software and to report some driver-related incidents rather than others. And the people who make those types of decisions stem from a particular culture. Senior figures are responsible for defining an organisation’s culture. And when the limitations and flaws of that culture become plain for all to see, that will never reflect favourably upon those senior figures. In any situation like this, if the top talent suddenly feel as though they are working in an environment that is growing steadily more radioactive, they’re not going to stick around long enough for their CVs to turn into box-office poison in the eyes of the outside world.
As a magnet for all sorts of electrifying adjectives – such as ‘dynamic’, and ‘disruptive’ – Uber should be an equally exciting draw for talent. It should have a reputation for being the kind of place where people are beating down the door to work there. Instead, they’re beating down the door to get out. As a recent Business Insider article reveals, 15 senior executives have quit the firm since February, with the latest to leave including Salle Yoo: Uber’s top lawyer: just the kind of figure that you’d think would be a pivotal asset for the company at a time like this, when it’s fighting challenging legal fires on a host of different fronts. Tellingly, Uber has also lost its head of compliance, further impairing its ability to stay on the right side of regulatory forces.
Compare the severe loyalty crisis at Uber with the staff spirit at meteorically successful US startup Greenspire, which retrofits homes to be greener and more energy efficient. According to Inc.com, the company’s revenues grew by an astonishing 14,400% between 2013 and 2016 as it garnered a reputation for sharp ethical stewardship, in a market where consumers routinely feel overcharged for such services.
Greenspire founder and CEO David Murray prides himself on the firm’s incentivised, perks-driven culture – saying, “We like to provide a lifestyle they wouldn’t have at another company.” However, he points out, in return for a rewards-rich workplace, he expects staff to dedicate their full commitment and focus towards meeting company objectives. The combination appears to be working: as well as achieving a far higher retention rate than most other firms in its industry, Greenspire pulls in an extraordinary 85,000 job applications per year. Not bad for a company with less than 200 members of staff.
So how come Uber – the quintessential hip, young tech firm blessed with rapid growth – has become such a talent repellent?
Values of the past
In the spring, once its executive departures – and those of more junior head-office staff, too – had begun to bite, Uber hired law firm Covington & Burling to carry out a full-scale investigation of its culture and practices to determine where the problems lay, in efforts to stop the talent rot. Covington & Burling drafted 13 pages of recommendations, many of which reveal an enormous amount about the state that the company was in when the lawyers delved under the bonnet. The firm urged Uber to:
- Review and reallocate Kalanick’s responsibilities;
- Improve record keeping in the HR department;
- Use performance reviews to hold senior leaders accountable;
- Reformulate the company’s entire list of cultural values;
- Prohibit romantic or intimate relations between individuals in a reporting relationship, and
- Institute and enforce clear guidelines on alcohol consumption and the use of controlled substances.
The report added: “Significant consideration should be given to evaluating the reasons [why] employees are motivated to leave and addressing key drivers of employee turnover. Uber should engage a consultant or undertake internal surveys to identify and address attrition that is higher than expected, across the company or within specific [divisions]. Required exit interviews with neutral third parties (such as HR representatives) should be instituted as one method for evaluating an employee’s decision to leave and identifying trends in employee turnover – particularly among employees Uber would prefer to retain.”
It is clear from Covington & Burling’s investigation that the kind of bullish, aggressive attitude that Uber had wielded to carve out a story of rapid growth was no longer compatible with its newfound status as a massive, global corporation. The values that had succeeded in the past were ill equipped to steer the firm into the future, and the cultural chaos that had stemmed from a failure – or unwillingness – to reshape those values in step with the firm’s speedy expansion had inevitably forced talent out.
Unfortunately for Kalanick, the report arrived too late to contribute to an overhaul or strengthening of his position – and in fact, its conclusions almost certainly placed him in mortal peril. Just one week after the recommendations emerged, Kalanick was forced to resign from the company he’d built, following a vote of no confidence in his leadership on the part of that most influential force in the business world: investors. It was all the proof Uber needed that it didn’t live in a bubble, and that business commentators’ exasperation towards the firm was felt closer to home, too. According to Jason Hanold – head of US executive recruitment service Hanold Associates – Uber had become “the very definition of a toxic leadership culture”, with Kalanick setting that tone.
If the CEO’s responsibilities are sketchy or poorly defined; if the HR department doesn’t adequately hold senior figures to account; if cherished cultural values are no longer suitable in an evolved context, and if inappropriate relationships or illicit behaviours are undermining the smooth running of the business, then people are sure to beat a hasty retreat. Any one of those factors could pose a serious threat to the cohesion of a talent base – but all of them mounting up at once? That’s a most unappetising brew.
A change of tone?
Uber’s future is now in the hands of new chief executive Dara Khosrowshahi, who has come to the firm from online travel platform Expedia. As Business Insider’s article points out, the vast array of vacancies at the company’s top table may actually make it a lot easier for Khosrowshahi to bring in his own, preferred talent and remake Uber in his own, uncontroversial image. There are already signs that the tone of the firm’s external communications are changing: three days after the TfL decision emerged, Khosrowshahi published an open letter to Londoners in the pages of the city’s Evening Standard, striking a far more conciliatory note than the media was used to from the Kalanick days.
“While Uber has revolutionised the way people move in cities around the world,” he wrote, “it’s equally true that we’ve got things wrong along the way. On behalf of everyone at Uber globally, I apologise for the mistakes we’ve made. We will appeal this decision on behalf of millions of Londoners, but we do so with the knowledge that we must also change. As Uber’s new CEO, it is my job to help Uber write its next chapter. We won’t be perfect, but we will listen to you; we will look to be long-term partners with the cities we serve; and we will run our business with humility, integrity and passion.”
Of all those qualities that Khosrowshahi cites, I have little doubt that humility will play the most decisive role in helping Uber transport itself into a new era where its ethical scruples match the convenience of its service. That sounds like the sort of company that many seasoned executives would jump through hoops to work for.
Image of Dara Khosrowshahi captured from this video from his former firm Expedia