Legal Blog

Uber’s CEO Resigns – Lessons for CEOs

Late Tuesday night, Uber’s CEO, Travis Kalanick, announced that he is formally resigning after taking an indefinite leave of absence earlier this month.  This follows an extensive investigation into the company’s corporate culture by former attorney general Eric Holder, Jr., which resulted in the company adopting 47 recommendations from his report.

 

Uber, founded just 8 years ago, revolutionized the taxi industry. The transportation service has spread to 75 countries, employs over 14,000 people and has an estimated investor value of nearly $70 billion.  However, recent concerns about workplace culture and treatment of female employees resulted in an investigation which found a cut-throat workplace that turned a blind eye to problems.  In the end, despite the business success experienced by Uber, Mr. Kalanick was forced to resign due to these workplace issues.  Other employers and CEOs can learn a number of lessons from these events:

 

  1. Culture matters. Don’t get me wrong – developing desirable products and services and running a profitable business will always be goal number 1 (and 2 and 3) for any successful company.  However, it is not the alpha and omega of a company.  Thanks to social media, now more than ever, what happens at a company can become public knowledge and eventually, no matter how successful a company is, if its workplace culture does not match its employees’ and prospective employees’ values, it will suffer.  While healthy competition can spur growth, back-stabbing and ruthless competition can lead to employee burnout, decreased retention and difficulty with recruitment.

 

  1. Disparate treatment and discrimination allegations should be taken seriously. Central to Uber’s cultural problems were widespread reports of disparate and problematic treatment of female employees and customers, most notably reported by former engineer, Susan Fowler, in her blog earlier this year.  With greater attention being paid to gender imbalances in the tech industry and the workforce as a whole, in addition to the corporate problems Uber’s allegations created, Uber found itself in the middle of a public relations nightmare.  It behooves companies to take proactive steps to ensure that their employment practices are up to date and that all of their employees, regardless of gender, disability, race, national origin, age, etc. are being treated fairly based on the merits of their performance.  Reports about unequal treatment should not be brushed aside but should be investigated and, if substantiated, action should be taken to remediate the problem.  Otherwise, perpetrators are encouraged to continue misconduct, further creating an environment that can create corporate liability, be toxic for growth and make employee retention a problem.

 

  1. Finally, the lesson all executives, be they CEOs, COOs, CFOs, or board members, should take from the events at Uber is that it does not matter how successful your product is – if you turn a blind eye to problems in the workplace, they can grow to the point where correction requires your removal.

 

If you have questions about Uber’s recent changes or how to avoid these issues in your workplace, please contact Greg Currey at gcurrey@offitkurman.com or 410.209.6424.

ABOUT GREGORY CURREY

Gregory Currey Casual -Smallgcurrey@offitkurman.com |410.209.6424

Gregory Currey is an experienced and efficient litigator who focuses his practice on Labor and Employment Law and Defense Litigation. He represents employers in State and Federal employment litigation, focusing on all aspects of employee relations, including compliance with Title VII, the ADA, FMLA, FLSA, immigration issues involving I-9s, the E-verify program and H-1B visas, ERISA, retiree health benefits and the NLRA. In addition to handling employment litigation, Mr.Currey represents companies and individuals in general litigation, with extensive experience in construction litigation. In addition to his litigation work, Mr. Currey counsels businesses and organizations to ensure compliance with State and Federal employment laws, reviews and drafts policies for employee handbooks and leads employee and management training programs.

 

 

 

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