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Uber CEO takes indefinite nonmedical leave

Uber CEO takes indefinite nonmedical leave

June 19, 2017 11:36 AM | Print this page

The WSJ reports that Uber Technologies Inc (Uber) CEO Travis Kalanick will take an indefinite leave of absence from the company following the release and unanimous adoption by the Uber board of the recommendations of an investigation into the company's workplace culture and practices.

Background: workplace investigation and recommendations
The investigation was launched following the publication of a blog post in February by former Uber engineer Ms Fowler. The post alleged discrimination, sexism, harassment and the ineffectiveness of company policy and procedure to address these issues. According to an ABC report, this blog post quickly vent viral and prompted the hashtag #deleteUber in February. Reportedly, 200,000 people deleted their accounts in the wake of the post.

Shortly after this, the Uber board initiated an external investigation into workplace culture. The investigators were asked to address the following issues:
1. Uber’s workplace environment as it related to the allegations of discrimination, harassment, and retaliation in Ms. Fowler’s post;
2. whether the company’s policies and practices were sufficient to prevent and properly address discrimination, harassment, and retaliation in the workplace; and
3. what steps Uber could take to ensure that its commitment to a diverse and inclusive workplace was reflected not only in the company’s policies but made real in the experiences of each of Uber’s employees.

Report findings
According to Fortune, the report findings were grouped under four overarching themes: tone; trust; transformation and accountability. More specifically, the findings included:
• review and reallocate Travis Kalanick's responsibilities: The new Chief Operating Officer is to act as a full partner to CEO Mr Kalanick
• adopt a zero-tolerance policy for substantiated complaints of discrimination and harassment without regard to whether an employee is a “high performer” or a long-term employee
• elevate the visibility of Uber's current head of diversity in order to demonstrate the company's commitment to the issue and consider adding an employee diversity advisory board
• regularly publish diversity statistics to judge how the company is meeting its goals
• use performance reviews to hold senior leaders accountable: reviews to include metrics tied to improving diversity, responsiveness to employee complaints, employee satisfaction, and compliance
• include additional independent board seats on the Uber board who can exercise oversight of Uber's management
• require senior leaders at Uber to receive mandatory leadership coaching and new or first-time managers receive significant training
• target diverse sources of talent, use blind resume review, and adopt a version of the 'Rooney Rule' The Rooney rule is explained by Fortune as: a rule requiring at least one woman and one underrepresented minority must be considered in the slate of candidates for either every open position or every open senior position (the details vary from company to company)
• develop clear guidance on appropriate workplace relationships, including making clear that any type of romantic or intimate relationship between individuals in a reporting relationship is prohibited.
• audit and review pay practices, including for compliance with state and federal equal pay laws

The results were discussed on during a six-hour meeting with Uber's board, which unanimously voted to adopt all of the recommendations. The WSJ reports that the recommendations did not expose any specific incidents at Uber and adds that it isn't yet clear whether any employees will be dismissed or reprimanded as a result of the investigation. However, Fortune reports that more than 20 employees were terminated as a result of the investigation: 'The company cited sexual harassment and an array of other behaviors, such as bullying and retaliation, as reasons for the firings'.
According to WSJ, Ms Fowler has not welcomed the recommendations, stating on Twitter that: 'it's all optics'.

Announcement of CEO indefinite absence
In an email to employees from Mr Travis sent this week and reproduced in full the WSJ report, Mr Travis states that the reasons for his decision to take leave are personal (that his leave is partially to enable him time to grieve for his mother) but also to 'work on myself, and to focus on building out a world-class leadership team'. The email also notifies staff that his direct reports will take on his responsibilities during his leave. The email does not provide a return to work date: 'It’s hard to put a timeline on this - it may be shorter or longer than we might expect'.

The WSJ notes that nonmedical leave of absences for CEOs are rare for a company of Uber's size and that 'often leaders don't return.' WSJ notes that Mr Kalanick is 'protected in his position' because of his ownership of a large majority of shares in the company/his share-based voting power. The WSJ also draws attention to the many changes in executive staff since February including the departure of the leaders of operations, marketing, finance, communications and self-driving car development and the fact that company is actively searching for financial and operating chiefs as well as a general counsel.

Resignation of board member David Bonderman following incident at company-wide meeting to discuss recommendations for change
The WSJ reports that Uber board member, Mr Bonderman resigned from Uber’s board hours after he made a disparaging remark about women during a companywide meeting announcing the recommendations of the workplace investigation.
According to the WSJ, in the meeting, Ms Huffington (fellow board member) made the comment: 'There’s a lot of data that shows when there’s one woman on the board it’s much more likely that there will be a second woman on the board.' Mr Bonderman is reported as responding to this: 'Actually what it shows is that it's much more likely to be more talking'.

The WSJ describes Mr Bonderman's exit from Uber’s board as a 'stunningly quick turn of events at the end of a day in which the company laid out plans to reform its work culture in the wake of a former software engineer’s February blog post alleging chauvinism at the San Francisco company'. Mr Bonderman is quoted in the WSJ report as stating in the context of providing a reason for his resignation: 'I directed a comment to my colleague and friend Arianna Huffington that was careless, inappropriate, and inexcusable…The comment came across in a way that was the opposite of what I intended, but I understand the destructive effect it had, and I take full responsibility for that'. Mr Bonderman said in a statement reportedly sent to Reuters that he did not want his comments to create distraction for Uber, which is working to rid its culture of sexual harassment and discrimination.

Reaction to the investigation recommendations and CEO resignation

  • According to WSJ, some investors have 'praised' the recommendations as well as Mr Kalanick's leave on the basis that the company now has opportunity to address negative perceptions.
  • A separate WSJ notes that this issue is one of a number of issues impacting the company at present:
    Uber is facing a lawsuit by Google parent Alphabet Inc over the alleged theft of self-driving car trade secrets, a federal investigation into its business practices (The WSJ reports that Uber has admitted using technology to evade government officials seeking to identify and block its drivers in cities where it faced regulatory challenges) and the department of several executives over recent months.
  • According to the FT were Uber a 'conventional public company…he [Mr Kalanick] would be fired and the directors would hire an outsider who could put in place a stronger leadership team and restore moral authority'. Since Uber is 'neither public nor has a board with the ultimate power to sanction Travis Kalanick, this has not happened'.
  • The AFR states that 'Uber clearly has a sexism problem but political correctness won't fix its woes'

[Source: Susan J Fowler: reflecting on one very, very strange year at Uber February 19 2017; Statement on Covington & Burling Recommendations 13/06/2017; SMH 12/06/2017; Reuters 12/06/2017; Reuters 14/06/2016; FT 13/06/2017; 14/07/2017; WSJ 12/06/2017; 13/06/2017; 07/05/2017; ABC 14/06/2017; ABC 14/06/2017; The AFR 15/06/2017; Fortune 14/06/2017; 14/06/2017; 11/08/2015]