Uber has officially begun what will likely be a long and uphill march toward rebuilding its culture after what's been a disastrous first half of the year for the ridehailing company. As part of the overhaul, CEO Travis Kalanick has announced he's taking a leave of absence and allowing a group of executives to lead the company through the implementation of sweeping changes.
In an all-hands meeting Tuesday, the company presented employees with recommendations from Covington & Burling, the law firm that conducted an independent investigation into the company after former Uber engineer Susan Fowler published a blog post detailing unchecked sexual harassment during her tenure. Uber’s board of directors had committed to instituting all the recommendations during a board meeting a few days earlier.
The Covington report proposes many remedial measures for the $68 billion company, from changes in upper management to better board oversight to cultural changes such as earlier on-site dinners and options to work remotely. Uber has already implemented some changes from a separate internal probe, including the termination of 20 employees who were let go after investigations into sexual harassment, bullying and other types of claims.
In a statement, HR chief Liane Hornsey wrote, “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. While change does not happen overnight, we’re committed to rebuilding trust with our employees, riders and drivers.”
During the all-hands meeting at which the sweeping changes were announced, board member David Bonderman made a remark that highlights the need for a cultural shift. At one point, fellow director Arianna Huffington announced the addition of another female to the board, according to an audio file obtained by Yahoo Finance. "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," Huffington says in the recording.
"Actually, what it shows is that it's much more likely to be more talking," Bonderman replied. The room was "aghast," according to a tweet from New York Times reporter Mike Isaac. Bonderman issued an apology in the immediate aftermath and announced his resignation from the board later Tuesday evening.
The 13-page Covington report can be accessed here. Below is a rundown of some key recommendations; Uber has already taken action on several of them.
A major shift in Kalanick's role
The first recommendation from the law firm is to “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.”
Kalanick (left) officially announced his leave of absence Tuesday in a separate letter to Uber employees. In the memo, Kalanick said his decision to take time off as Uber’s leader is partly personal, as his mother passed away in late May in a boating accident that also seriously injured his father.
He said he’ll use the time—of undetermined length, for now—to reflect on himself and start building a strong leadership team. “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,” Kalanick wrote.
Hire the right COO
The search for a chief operating officer is a clear priority, as the person in that position would help Uber institute necessary changes. The firm said a COO would focus on day-to-day operations, culture and institutions within the company, and that the board should look for candidates that have experience in diversity and inclusion.
In early March, Recode broke the news that Uber had officially begun the search for a COO to partner with Kalanick and help him manage the company, which had already run into the first of its troubles: Fowler’s blog post, the lawsuit brought forth by Waymo regarding self-driving technology, and the departure of several key executives, among other things.
Kalanick’s letter says his direct reports will run the company in his absence. As of the time of the Recode article, the company had reportedly hired a search firm and whittled it down to a few candidates.
Build out board of directors
The report recommends adding board members who are able to exercise independent oversight of the company’s management practices. It also advocates for installing an independent chairperson of the board.
On Monday, Uber committed to adding Wan Ling Martello as a board member, as first reported by Bloomberg. Martello is a Nestle exec and Alibaba director.
The company's board currently consists of three Uber executives and four outside members. In addition to Kalanick, Ryan Graves and Garrett Camp are on the board. Camp, Uber's chairman, founded the company in 2009 before teaming up with Kalanick, and Graves is its SVP of global operations. Because of the way the board is structured, the three of them reportedly have outsized control over the board; their seats carry more voting power than others.
Before the addition of Martello, there were four other board members: TPG founding partner David Bonderman (who resigned Tuesday, as mentioned above), Huffington Post founder and businesswoman Arianna Huffington, Benchmark general partner Bill Gurley and Saudi Arabia Public Investment Fund managing director Yasir Al Rumayyan.
Bonderman's seat is set to be filled by another TPG representive, perhaps partner David Trujillo, who led the firm's original investment in Uber.
Rethink the company's cultural values
Even before Fowler published her scathing blog post, Uber was widely known as an aggressive place to work. The Covington report suggests reworking the company’s values.
Specifically, the report proposes letting go of values that have been used to justify poor behavior, including "Let Builders Build," “Always Be Hustlin’” and “Toe-Stepping.”
One example of a symbolic cultural change is the re-naming of a conference room from the War Room to the Peace Room, per a Bloomberg report.
Review employee benefits and policies
Uber should improve its benefits and policies to attract a more diverse workforce, according to the report. Among the benefits that stand to be reviewed are the company’s parental leave offerings.
Elsewhere in the reports, there are suggestions regarding policies for romantic relationships within the office and guidelines on alcohol consumption. Those policies seem to be ripe for change, especially considering the resurfacing of an email Kalanick sent to employees in advance of a 2013 company party, known as the "Miami Letter." Kalanick has been widely criticized for the unprofessional tone of the letter.
The firm also recommends reworking some of its other policies and practices. The company should, for example, move the on-site catered dinner to an earlier time so it can be used by a wider range of employees and to signal an earlier end to the work day. By the end of the day Tuesday, Uber's HR department had reportedly sent out an email saying several of the cultural recommendations are being put into place—including a dinner that's served at 7 p.m. instead of 8:15 p.m.
We'll keep a close eye on the ridehailing company as it works to institute the recommendations from the independent investigation. For now, here's our previous Uber coverage.