Uber CEO Will Have Less Power After An Internal Investigation

Travis Kalanick

Mike Blake / Reuters

An internal investigation into Uber's culture recommended that chief executive Travis Kalanick release some of his iron grip on the company, that the ride-hail giant hold its senior leaders accountable, and that it create an ethics committee, among many other suggestions.

These recommendations, which were made public Tuesday, were unanimously approved by the company's board at a meeting on Sunday. They are the result of an independent investigation led by former attorney general Eric Holder into allegations of pervasive sexism and sexual harassment at the company, which is valued at nearly $70 billion.

Also on Tuesday, Kalanick announced he would be taking a leave of absence from the company. (Kalanick is grappling with a family tragedy.)

The recommendations include:

• changing Uber's 14 cultural values, which included stepping on colleagues' toes, in favor of a more positive and collaborative environment
• instituting and enforcing guidelines on alcohol consumption and drug use at company events
• prohibiting intimate and romantic relationships between employees who report to each other, directly or indirectly
  
• holding senior leaders accountable, with metrics tied to improving diversity, and responsiveness to employee complaints
• giving Uber's diversity chief more power and instituting blind resume reviews while recruiting. "Uber should utilize the Rooney Rule for women and other underrepresented populations for key positions, wherein each pool of candidates interviewed for each identified position includes at least one woman and one member of an underrepresented minority group."
• creating an ethics and culture committee on the board
• creating a board with more distance from management and install an independent chairperson. The board is currently stacked in Kalanick's favor.
• using pay as a leverage to discipline executives because "that compensation provides a powerful tool for creating incentives for behavior"
• providing more training to managers and leadership on how to be constructive managers
• doing a better job at handling employee complaints – and escalating them. Fowler wrote in her blog post that her complaints were largely ignored.
• reviewing benefits to offer equal maternity and paternity leave to parents
• changing its performance review process to be less dog eat dog and "emphasize goal-setting and individual feedback"
• making promotion requirements clearer
• auditing its pay practices to ensure it is paying men and women equally

Uber launched two internal investigations into its workplace culture in February, after former engineer Susan Fowler published a viral blog post alleging sexism and sexual harassment at the company. The first investigation, led by the law firm Perkins Coie, focused on Fowler’s claims. Uber told employees last week that investigators looked into 215 reported claims about issues related to discrimination, sexual harassment, unprofessional behavior, bullying, harassment, retaliation, and physical security. The company said it fired 20 people as a result. The ride-hail giant also brought on Holder and Tammy Albarrán from the law firm Covington & Burling to create a report on its workplace and culture. The firms interviewed current and former employees.

The results of that report come after the company has dealt with months of unrelenting crises. It is facing a leadership void after the departures of more than a dozen executives, including Kalanick’s close confidant Emil Michael, who left the company Monday. It’s unclear whether he was fired or quit.

In addition to its culture crisis, Uber is facing a damning trade secrets lawsuit from self-driving competitor Waymo, part of Google’s parent company. That lawsuit led the company to fire the former head of its self-driving program.

In March, Kalanick was caught on video yelling at an Uber driver during an argument over fares and apologized. “It’s clear this video is a reflection of me—and the criticism we’ve received is a stark reminder that I must fundamentally change as a leader and grow up,” Kalanick wrote in an apology to staff. “This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.” To help, Uber has been searching for a chief operating officer to serve as a No. 2 to Kalanick. That search is still underway.

Leadership has pledged Uber will change. Kalanick told a group of more than 100 female engineers at the company that “I want to root out the injustice. I want to get at the people who are making this place a bad place. And you have my commitment.” Board member Arianna Huffington told reporters during a damage control press call in March the company intends to “make Uber the most admired place to work in.” The company has since implemented a confidential employee hotline, doubled its employee-relations team and put in place a formal system to track employee complaints.

Still, a stream of revelations about the company in recent months has led to questions as to how much Uber can change. Uber investors Mitch and Freada Kapor have since at least 2010 been working to “exert a constructive influence” the Uber’s culture, they wrote in an open letter to the board in February. “We feel we have hit a dead end in trying to influence the company quietly from the inside,” they wrote.

On Tuesday, after the Holder report's release, the Kapors said in a statement that "Today’s report and recommendations are the best signal yet of how they intend to respond."

"The recommendations are both thoughtful and extensive, and we are very encouraged that they have taken this as seriously as we had hoped," they wrote. "Uber’s termination of a number of employees, including some in senior leadership, has also shown sincerity in action, and we are hopeful that their actions will continue to meet the aspirations of this report."

Amid the departures and personnel changes as a result of the internal probes, Uber announced last week that it had hired Harvard Business School professor Frances Frei as senior vice president of leadership and strategy. The company called her "one of the world’s most respected authorities on organizational transformation."