uber investigation

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Uber CEO Travis Kalanick takes leave of absence

Uber released the results of Holder's investigation on June 13.

Jun 13, 2017, 3:26 pm*

Tech

Phillip Tracy 

Phillip Tracy

An investigation into Uber following accusations of sexual harassment in the workplace just wrapped up, and its impact is already being felt.

To quickly recap: In February, engineer Susan Fowler wrote a blog post chronicling pervasive sexual harassment at Uber. Her allegations were followed by posts from female employees who said they experienced the same disturbing treatment.

Uber responded immediately by hiring former U.S. Attorney General Eric Holder of Covington & Burling to conduct an independent investigation into the sexual harassment allegations. As those investigations proceeded, another law firm—Perkins Coie—dug into the company’s history in its own investigation. The firm’s findings resulted in the firing of 20 Uber employees, including Eric Alexander, its president of Uber’s Asia division, according to a report from Recode.

Now Holder’s investigation, which consisted of interviewing more than 200 employees and reviewing a database of 3 million documents, is complete, and Uber’s board of directors have been briefed on its findings. Reports say board directors approved all 47 recommendations stemming from the investigation after they met for a six-hour meeting on June 10.

Here is what we know about the findings of the investigation, and how they will impact the ride-hailing giant.

Travis Kalanick takes leave of absence

The beleaguered CEO has been the subject of several controversies over the last few months, some of which are being looked into by Perkins Coie to determine if he helped create a “party” atmosphere at Uber, according to Recode. First was a video of Kalanick belittling his Uber driver. Then there was the testimonial by Kalanick’s ex-girlfriend describing a company trip to an escort bar in South Korea where Uber execs allegedly chose women out of a lineup. The most recent controversy stems from the release of a letter written by Kalanick outlining rules for having sex with other employees at a company party in 2013.

Kalanick confirmed he will be taking a leave of absence to grieve the death of his mother, according to a company-wide email obtained by Recode.

“I need to take some time off of the day-to-day to grieve my mother, whom I buried on Friday, to reflect, to work on myself, and to focus on building out a world-class leadership team,” Kalanick wrote.

The Uber CEO and co-founder did not give a timeline for his absence.

“It’s hard to put a timeline on this—it may be shorter or longer than we might expect. Tragically losing a loved one has been difficult for me and I need to properly say my goodbyes.”

Kalanick said if “Uber 2.0” is to succeed, he needs to work to make “Travis 2.0” the leader the company needs.

No specific names were given as to who might take over during his absence. Kalanick wrote, “During this interim period, the leadership team, my directs, will be running the company.”

Emil Michael leaves the company

Uber’s second-in-command and one of CEO Travis Kalanick’s closest confidants has left the company after the board recommended his removal, according to the New York Times. Michael, Uber’s head of business, was involved in two incidents of alleged misbehavior. Those two specific incidents were not disclosed, but he has been the subject of controversy in the past.

In March, Kalanick’s ex-girlfriend Gabi Holzwarth spoke with the Information about a trip she took with Uber executives to an escort bar in South Korea. Holzwarth said she was told by Michael to lie about the outing.

“I just want to make sure that if this story comes out,” that Holzwarth would say they went to karaoke and “had a good time,” Michael said, according to Holzwarth.

Michael was also embroiled in controversy when he suggested it was OK to dig up dirt on journalists who write negative press about Uber.

It’s not clear at this time whether he left the company or was fired.

“I signed on this company nearly four years ago, and it has truly been the experience of a lifetime helping Uber become the fastest growing company of all time—spanning 75 countries with over 14,000 employees,” Michael wrote in an email, according to the New York Times.

Holder report recommends adding an oversight committee, independent board members, and a chairperson

The Holder report recommended the company add more independent board members. Uber is reportedly planning to appoint Wan Ling Martello, an executive vice president at Nestle.

The report also says Uber should install an independent chairperson to the board and create an oversight committee that can “oversee Uber’s efforts and enhance a culture of ethical business practices, diversity, and inclusion within the organization.”

Uber will search for COO to decrease Kalanick’s influence

According to Bloomberg, Uber’s board will strip Kalanick of some duties and limit his influence on the company by appointing a COO to take over his responsibilities.

Here is the official recommendation given by Covington:

“The Board should 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. The search for a Chief Operating Officer should address this concern to some extent.”

This new chief operating officer would “act as a full partner with the CEO but focus on day-to-day operations, culture, and institutions within Uber.”

The investigation findings include recommended character traits for the future chief operating officer (COO).

“Some of the skills and experiences the Board should look for in a COO include: candidates with backgrounds in diversity and inclusion and candidates who are themselves diverse; candidates with experience dealing with organizations that have complicated labor and operational structures; and candidates with experience in improving institutional culture.”

Uber to create performance reviews for top executives

This effort would hold leaders accountable for their actions and overall performance. The review would include metrics that relate to improving diversity, responsiveness to employee complaints, employee satisfaction, and compliance.

The report says the board could consider incorporating a compensation system to hold senior leaders responsible.

Uber will increase the profile of its head of diversity

Covington recommends Uber increase the role and visibility of Bernard Coleman, the company’s head of diversity. It says the head of diversity role should be renamed “chief diversity of inclusion officer,” and that he should report straight to the CEO and COO.

The executive should send updates to employees about Uber’s diversity efforts and outreach programs, as well as serve as a resource for senior management.

Uber will rewrite its 14 core values

Covington argues Uber’s core values should be more inclusive and reflect positive behaviors. It says the company should work with a third party to rewrite the values with influence from its employees. It specifically recommends eliminating some of its previous values, including “let builders build,” “always be hustlin’,” “meritocracy and toe-stepping,” and ‘principled confrontation.”

Uber will enact mandatory training for senior management, human resources, and managers

A big chunk of Covington’s report recommends Uber require training for its employees. It specifically outlines how Uber should create programs for key senior management, human resource employees, and managers.

“Sufficient time and resources should be devoted to both the selection of the consultant and the training itself. This training can be done as either standalone training, or as part of broader leadership coaching and training.”

Uber to expand its diversity efforts

More than two pages of the report revolve around improving diversity within the company. A few of the main recommendations include: establish an employee diversity board, regularly publish diversity statistics, target diverse sources of talent, and use blind résumé review.

Holder recommends ways to figure out why everyone is leaving Uber

The investigation results devote an entire section to recommending methods for determining why the company has such a high employee turnover. It advises the company to hire a consultant and undertake internal surveys to address attrition that is “higher than expected.” Another method would be to conduct exit interviews to hear from former employees on why they are leaving the company.

Holder wants Uber to address employee practices including alcohol consumption, rules for relationships with coworkers, and discrimination policies

In a section titled, “Changes to employee policies and practices,” Covington outlines ways Uber can create a less aggressive environment in the workplace. It starts by recommending that Uber update its discrimination and harassment policies to make it clear that misconduct is not allowed.

“Uber should consider adopting a zero tolerance stance for violations of the anti-harassment, anti-discrimination, and anti-retaliation policies no matter the level or performance of the perpetrator.”

Uber was also advised to create guidelines for workplace relationships that would prohibit any type of romantic or intimate relationship between individuals in a reporting relationship.

Holder’s report wants Uber to prohibit the consumption of alcohol and controlled substances during core work hours and to limit the budget available to managers for alcohol purchases. In what sounds like a direct jab at Kalanick’s “Miami letter,” Covington says Uber should support work events that do not emphasize alcohol.

Uber to review pay practices to ensure equal compensation

Covington ends its report by recommending that Uber audit and review its practices to ensure its compensation practices are based on business-related reasons. It says members of the senior management and Compensation Committee of the Board of Directors should work together to review the audit done by an outside law firm.

We will update this article as we receive more information.

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*First Published: Jun 12, 2017, 4:07 pm