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Uber’s Halfway Point: From Animal House To IPO

By Richard Levick, Forbes

Actions count more than words.

No corporation – especially one of Silicon Valley’s most iconic brands – wants to be confronted with charges that it has harbored an “Animal House” workplace hostile to women. Nor does a California–based company’s human resources function – the very services that are supposed to distinguish it from the rest of the cold corporate world – want to be accused of corrosive behavior that borders on the Neanderthal.

Yet that’s what happened to Uber when a female engineer, Susan Fowler, leveled explosive sexual harassment charges against the company and the New York Times followed with an equally damaging investigation. These toxic headlines came just weeks after the #DeleteUber movement went viral following the company’s oddly tone-deaf initial response to protests against President Donald Trump’s Muslim travel ban and the CEO’s apparent eagerness – since rescinded – to serve on a Trump business advisory council.

Ms. Fowler’s allegations triggered a chain reaction, including high-level dismissals, a public vow from Uber CEO Travis Kalanick to overhaul the company’s culture, the empowerment of the Uber’s board’s most prominent female member – Arianna Huffington – to hold the leadership team accountable, and the retention of former U.S. Attorney General Eric to conduct a purportedly no-holds-barred investigation.

Make no mistake: Kalanick and company are up against it. A group of Uber investors are already skewering Holder for his lack of independence, assailing the integrity of his probe, and questioning the company’s capacity to institute change.

So has Uber gone about its housecleaning the right way? Is it taking the essential steps to cleanse its culture and restore its brand integrity, especially among investors, female executives, and the millennials who see Uber as their creation, a manifestation of the way “new” technology is transforming the “old” service economy?

The Times’ piece illustrates the depth of the hole that Uber has dug for itself. Only time and the rehabilitation of Uber’s reputation (and market share!) will tell, but early signs point toward the positive. Since the bombshell hit, they’ve made the right recuperative moves; more impressively, they’ve made them in a hurry, wisely using a three-day holiday.

“Hurry” is central to the Uber story. In a few short years, it has gone from a start-up with a frat party ethos to a formidable multinational, a maturation process that, not surprisingly, has carried with it some thorny challenges. Early on, it sadly confused a circle of male buddies with the mature professionals needed to run a global enterprise.

It is never easy for a founder to bring in new leadership as corporate growth outstrips skills, but loyalty alone should not be confused with wisdom. The litany of past bad acts makes clear that no matter how smart Kalanick may be as an entrepreneur, he looked the other way when male supervisors engaged in execrable conduct that would have gotten them thrown out of Delta House.

Either out of ignorance or fear of reprisal, Uber’s human resources function abdicated its responsibility. So did senior management.

Kalanick acknowledged as much when he promised to be far more proactive and transparent in revamping Uber’s culture and in authorizing an “urgent” and “independent” investigation. It was a good first step – a powerful message well communicated, if albeit a bit of a rerun.

Still, there’s no doubt that the two initiatives Kalanick and his team launched over the long weekend helped mitigate the harsh media narrative, changing the headlines from “company out-of-control” to “company seeking to get house in order.” Both could ultimately prove pivotal in enabling Uber to surmount the crisis.

Kalanick gave board member Huffington, founder of The Huffington Post, the authority to “hold the leadership’s team’s feet to the fire” in stamping our harassment and creating a healthier work climate. Ms. Huffington’s comments after meeting with Kalanick and Uber’s new human resources head reflected the gravity of the situation and the company’s resolve to fix it: “Travis spoke very honestly about the mistakes he’s made – and how he wants to take the events of the last 48-hours to build a better Uber.  It was great to see employees holding managers accountable.”

Uber’s strategy is clear – tapping Huffington’s credibility and gender to help them acknowledge their mistakes and begin turning the page. In the coming months, the message Uber needs to repeatedly convey, through company spokespeople and respected third parties, is: “It’s a new day here. That was then. This is now.”

But the ultimate test for Uber will come with Holder’s report, which must be seen as genuinely independent and forthright, with no interference from the Kalanick leadership team. Holder must be given the authority and latitude to leave no stone unturned.

An “Open Letter to the Uber Board and Investors” written by a pair of angel investors, Mitch and Freada Kapor, points to Uber’s deplorable track record on workplace civility issues. It also reveals why so many company observers are cynical about the role of Huffington and Holder.

“Uber’s outsize success in terms of growth of market share, revenues and valuation are impressive, but can never excuse a culture plagued by disrespect, exclusionary cliques, lack of diversity, and tolerance for bullying and harassment of every form,” the Kapors wrote on February 23. “We are disappointed to see that Uber has selected a team of insiders to investigate its destructive culture and make recommendations for change. To us, this decision is yet another example of Uber’s continued unwillingness to be open, transparent, and direct.”

The Kapors aren’t alone. Susan Fowler is addressing many of the same questions. Her blog, a popular destination for Uber employees and detractors, gives her a strong platform to engage reporters and shape the issues governing the company’s handling of the investigation. Her latest post posits that some people are indeed capable of change, but others, given their prejudices and lack of self-awareness, are not. It’s a smart and ironic commentary sure to keep the controversy alive.

Fowler will no doubt continue to define the terms of the debate as she seeks to light the path toward a more enlightened American workplace.

Clearly then, the onus is on Uber to demonstrate that its commitment to a new day is genuine. One weekend does not a crisis recovery plan make. Holder’s investigation and subsequent report may well be make-or-break.

Uber is not only going to need to engage in a series of constructive and conciliatory actions, it must make a meaningful sacrifice to demonstrate its remorse and win back the confidence of its constituents.

As Jonathan Puth of Correia & Puth, PLLC, a Washington DC law firm that represents sex harassment plaintiffs puts it, “Susan Fowler put a spotlight on sex harassment in an industry that is not just male dominated but has exaggerated regard for pace of innovation at the expense of valuing women. They appear to be doing the right thing, but Uber has a huge hill to climb to hire more women, create a culture open to airing complaints of discrimination, while protecting employees from reprisal of any kind.”

One way for Uber to show that it now “gets it” is to hire more senior female executives and to encourage more young women to pursue careers in the computer sciences and engineering. Uber should consider working with Bay Area colleges and secondary schools to break down the academic and social barriers that discourage women from studying engineering and the sciences. It can lead the way in Silicon Valley by funding studies, endowing scholarships, engaging in school partnerships, and making itself more accessible to school and community groups.

Given the disquieting revelations that have surfaced, Uber’s corporate social responsibility programs must run much deeper and longer than most. The frat party days are over.

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Read the article on Forbes here.

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