What boards can learn from Uber’s culture woes

The well-documented cultural problems at ride-sharing behemoth Uber has highlighted the importance of corporate culture.

In seven years, Uber has exploded into a $70 billion business that operates in more than 70 countries, but that stratospheric success has now been overshadowed by the plague of bad publicity exposing its festering corporate culture. Under mounting pressure from investors over his leadership, Uber’s co-founder and chief executive Travis Kalanick stepped down from his post on June 21. Kalanick, 40, had faced increasing scrutiny over his management style and his own behaviour, which included being filmed arguing with one of his drivers. Shortly before Kalanick stepped down, Uber’s chief human resources officer Liane Hornsey had sent a company-wide email stating, “Our values define who we are, and how we work ... and some need to change.”

News of Uber’s troubles broke in February when a former engineer, Susan Fowler, posted a blog detailing a history of discrimination and sexual harassment at the company. Following Fowler’s post, The New York Times ran an article titled ‘Inside Uber’s Aggressive, Unrestrained Workplace Culture.’ The article said interviews with more than 30 current and former Uber employees, as well as reviews of internal emails, chat logs and tape-recorded meetings, “paint a picture of an often unrestrained workplace culture.” Accusations detailed by the paper include sexual assault, a director shouting homophobic slurs, and a manager threatening to beat an underperforming employee’s head in with a baseball bat.

“The most obvious narrative about Uber is that failing to focus on culture creates business risk,” says Peter Haasz, Vice President of Business Development and Product Marketing at Culture Amp, an Australian employee feedback and analytics platform. “The lesson to be drawn is that culture is not soft and fluffy; it is something you need to build and manage with a specific purpose in mind. After all — who creates a company's products, delivers on its brand promises, and makes most important decisions? The people.”

Haasz says companies need to build employee feedback into everything they do in order to ensure a healthy corporate culture. “What this means is commitment throughout the organization to repeated cycles of collecting candid employee feedback, understanding what it means, and taking effective action at scale,” he says.

Since 2011, Culture Amp has worked with over 1000 companies around the world including brand names such as Slack, Airbnb, Estée Lauder, Adobe, Pixar and Nike. “Companies like Slack believe that if they take a deliberate and evidence-based approach to putting culture first in their business decisions, they will achieve a sustainable, long term unfair advantage over their competitors,” says Haasz. “In other words, culture is hard, but if you get it right, everything else gets a lot easier.”

Dawn Sharifan, Head of People at Slack, said they fundamentally believe that their culture is their competitive advantage. “It is what allowed us to pivot from a failed gaming company into the fastest B2B SaaS company ever,” says Sharifan.

When it comes to creating a healthy corporate culture, it has to start from the top, says Lysarne Pelling, corporate culture policy lead at the Australian Institute of Company Directors. “The reality is culture does start at the top, the board needs to set the tone from the top, and it’s essential,” says Pelling. Sitting at the top of a governance apex for an organisation, the board needs to set and model the values for the organisation to the extent that they can, given that non-executive directors are part-time.

Pelling says a board does this in a number of ways, including role modeling in terms of how board members carry themselves in their own dealings. Appointment and oversight of the CEO is another big factor. “The CEO is obviously enmeshed in the culture and drives it so that is a pivotal decision in terms of the board making sure that the CEO is aligned with the espoused values and that they monitor to make sure he/she walks the talk,” says Pelling.

Now with Kalanick stepping down, the board’s decision in selecting the new CEO will send a message to Uber’s employees, its drivers, its users and its investors about the type of culture the share-riding behemoth is trying to create. The stakes for the company could not be higher.