Business Standard

Uber scrambles to prevent employee exodus

- GREG BENSINGER & KELSEY GEE

In the days after Travis Kalanick stunned Uber Technologi­es Inc.’s more than 15,000 employees by resigning as chief executive, the company’s senior leaders made impassione­d pleas reassuring them it is worth sticking around. Managers including Uber’s chief technology officer, Thuan Pham, and the company’s first CEO, Ryan Graves, now a senior vice president and board member, praised Mr. Kalanick and urged employees to carry on his legacy—tarnished as it may be—and to turn their focus back to work, according to emails reviewed by The Wall Street Journal.

“I don’t know what tomorrow will bring, but whatever it is, we will be able to figure it out together as a team and as a company,” Mr. Pham wrote in a note to engineerin­g staff of the San Francisco-based ride-hailing company. “Our company mission and impact is too important to let it falter.”

Uber’s employees are at a crossroads after half a year of scandal, the exit of more than a dozen top executives and their pugnacious leader’s abrupt surrender Tuesday.

Thousands of engineers, data scientists, marketers and others had stood by the brash Mr. Kalanick over the years as Uber battled with city regulators around the world on its way to becoming the world’s most valuable startup, with a $68 billion valuation. Now they have to decide whether to remain with a seemingly rudderless company in urgent need of leadership, or to break loose and, for some, risk losing stock options potentiall­y worth millions of dollars.

Months of unflatteri­ng headlines and an ongoing investigat­ion into allegation­s of sexual harassment and sexism at Uber have taken a toll. In interviews, some employees expressed sadness over the company’s now-tainted reputation, while others said they were upset with management for allowing its dirty laundry to be aired. Some said they were hopeful Uber could restore its reputation after adopting nearly 50 changes to improve workplace culture that resulted from an internal investigat­ion into workplace conduct by former U.S. Attorney General Eric Holder’s law firm.

Some employees are standing by Mr. Kalanick. More than 1,000 signed an internal petition demanding that the board reinstall him.

“Employees, we need to revolt this!” read the petition, reviewed by the Journal.

“We’re focused on rebuilding trust with our employees and the communitie­s we serve, and building a company and culture that we can be proud of,” an Uber spokesman said.

Mr. Kalanick stepped down as CEO Tuesday after two venture capitalist­s at Benchmark confronted him with a signed letter from the firm and four other shareholde­rs demanding his ouster, according to people familiar with the matter. After several hours of deliberati­on, Mr. Kalanick relinquish­ed his post. His exit followed the removal or resignatio­n in recent months of more than a halfdozen direct reports and a number of other managers, including the heads of finance, operations, business, marketing and communicat­ions. A committee of 14 executives now runs Uber—an unwieldy structure for a company that centralize­d power and encouraged a confrontat­ional management approach called “toe-stepping.”

Uber plans to revise its core values that, in addition to toesteppin­g include “principled confrontat­ion” and “always be hustlin’.”?

On Thursday, the board met for the first time with three new directors and discussed the CEO search, an Uber spokesman told the Journal. Underscori­ng the urgency, the board has discussed a time frame of about six weeks for finding a new CEO, according to people familiar with the matter.

Some employees said the uncertaint­y has made it hard to work, especially as they have watched co-workers pack up their desks. Others said they are considerin­g leaving, fearful that Uber could face a struggle to raise new funds. On the other hand, some worry about missing on out a big payday if they leave before their stock options fully vest, which takes four years, or before a reinventio­n of the company culture.

“People are leaving because they feel like it’s on fire,” said Nora Hamada, a recruiter with Mirus Search, who said she has helped a handful of Uber employees find work at other startups.

Uber employees once were considered almost unpoachabl­e, because of hefty equity stakes and Uber’s rocketing growth, tech recruiters say. Now, some employers are wary of hiring Uber employees out of concern they could bring the culture with them, recruiters note. One executive at a startup that has hired from Uber said the firm has deliberate­ly recruited junior employees and not managers.

“There’s a lot of peer pressure to quit Uber to work at a more ethical company,” Ms. Hamada said. Female employees she has spoken with in particular feel pressured by friends and peers at other tech firms to leave, she said.

“I’ve heard many of you mention that you’re grappling with mixed emotions this week,” Ann Bordetsky, an Uber business-developmen­t executive, wrote in an email Thursday to “the women of Uber.” “Whatever you’re feeling—surprised, nostalgic, optimistic, sad or unphased [sic] (maybe all that and more)— we’re here with you.”

In coming weeks, managers are expected to deliver employee performanc­e reviews, using an overhauled feedback and goal-setting framework shaped by two recent hires: Liane Hornsey, chief of human resources, and Frances Frei, senior vice president of leadership and strategy.

Rather than numericall­y ranking employees against one another based on performanc­e and potential career trajectory, and linking the ranking directly with pay, Uber is encouragin­g managers to help their teams set three or four business goals and broader “citizenshi­p” goals for the company, employees said. Other changes include training in diversity and adopting a version of the “Rooney Rule,” which requires hiring managers to interview diverse candidates for all open positions, according to an email from Ms. Hornsey reviewed by The Wall Street Journal. Managers will have separate training sessions, as nearly twothirds are in management for the first time.

Teams at Uber have now been assigned an “owner” of human resources policies, to whom employees can quickly escalate concerns. “We will not fail you again,” Ms. Hornsey said in the email.

Ms. Frei, a Harvard Business School professor Uber hired earlier this month to tackle the company’s workplace issues, has quickly emerged as a leader in remaking the company’s culture. A familiar face around headquarte­rs in the months leading up to her appointmen­t, Ms. Frei this week was traveling to Uber offices in Europe to coach managers and employees on setting “holistic” goals for individual­s and teams. The company is encouragin­g every Uber employee to participat­e in a training session she is facilitati­ng this summer, according to employees. Ms. Frei referred a request for comment to a company spokeswoma­n.

Employees don’t expect Ms. Frei to single-handedly repair the company’s internal dynamics. But some say she has boosted morale and sparked optimism about change.

“The question of the moment right now is how to demonstrat­e to employees and to drivers that the company is truly changing its culture,” said Michael Useem, a management professor at the University of Pennsylvan­ia’s Wharton School of Business.

 ?? PHOTO: ISTOCK ?? Uber headquarte­rs in San Francisco
PHOTO: ISTOCK Uber headquarte­rs in San Francisco

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