Exposé at Uber o≠ers a lesson of the times
Even the hint of a toxic workplace can be a liability for companies
Corporate culture has long been the sort of squishy management consultant term that’s hard to define, even harder to change, and the recipient of lots of lip service yet little action by chief executives.
But however amorphous the term may be, its importance was stamped into stark relief this week after a former female Uber engineer made allegations about a sexist, chaotic and aggressive culture — “a game-of-thrones political war,” she called it — at the Silicon Valley company in a deeply unsettling blog post about her experience there.
The viral essay spawned devastating follow-up stories by journalists about the company’s “Hobbesian environment” and its “human resources mess.” It revived a #DeleteUber social-media boycott of the ride-sharing app that cropped up after President Trump’s travel ban. On CNBC, one venture capitalist called the allegations “a huge deal” as the company moves toward an expected IPO.
Early Uber investors Mitch Kapor and Fraeda Kapor Klein, who also works on diversity issues in Silicon Valley, penned an open letter Thursday saying they are “disappointed and frustrated,” and “concerned that the company
will try to manage its way past this crisis and then go back to business as usual.”
More and more, stories depicting aggressive corporate culture are both the source of fascination in a social-media world and a potential reputation risk that goes well beyond what a company’s current employees and future recruits think of it. Uber is just the latest example. The fake accounts scandal at Wells Fargo laid bare a toxic sales environment fueled by high-pressure sales goals. A widely read story about Amazon’s hard-charging corporate culture in the New York Times in 2015 prompted pushback from the company months later. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)
A company’s culture has long been an underlying actor in any story about its successes, its struggles or its failures. (Enron, anyone?) But human resources and corporate reputation experts say that shifting expectations of consumers and employees, the role of social media and increasing interest from investors in corporate culture have driven the topic to the forefront, making exposure of a company’s “how we do things around here” approach more salient and precarious than “People and analysts, in particular, are starting to say how a company treats its employees needs to be factored into valuations of the company,” said Brian Kropp, the human resources practice leader of the consultancy CEB. “A lot of them are starting to look at this issue and say that’s going to have material impact on the company.”
Social media is a big driver. A blog is what allowed Susan Fowler, the engineer who described the “strange, fascinating and slightly horrifying” experience of her year working at Uber, to share her story, and then social-media outlets like Twitter, Facebook and other viral platforms amplified it. (Fowler alleges that she was propositioned by a manager soon after starting and that the HR department repeatedly protected high performers when she and others complained.) Meanwhile, sites like Glassdoor.com give anyone with an Internet connection the chance to offer unvarnished reviews of what it’s like to work for a company as easily as they’d review a movie.
That makes it harder for companies to stay ahead of any negative impressions online. “You’ve got to respond quicker,” says Bob Sutton, a professor at Stanford’s Graduate School of Business. “It’s higher-risk and harder to control it used to be.”
Expectations by employees and consumers, meanwhile, have also shifted. About a decade ago, companies began cultivating what they called their “employment brand” — the image in the minds of potential recruits of what it’s like to work at that company. But since then, the “employment brand and the product brand have become really enmeshed, and they’ve all become part of one bigger story,” Kropp said. “What you see is a lot of companies starting to use their HR policies to influence what their corporate brand looks like.”
In other words, they don’t just care about what employees and recruits think about what they’re like to work with. What consumers — who increasingly want to do business with companies that share their values — think about their culture matters a lot, too. Another factor: The rise of subscription-based purchases for cellphones, Netflix, services like Birchbox and more means people evaluate who they buy from differently. “When it comes to purchase decisions, which look more and more like relationships, people think more and more about long term,” says Anthony Johndrow, the chief executive of a reputation advisory firm in New York.
That’s why companies are givever. ing new HR policies — extended maternity leave, for instance, or weekends-off policies for junior bankers at Wall Street firms — the kind of PR push traditionally reserved for new products. It’s also why they’re more wary than ever about negative exposés of their company’s culture.
Research has shown that consumers don’t need to experience bad treatment themselves to think twice about buying from a company. Christine Porath, a professor at Georgetown’s McDonough School of Business, found in lab experiments that when customers witness uncivil behavior between two employees, “not only do they think badly of those employees, but they generalize really dramatically to the organization and the brand,” she said. Just 20 percent of participants in her study said they would do business with the firm again, she found. “They’re very unforgiving with respect to this.”
Investors are also more focused on culture. Kropp recently released a report showing a surge in discussion by chief executives and analysts during earnings calls about a company’s talent, with organizational culture being first on the list of topics. Between 2010 and 2016, the rate of companies making references to organizational culture in earnings calls went from 19 percent to 29 perthan cent, his research found.
Analysts Kropp interviewed told him that companies that had a better grasp of how their employees were doing were more successful navigating the financial crisis, which spurred their interest in more closely tracking the issue. “Whether or not you care about your employees has really started to become a big differentiator in how analysts are thinking about valuations,” Kropp said.
He says that could be a factor for Uber, which is reported to have a nearly $70 billion valuation and is expected to go public in 2018. “My guess is investors are taking a step back and saying those are real risks,” Kropp said.
In an emailed statement, Uber’s chief human resources officer, Liane Hornsey, who recently started at the company, said it was “totally committed to healing wounds of the past and building a better workplace culture for everyone.” The company’s chief executive, Travis Kalanick, known for being pugnacious, appears to have taken on a more humble tone, tweeting after Fowler published her post that “what’s described here is abhorrent & against everything we believe in,” apologizing to employees in an emotional all-hands meeting this week and saying in a memo to employees that “it’s been a tough 24 hours.”
The company has brought in former U.S. attorney general Eric H. Holder Jr. to conduct an internal investigation, and board member Arianna Huffington said she would “hold the leadership team’s feet to the fire.”
It’s unclear how much of a hit Fowler’s post — and the attention it’s brought to Uber’s culture — will ultimately have on the company’s reputation. However unnerving it may have been for some consumers to read the New York Times’ account of Amazon’s culture, the company was recently rated the most reputable company in the United States among visible companies in the Harris Poll.
Johndrow said corporate reputation is less likely to take a hit if consumers don’t feel the effects directly, as they did with the Wells Fargo scandal. The biggest reputation risk for Uber, he said, will be its ability to attract and retain the best employees in the fallout of the most recent news. But consumers may not be far behind. The repeated bad headlines, he said — from the chief executive’s reference to “boober” to what people misperceived as an effort to profit after Trump’s travel ban — means for some consumers, “we’re nearing the 1,000th cut.”