Ex­posé at Uber o≠ers a les­son of the times

Even the hint of a toxic work­place can be a li­a­bil­ity for com­pa­nies

The Washington Post Sunday - - BUSINESS - BY JENA MCGRE­GOR

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.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.