A Challenge for Uber’s Board

by on June 13th, 2017

Today’s article was submitted by Prof. Kevin Sharer.

Uber is a remarkable company that has transformed personal transportation around the world. In the process it has created enormous value for shareholders, provided jobs for thousands including many HBS grads, and upended the status quo. The CEO has pursued an aggressive, take no prisoners approach familiar to many in Silicon Valley. He has made his ambition for the company clear and seemingly boundless and has been a tireless advocate, leader, and example for the company. However, he has created a company that clearly has issues as a place to work and in his own behavior has sometimes not been exemplary. Evidence of the problems abound in executive exits, troubling anecdotes about how women are mistreated, HR indifference to issues, tolerance of “brilliant jerks,” and the CEO’s own sometimes off-putting or even bullying behavior. The combination of these factors and events has resulted in a crisis at Uber such that the board is very seriously assessing the workplace environment and CEO behavior. High profile advisors have been hired, press conferences held, promises made, and CEO mea culpas offered. This would seem an Uber-specific issue with little relevance to the wider world. It is not. Shaping, operating, assessing, and modifying company culture as experienced in the workplace is a key leadership task. We give some attention to culture at HBS, but spend little time on the tasks and processes you as future leaders need to master to be effective in this vital area. So how should Uber’s board or you proceed in understanding cultural reality? You may also need to take steps after the assessment to assure the environment is changed so all staff are treated with respect, given a chance to grow, treated fairly, assessed on merit, and held accountable regardless of rank or status for their own behavior.

The first step is to assess the culture as either defined by what is written or what is described as the aspiration by the CEO and head of HR. Culture is best defined by the written or described expected behaviors and workplace conditions for all staff. These behaviors and conditions usually include being treated with respect, assessment based on merit, diversity goals, teamwork, role model leadership, high quality decisions and work, ethical behavior, and the list goes on. The key at this stage is to decide what is actually expected. In the rare case that the defined or expressed values are wrong, that needs to be addressed first. However in the overwhelming case the expected behaviors and environment are most likely laudable. The problem is likely not what is described but what is actually practiced and the consequences and actions taken when deviations exist. The hard work is moving beyond anecdotes to social data that is reliable, current, and representative. Nothing beats periodic anonymous surveys that ask staff their actual experiences in the workplace. Short of this data, skilled interviewers need to talk to representative groups of current and former employees. Are there employees who have been disciplined for values violations or even fired? Is there a systematic record of handling complaints? Is there an anonymous electronic ombudsman system that is rigorous and effective? What does the data say? The point is that the board needs to move beyond anecdotes and aspirations and penetrate to what is actually happening. The hard work can then start which is deciding what to do.

The first place to look is at the capability, role, and effect of the senior HR leader and HR department. Are they custodians of the values and if so how do they perform this task? Is the HR leader as capable, well positioned, trusted, and powerful as the other C-suite members? Does the HR leader tell the CEO the hard truths – particularly when the CEO is out of bounds? Does the board privately ask the HR leader questions about CEO behavior and company culture? If the HR leader or department are deficient in any of these key tests, this is a real blinking red light when deciding if the culture is healthy.

The next place to look is hiring, promotion, and exit patterns. A male dominated organization with few diverse voices is often a leading indication of latent problems. This is particularly true when the men are young and engineers. This is not to criticize all young male engineers, but the absence of diverse voices in positions of real power is a cause for deeper assessment. Do staff get a free pass for being creative or effective while being abusive or bullying to others? This is a sure sign of an unhealthy culture and cannot be tolerated. Firing a few “brilliant jerks” after they do not respond to counselling can be a particularly good demonstration about what is really expected. This is one of the hardest right things you could be called on to do. Do not fail this test as so many including legendary CEO’s have done.

What to do about a CEO who is fantastic in many ways but is too often not behaving properly? Sadly sometimes these decisions are easy and the CEO must go. More often, it is not so clear. A particularly naïve idea is to hire a COO to “mind” the CEO. COO’s can support a CEO, bring complimentary skills, and take work on. But they will not change a CEO’s core behavior. First, the board has to be serious in both defining what is expected and assuring a fair process exists to assess CEO behavior. Perhaps an executive coach or counselor would help. But fundamentally the CEO must want to be the role model leader the company deserves, in his or her heart likely wants to be, and the board demands.

So what does a healthy culture look like? Expected behaviors are written down, clearly described and taught. The top leaders model the behaviors and unrepentant value felons are shown the door. Moreover, adherence to the values are assessed in surveys, evaluated for individual leaders, and demanded for advancement. The HR leader and HR department are capable and effective custodians of the values with the senior HR leader positioned to tell the CEO and board the hard truths if necessary. Diversity is real and not just aspirational. Staff are treated with respect, assessed on merit, and all groups valued and heard. There are ways to safely express concerns and reports of values violation are handled promptly, seriously, and fairly. The board pays attention to culture as it does to CEO choice, strategy, financial results, compliance, and other critical matters. While many firms have and sustain healthy cultures, too many do not. Fully embrace your duty as a role model leader in creating and sustaining a healthy culture, and take this responsibility as seriously as strategy, results, team selection, and compliance. Your career could well depend on it.

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Harvard Business School Professor Kevin Sharer joined the HBS Strategy unit in the fall of 2012. Before HBS, he was CEO of Amgen for twelve years and before that Amgen’s President for eight. He has served on the boards of directors of Chevron and Northrop Grumman and is currently on the board of Allied Minds. For a decade he was Chairman of the board of the Los Angeles County Museum of Natural History. Professor Sharer is a Naval Academy graduate and has master’s degrees in aeronautical engineering and business.

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