News  |  Business

Uber CEO Travis Kalanick takes leave amid sweeping changes at company

Uber CEO Travis Kalanick takes leave amid sweeping changes at company
Uber CEO Travis Kalanick speaks to students during an interaction at the Indian Institute of Technology (IIT) campus in Mumbai, India, January 19, 2016. REUTERS/Danish Siddiqui
UBER embarked on a massive corporate overhaul Tuesday in an attempt to rehabilitate one of the technology industry's most visible, valuable and controversial companies as it struggles to emerge from months of scandal.

Out - at least for now - is brash chief executive Travis Kalanick, who is taking an indefinite leave and, whenever he returns, faces diminished power within the company and on Uber's board of directors, which is adding several new "independent" members and diluting his authority.

But even as the company took steps to signal its seriousness in combating sexual harassment and other unprofessional conduct, David Bonderman, a billionaire businessman on Uber's board, made a quip about women at a company-wide meeting Tuesday that stunned many in the audience.

As fellow board member Arianna Huffington spoke of the need for more women on Uber's board, Bonderman interrupted to say that would make it "much more likely there'll be more talking" at meetings. He later apologized to Huffington and in an email to employees in which he acknowledged the joke was "inappropriate."

The gaffe marred what was otherwise a carefully managed rollout of 47 recommendations by former U.S. attorney general Eric Holder, who along with colleagues at the law firm Covington & Burling spent months investigating Uber's corporate culture. The board adopted all the recommendations Sunday and announced them in Tuesday's meeting to Uber's 14,000 employees.

The moves require a tricky balancing act for a company that, only a few months ago, was among the most widely studied and emulated in the tech industry for its ability to upend an entrenched business model while building nearly $70 billion in investor value.
Yet many of its strengths - a hard-driving culture built by a chief executive determined to surmount any obstacle as the company spread to 75 countries worldwide - contributed to a corporate culture that underscores Silicon Valley's broader struggles with diversity and the treatment of women.

"The ultimate responsibility, for where we've gotten and how we've gotten here rests on my shoulders," Kalanick wrote in an email to employees. "There is of course much to be proud of but there is much to improve. For Uber 2.0 to succeed there is nothing more important than dedicating my time to building out the leadership team. But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve."

In describing reasons for the leave, Kalanick also cited the death of his mother and serious injury of his father in a boating accident last month.

Stripping some of Kalanick's authority is the first of the 47 recommendations from Holder and his team, which received input from employee polls, focus groups and hundreds of individual interviews.

Though the company has withheld from the public the full text of the report, the changes announced Tuesday signal that contemporary corporate norms of employee behavior were flouted at Uber with impunity.

"The goal is to enforce a zero tolerance policy toward any kind of abusive behavior - whether it's sexual harassment, discrimination, bullying, or any kind of unprofessional behavior," Huffington said in a statement to The Washington Post. "And as I've said again and again, no brilliant jerks will be allowed, and no one will be protected because they are top performers."

The changes run the gamut, including new hiring practices, efforts to improve diversity and new reporting requirements to handle harassment complaints. The report called for a ban on sexual relationships between managers and their subordinates, as well as limits on the consumption of alcohol and a prohibition on using illegal drugs during work hours and at company events.

Employee complaints are to be handled using a comprehensive process, while employee benefits were improved to include equal family leave time for male and female workers.

Even the company's 14 core "values" are getting replaced, because some - such as "Let Builders Build" and "Always Be Hustlin' " - were sometimes "used to justifying poor behavior," according to Holder's report.

Yet the recommendations failed to impress former Uber engineer Susan Fowler, whose February blog post about her experience being sexually harassed triggered the company's decision to commission Holder's report.

"Ha! Yeah, they'll never apologize," Fowler wrote on Twitter in reply to another person. "I've gotten nothing but aggressive hostility from them. It's all optics."

Under the changes announced Tuesday, senior managers will undergo mandatory leadership training, and Uber's position of head of diversity will be renamed as the "chief diversity and inclusion officer" and report directly to the chief executive or chief operating officer. Uber also will adopt the equivalent of the National Football League's "Rooney Rule," requiring that when the company is filling a key job, at least one woman and one minority candidate be interviewed before the hire can go forward.

Reports that Kalanick was considering a leave had sparked speculation over who might lead a company that has been built in the chief executive's image. In his note, Kalanick did not name a temporary chief executive, suggesting instead that he might stay close to operations even while on leave. "During this interim period, the leadership team, my directs, will be running the company," Kalanick wrote. "I will be available as needed for the most strategic decisions, but I will be empowering them to be bold and decisive in order to move the company forward swiftly."

The corporate shake-up at Uber already has prompted several executive departures, including Monday's announcement that Emil Michael, senior vice president for business and a close Kalanick ally and confidant, was leaving amid pressure from the board.

Uber also announced Monday that it was adding a new member, Nestle executive Wan Ling Martello, to one of several empty seats on the board. She is expected to bring financial expertise while also providing another high-profile woman to a company criticized as exemplifying Silicon Valley's male-dominated "bro" culture.

As part of the internal investigation led by Holder, Uber already has fired 20 employees, while issuing reprimands and requiring new training for others amid 215 reports of possible sexual harassment, bullying, retaliation and other unprofessional conduct.

"This is a hugely significant event," said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania. He added that the list of recommendations reads like a textbook from "Leadership and Management 101" and, if implemented effectively, could serve as a model for other Silicon Valley companies grappling with diversity and harassment issues.