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TEAM UBER FINAL PAPER

Xavier Ali - Christina Domanico - Louise Favrot - Adrian Lewis

Introduction

Uber Technologies, Inc. is a San Francisco-based ridesharing company founded in 2009​.

The company’s flagship product, the Uber app, connects passengers with independent

contractors who typically offer their own cars as taxis. The reservation, routing, and payment

processes are entirely digital. In addition to ridesharing, Uber has expanded into food delivery,

bicycle-sharing, and even helicopter rides​.​ Uber is the largest ride-sharing company in the world

by revenue, has generated almost $16.47 billion in gross bookings in the most recent quarter

(​Uber Announces Results for Third Quarter 2019​, 2019). It has completed more than 5 billion

rides and continues to dominate the ride-sharing business (Blair, 2019). Although the company

has grown exponentially within a short amount of time, its success has been marked by many

problems (Blystone, 2019). This paper will be discussing two main issues: the company’s hostile

working environment and the mistreatment of drivers. The former will be analyzed through the

themes of organizational culture and leadership, while the latter will be examined through

organizational structure and motivation.

Hostile Working Environment

Uber has struggled with a hostile working environment for years, which has caused a

multitude of negative incidents within the company. At least three lawsuits from two different

countries were filed in 2016 against Uber from former employees alleging discrimination, sexual
harassment, or verbal abuse at the hands of managers (Isaac, 2017). This issue became public

when Susan Fowler, a former engineer at Uber, unveiled the rampant sexual harassment and

discrimination that happened to her and other employees. To worsen the situation, no actions

were taken even after she reported the incident to the HR department. Fowler attributed this issue

to management, which was constantly competing with one another and would even boast about

undermining their supervisors in an attempt to one-up their peers to move up the corporate

ladder. This practice was commonplace and even encouraged (Fowler, 2017). Fowler claimed

that “the [toxic] culture was stoked — and even fostered — by those at the top of the company”

(Isaac, 2017). Additionally, the Hobbesian environment at Uber also allowed top performers to

bend the rules to achieve results and pitted coworkers against one another. This escalated to the

point where a manager threatened to strike an underperforming employee with a baseball bat and

a director shouted a homophobic slur in a company meeting (Isaac, 2017).

Organizational Culture

The first major contribution to the hostile working environment at Uber is the

unrepresented values within the organizational culture. Organizational culture is “a system of

shared assumptions, values, and beliefs that indicate appropriate behavior and inappropriate

behavior” within an organization (Bauer & Erdogan, 2019). This system needs to be a unique

social and psychological picture of an organization's environment and “fits with the demands of

the company’s environment” (Bauer & Erdogan, 2019). For Uber’s original core values, they

drew inspiration from Amazon, but just because those values attributed to Amazon’s success,

does not mean that it can be easily and successfully applied to Uber. There was an

incompatibility and disconnection issue between the previous core values and Uber’s true values
as a company as well as its employees. Uber’s current CEO, Dara Khosrowshahi, claimed that

“some of them simply did not represent the kind of company we want to be” (Khosrowshahi,

2017). Uber merely emphasized on “hustling, toe-stepping, and meritocracy, and everyone ​used

those values to excuse their bad behavior” (Wong, 2017). ​Furthermore, there was a lack of

communication and socialization on Uber’s core values, which are the two steps that are the most

basic and important things to do at an early stage in order to implement the desired working

environment. Organizational culture will not be automatically instilled in employees’ identity

when they first joined. There is a process to inculcate it and following the steps does not

necessarily mean the culture will be successfully embedded. Organizational culture also requires

time for employees to cultivate it and act accordingly. Failures in these two steps cause Uber’s

core values to be misinterpreted and misused by using each individual’s personal beliefs, which

caused unconformity; what is right for a person may not be right for another person. For

example, “‘Toe-stepping’ was meant to encourage employees to share their ideas regardless of

their seniority or position in the company, but too often it was used as an excuse for being an

asshole” (Khosrowshahi, 2017). Certainly, organizational cultures cannot represent all

individuals’ values, principles, and beliefs, as it is not about each of them. Instead, organizational

cultures should focus on a consensus about the organization and its goals.

Although Uber’s aggressive culture, which values competitiveness and outperforming

competitors, has been able to bring the company to exponential growth and a market valuation of

over $70 billion, the success comes with a cost to the company’s overall working environment

(Bauer & Erdogan, 2019). There were “malicious fights for power, interns repeatedly putting in

over 100 hours a week but only getting paid for 40, discrimination against women, and prejudice
against the transgender community” (Wong, 2017). These matters occurred because the

aggressive culture has a “​win-at-all-cost mentality and resulted in bending rules and, in some

cases, breaking the law” (Bauer & Erdogan, 2019). This mentality also establishes an

unfavorable competition between employees as they would not be able to climb the corporate

ladder unless they overcome other teammates. Coupled with the fierce competition in the market

and ​Uber’s financial conditions that are still showing negative net income even creates more

pressure from the top management to be even more aggressive. Ultimately, this contributed

negatively to Uber’s working environment, and hence, engender a hostile working environment.

To counter the unrepresented and unshared organizational culture at Uber in the future, it

is important to know how cultures are created and maintained. In the creation, founder values

and industry demands are two aspects that should be highlighted to set the foundation, and early

values, assumptions, and goals (Bauer & Erdogan, 2019). Specifically, Uber has to know its

industry characteristics and demand acts, and what is intersecting between them. Then, Uber has

to define the behavior and goals that they wish to achieve with the values that have been

established as “​it allows employees and executives to then translate the values into how they will

do business, serve customers and serve each other” (Franz, 2019). ​Furthermore, do not be

resistant to modify organizational cultures if necessary, yet do not continuously change it. In

other words, if a change is really necessary, construct organizational cultures that can be the

guidelines for all Uber employees, now and in the future. Lastly, in order to maintain it, Uber has

to adopt new employee onboarding, which is “the process through which new employees learn

the attitudes, knowledge, skills, and behaviors required to function effectively within an

organization,” regardless of how new employees rank when they first joined (Bauer & Erdogan,
2019). This can be done through an orientation or mentorship program. We would highly

recommend that this program can be offered to all employees as part of reinforcing,

communicating and socializing organizational cultures continuously.

An aggressive culture does not always entail a detrimental result. There are two things

that should be highlighted to avoid the negative impacts of it to move forward. First is by

establishing a healthy competition through honest performance feedback, “changing the reward

system” and reward the best performance ​(Bauer & Erdogan, 2019)​. Second, is by defining

“win-at-all-cost mentality” clearly. Set boundaries on what costs are allowed and what is too

much. For example, working four hours overtime is acceptable, yet, bribing the government to

get permission on a new project is not allowed. In addition, a leader’s vision and goals can also

contribute to an aggressive culture as well and “culture change often follows changes at the

highest levels of the organization” ​(Bauer & Erdogan, 2019). Therefore, it is important to

resuscitate the leader if the culture has changed to be an overly aggressive culture.

Leadership

Poor leadership at Uber is largely responsible for the poor, hostile work environment that

Uber employees face. Leadership is a huge influence on how a company operates and oftentimes

the CEO and the values that they put in place will set the tone for the entire company. The

leadership at Uber is marked by numerous sexual harassment cases, homophobia, threats,

unprofessionalism, dishonesty, and a lack of accountability.

Managers within Uber are further encouraged to misbehave because they are not held

accountable. When employees such as Susan Fowler report the inappropriate actions of upper

management, their cases go ignored, as human resources often make excuses for top performers
because of their ability to improve the health of the business (Fowler, 2017). A group of such

people was called the A-Team, which composed of executives who were personally close to Mr.

Kalanick, Uber’s CEO (Isaac, 2017). Human resources are meant to facilitate responsibility

within the workplace and in the case of Uber, they turned a blind eye. Uber’s leadership seemed

to think of themselves as untouchable and free from the responsibility for their actions. This

exemplifies the abuse of power (Bauer & Erdogan, 2019).

The toxic leadership at Uber started from the CEO and the aggressive principles that were

enacted at the company’s founding. Kalanick’s ideals encouraged competition, even between

people who were leaders and meant to set examples. The formal leadership of managers had a

negative influence and trickled down to other employees (Bauer & Erdogan, 2019). When Ms.

Fowler unveiled the rampant sexual harassment at Uber, Kalanick denied that he had any

knowledge of it and said that employees reported for sexual harassment would be fired (Kukura,

2017). Yet there is proof that employees, after experiencing a lack of action from the HR

department, had notified the CEO, along with the CTO, Thuan Pham (Isaac, 2017).

Autocratic leadership, where leaders make the decision alone without necessarily

involving employees in the decision-making process can have severe consequences (Bauer &

Erdogan, 2019). Management that does not listen to or acknowledge the concerns of their

employees can be extremely harmful and dangerous. For instance, when Uber’s upper

management was warned that the self-driving cars were not ready to be driven on public roads,

management ignored it. Just days later, their self-driving car had an accident, killing Elaine

Herzberg where the vehicles were being tested (Corbett, 2018). In this case, Uber’s autocratic
leadership style cost a woman her life. This fatal accident could have been prevented, if not for

Uber’s poor management choices.

The five key traits that are correlated with leadership are intelligence, self-esteem,

integrity, extraversion, conscientiousness, and being open to experiences (Bauer & Erdogan,

2019). The leadership at Uber especially lacks integrity. “Research [...] shows that people who

are effective as leaders tend to have a moral compass and demonstrate honesty and integrity,”

which leaders at Uber lack (Bauer & Erdogan, 2019). The management at Uber was especially

lacking in this aspect. A company’s employees should operate more as a team, rather than

competition, yet management undermined their peers and encouraged that everyone under them

to the same.

The leadership style of Uber best fits an achievement-oriented leadership style, which is

defined by leaders setting goals for employees and encouraging them to reach their goals (Bauer

& Erdogan, 2019). This leadership would be effective, but Uber fails to fulfill the second aspect

of this style; focusing on goals and growth, yet failing to encourage employees. The

achievement-oriented leadership style “is likely to be effective when employees have both high

levels of ability and high levels of achievement motivation” (Bauer & Erdogan, 2019). This

leadership style could be effective at Uber, but they fail to motivate their employees in a healthy

way.

Ultimately, it is the responsibility of the CEO and all upper management to set an

example. ​Leadership that matters because it sets the tone on how shareholders, employees, and

consumers of the product/service interpret culture and drive value for the company. People tend

to conform, meaning that they behave consistently with social norms ​(Bauer & Erdogan, 2019).
It would be impossible to blame an individual manager for his actions when it is the company

standard to be aggressive and undermine one another. Uber, as a whole, has a leadership

problem.

W​hile the ​chief executive​ is often the most important player when it comes to setting the

tone for a company’s culture, the management team, the board, company executives and even

shareholders and employees have a role to play. Uber has a structural problem in terms of

company culture, which has ultimately led the CEO to resign. Changing the person who is in

charge does not necessarily ensure success, the leadership structure of the company must also

change as well to ensure that history does not repeat itself. In Uber’s effort for exponential

growth, managers were given too much autonomy and lacked oversight. They should transition

to democratic decision-making, where employees are also involved in the decision-making

process ​(Bauer & Erdogan, 2019); which would prevent future incidents.

Furthermore, they need to ensure that when they are changing who is in a leadership

position, that person is a transformational leader, who aligns employee goals with the leader’s

goals. If Uber employees worked for transformational leaders, this would encourage them to

focus on the company’s well-being rather than on what is best for them as individual employees

(Bauer & Erdogan, 2019). Changing the way in which employees operate and view success is

one way that Uber can prevent such detrimental leadership. They could also institute

achievement motivation and fulfill the latter half of achievement-oriented leadership to make it

effective (Bauer & Erdogan, 2019).

Mistreatment of Drivers

On May 8th, 2019, Uber drivers around the world refused to work for all ride-sharing

services and were able to achieve this feat despite not having a formal union. The strike was

motivated by severe dissatisfaction among drivers resulting from several issues, including

employment status and salary (Campbell, 2019). To fully understand the magnitude of these

problems, which will be explored further, some context on Uber drivers’ jobs is necessary. In

addition to typical work concerns, drivers also face the constant stress of being vulnerable while

on the job. In the past few years, several Uber drivers have been attacked by their passengers;

one recent attack left Joseph McVey, a Sacramento Uber driver, in a medically-induced coma

(Large, 2019). While under this stress, the other problems Uber drivers face are understandably

amplified, and Uber’s apparent lack of care is all the more unacceptable. The direct mistreatment

of drivers is a controversial and increasingly publicized issue that stems from the company’s

organizational structure and motivational failures.

Organizational Structure

The major problem that emerges in the case of the organizational structure concerning

Uber drivers is their status, which appears to be vague and not clearly defined by the company.

Organizational structure refers to how the work of individuals and teams is coordinated (Bauer &

Erdogan, 2019). The company has faced several lawsuits concerning the status of drivers who

are considered independent contractors, not employees of Uber, which is paradoxical given that

the entire function of the company depends on the drivers. Therefore, there is a disconnect

between the drivers and bureaucracy at Uber, whereby workers are separated by their different
statuses (employees vs. independent contractors) and also their physical locations (cars vs.

offices).

The controversy began nationally in 2013, with the case of O'Connor v. Uber, a class

action on behalf of 385,000 Uber drivers hoping to be classified as employees rather than

independent contractors. As a result of this lawsuit, Uber offered a settlement of more than $100

million to the plaintiffs if they agreed to remain as independent contractors, showing Uber's

unwillingness to change the status of their drivers (Hawkins, 2019). Uber is vehemently opposed

to the idea because categorizing Uber drivers as independent contractors is advantageous for the

company, as it allows the corporation to avoid paying drivers the minimum wage. Furthermore,

independent contractors are not entitled to employee benefits such as health and life insurance,

paid time off, and retirement allowance; accordingly, Uber can save a significant amount of

money by not treating drivers as employees. Ultimately, Uber’s settlement offer was rejected by

the judge, but a subsequent law turned the case in Uber’s favor: a law obligating drivers to use

individual arbitration, which meant drivers did not receive true justice.

Furthermore, centralization, the degree to which decision-making authority is

concentrated at higher levels in an organization (Bauer & Erdogan, 2019), is very high within

Uber. Uber has a tall structure in which all the power is concentrated at the top, while employees

at the bottom, namely drivers, have no influence on decision-making. This discrepancy in power

has created a gap between executives and drivers, and has been further reinforced by the debate

on the status of drivers (Bauer & Erdogan, 2019). Additionally, drivers have almost no
autonomy, as they do not have the opportunity to develop morally and achieve goals

independently, which can have an impact on their job satisfaction.

In response to the problematic nature of Uber drivers’ statuses, lawmakers have

attempted to intervene. ​California Assembly Bill 5​, which was signed into law in this September,

aims to force transportation companies to qualify their drivers as employees rather than

independent contractors so they can obtain employees benefits (Marshal, 2019). However, Uber

has stated that this law does not apply to its company as Uber classifies itself as a technology

company and not a transportation company. Uber’s reasoning is that it only operates an

application that connects drivers and passengers, without having control over drivers' working

hours. If the bill were to be applied to Uber, the company would have an estimated additional

cost of $500 million per year or $3,625 per driver, and these costs may increase Uber’s fare by as

much as 20%, assuming executive salaries remain unchanged (Marshal, 2019). It would not be in

Uber’s best interest to consider drivers as employees, which is why they actively resist changing

the status of drivers. In this case, Uber's resistance is particularly underlined; despite the fact that

a law has been passed concerning Uber drivers and their status, Uber categorically refuses to

bend, to the point of arguing to the limit of absurdity, such as categorically denying that its main

service is transportation. Uber demonstrates an active resistance, which is the most negative

reaction to the proposed changes, and this resistance has pushed them to sabotage and

outspokenly object the any procedures, such as ​Assembly Bill 5 (​ Bauer & Erdogan, 2019).
 Moreover, in many cases, Uber has acted as an employer rather than a simple application

linking users and drivers. Barbara Ann Berwick was reimbursed more than $4,000 following a

lawsuit in which she accused Uber of not helping her, whereas for eight weeks she had hardly

any rides and therefore lost money because of external expenses related to the trade, such as car

maintenance and gas (Isaac & Singer, 2015). However, the supposed efforts mentioned above

precisely denounce the major problem of Uber, which hides behind good actions and attempts to

utilize these events to generate good publicity in order to restore the company’s image. Uber

draws attention away to events such as these so that shareholders do not focus on the real

problem: the status of Uber drivers and the organizational structure.

Despite the fact that Uber still refuses to consider its drivers as full-time employees of the

company (even after the vote of a law as in California), and to allow them to benefit from the

advantages associated with this status, some measures have been put in place by the platform to

benefit drivers and the organizational structure. In particular, Uber has improved the driver

experience by designing an Uber application dedicated solely to Uber Pro drivers, with a system

of rewards based on the rides completed during the day. Uber says they are "delighted to reach a

settlement on this issue and continue their efforts to improve the quality, safety, and dignity of

self-employment" (Hawkins, 2019). This motivation method can be likened to motivation

through performance incentives, reward system that tie pay to performance (Bauer & Erdogan,

2019); although this method can be effective, it encourages drivers to focus on their performance

and less on related elements (e.g. passenger well-being) and is a psychological pressure, pushing
them to improve their performance and statistics, by all means, reported by Uber drivers. This is

another way that Uber resists changing the status of their drivers. Uber refuses to do so because

they are focused more so on the bottomline and utilize other “solutions” to avoid treating drivers

like employees, which would be very costly to the company.

Uber is a young company with a start-up mentality; however, its organizational structure

does not reflect this. Uber is a high structure, but also a mechanical structure, characterized by its

similarity to bureaucracy and highly formalized and centralized, rigid and resistant to change

(Bauer & Erdogan, 2019). It limits innovation, creativity, and initiative, which is negative for a

large company such as Uber. Therefore, the company should make its organizational structure

more adaptable, relying in particular on the model of the organic structure, flexible and

decentralized with more fluid means of communication and on boundaryless organizations,

where traditional barriers are removed (Bauer & Erdogan, 2019). This would include making

drivers fully employed by Uber; but also, through a global and radical change within the

company. This change could start with a change of direction, which, as seen in the previous

section, is the cause of many conflicts at Uber.

Motivation

Uber’s failure to create a motivating work environment has also played a significant role

in the mistreatment of its drivers. The issues with the work environment are largely shaped by

the visible dichotomy between the roles of Uber’s leadership and drivers. The company’s

executives have a duty to maximize the value of the company, especially ahead of an initial
public offering, and this involves lowering prices to remain competitive. When these executives

successfully boost Uber’s value, they are compensated generously, with the company’s top five

executives earning about $130 million in salary and equity in 2018 (Cao, 2019); even Uber’s

current CEO believes this is too much. In contrast, competitive pricing causes Uber drivers to

suffer from the aforementioned salary and job security issues despite facilitating the company’s

main service.

When examining the roles of executives and drivers through the lens of the two-factor

theory of motivation, the drivers’ animosity is understandable. Uber’s leaders have created an

environment that is substantially more motivating for themselves than for their drivers. The

company’s leaders are rewarded for their achievements through bonuses and equity, and have the

opportunity to advance up the corporate ladder. Furthermore, their jobs entail the more

interesting and exciting aspects of working for a startup, such as utilizing their creativity and

problem-solving skills to design marketing campaigns and generate demand. Meanwhile, drivers

have no choice but to be concerned about how users rate them, as low ratings can prevent them

from working. Additionally, drivers are understandably worried about their lackluster salaries,

occasionally dangerous working conditions, and a lack of job security, which are all factors that

can and do lead to worker dissatisfaction (Bauer & Erdogan, 2019). For years, these

demotivating factors have plagued the millions of Uber drivers around the world, and in turn,

have contributed to a high turnover rate (Belmonte, 2019).

To amend the mistreatment drivers, which should also reduce turnover and improve

public perception, Uber’s leaders need to rethink how they motivate their employees. As stated,

the current job design for Uber drivers is not motivating, and the discrepancies between drivers
and executives are stark; the equity theory of work may provide a solution. Because rates are

typically fixed, all Uber drivers working for the same service, for the same number of hours,

during the same time of day, and in the same general area, earn the same average hourly wage

(Belmonte, 2019). Therefore, any individual Uber driver comparing him or herself to a similar

driver will feel there is equity in pay.

When Uber executives are the referents, however, there is a clear inequality in the

input-outcome ratio. Despite claiming to be a technology company, Uber’s primary service is

transporting people, a task that is entirely undertaken by drivers. The creation and maintenance

of the app, marketing, and financial management are all important functions, so it is

understandable that the executives in charge of these functions are paid high salaries. It is just as

understandable that Uber drivers may feel like their collective efforts in carrying out the

company’s main function deserve a similar outcome (Bauer & Erdogan, 2019).

To amend this inequity, Uber’s leaders should commit to offering highly-rated, full-time

drivers additional compensation in two forms: stock options and yearly bonuses. As a result, as

Uber drivers create value for customers, which in turn can increase the overall value of the

company, they receive proportionate compensation in addition to their hourly wages. Moreover,

these yearly bonuses should increase whenever executive compensation is increased, as this will

have a two-fold effect. First, these increases will force Uber’s leadership to scrutinize exorbitant

executive salaries and raises more harshly, as it will be costly to increase bonuses for thousands

of full-time drivers. Second, whenever increased executive compensation is deemed necessary,

drivers will not feel like their contributions to the company are being ignored, which results in a

more motivating work environment.

 Conclusion

While Uber has achieved a vast amount of success, there is still a lot of room for

improvement within their company, especially when they reflect upon the company’s

overarching ethical behavior. Success should not just be measured by dollar signs. Employee

satisfaction, safety, and community impact should also play a part in Uber’s ideas of success.

Uber’s key issues of how they treat their drivers and its hostile working environment reflect that

Uber’s organizational culture, leadership, and how they motivate their employees need to

undergo serious change. However, despite all the efforts that Uber must put in place, particularly

regarding driver mistreatment; the company is planning to invest in autonomous vehicles in

order to reduce the number of drivers to increase its profit. Uber declared in a press release "As

we aim to reduce river incentives to improve our financial performance, we expect driver

dissatisfaction will generally increase” (Wong, 2019).

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