Being a $70 billion company, Uber has been in the limelight for all the wrong reasons during the last six months as its CEO Travis Kalanick takes a leave of absence for an indefinite period. The decision has been taken in respond to a report that was published regarding the workplace culture that urged the company to reassess its leadership role.
Uber has been facing multiple scandals during the last few months. Subsequently, it has dented the company image significantly and brought a turmoil in its top management. It is said that some of Kalanick’s duties will be shared by other top executives or will be given to some other executive completely. However, it is still unclear how a huge company with more than 12,000 employees will be run without a CEO in place. Currently, the company is under scrutiny by a workplace review law firm.
Following the report, Kalanick gave an indefinite leave by referring to his mother’s death earlier and made it an excuse to take a back seat from his responsibilities for a while. He announced it in an email sent to staff stating:
“I need to take some time off of the day-to-day to grieve my mother, whom I buried on Friday, to reflect, to work on myself, and to focus on building out a world-class leadership team. 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”
Before the CEO’s leave, the company had already fired more than 20 employees over reports of harassment, retaliation, discrimination and bullying. Additionally Uber’s board of directors have agreed to implement all the recommendations of the workplace review conducted by Eric Holder’s law firm. Under the review, 57 complaints were also recorded regarding similar issues and more than dozens of employees were given warnings.
Experts have different views regarding Kalanick’s decision and UBER’s future operations
Jeffrey Pfeffer, a renowned professor at Stanford’s Graduate School of Business who has written extensively about organization theory, believes that Kalanick will still be part of major decision making in the organization. Pfeffer further said:
“My sense is that most of what Uber has done is to ‘signal’ that they are changing. Whether they are [truly implementing change] is another matter”
He also gave a situation that for instance the top executives disagree over matters of sales and operations then who will resolve those issues. Since Kalanick gave a statement that “he will still be available for the most strategic decisions”, which indicates that the CEO is actually not taking a leave at all.
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Another anonymous crisis expert has a different opinion as he stated:
“As long as Travis was in the CEO role, the company would continue to be the focus of media attention and would be likely the focus of criticism. I think this maneuver puts an end to it, because the focus of all that media criticism is now gone”
Pfeffer further explained that the situation of a CEO taking a leave is not a unique idea in the corporate world as there are many examples such as leader of United Airlines, Oscar Munoz took a leave for one year for his heart surgery. Another CEO of Aircastle took a medical leave and later stepped aside completely.
Jeff Cohn, an expert on succession planning at a New York based leadership development firm gave his insight stating that he has never seen a CEO taking a leave without a medical reason. Cohn said:
“Perhaps it has happened, but I can’t think of any high-profile situations where a board has encouraged its CEO to step aside in the context of becoming a better leader”
Jeff also pointed out that doesn’t work. You can take a week-long executive leadership course on empathy or resiliency, but you don’t develop these skills in weeks or months. It takes years to address fundamental leadership issues. Anything else is window dressing.
While discussing the current state of leadership, Cohn called it a mistake from company’s perspective as he said:
“Leading from the shadows when you’re such a powerful founder – it won’t work. [Kalanick’s direct reports] will always be second-guessing themselves now and wondering what Travis would do in a particular situation. Even if he’s not physically there, they’ll be wondering if they have to get his approval. It’s a terrible way to lead. I think the board and even Travis will figure out that they need to get an interim CEO in there”
Pfeffer on the other hand believes its a smart move as he says that although Travis is gone temporarily and some things in the company will change but it is impossible to cut him out completely. Since Travis is a strong founder of the company with a hard-changing personality with strong voting rights to support his position.
Nonetheless, all experts unanimously agree that it is illogical to assume that Travis will not regain its position.
Continuous scandals haunting the company
Despite some structural changes based on the report’s recommendations, Uber is still facing some issues as the company paid $20 million in settlement in the beginning of the year. This settlement was made to the Federal Trade Commission for charges against misleading drivers about potential Uber earnings.
Travis also faced a lot of criticism recently when Bloomberg released a video of the executive insulting an Uber driver after he complained about falling rates of Uber and his shrinking earnings.
Meanwhile, mass resignations at the top tier is another major blow faced by the company along with an empty position of COO. The situation was further aggravated when the venture capitalist David Bonderman resigned as a board of director due to a controversial comment at the staff meeting.