Travis Kalanick, Uber Technologies Inc. chief executive, told employees Tuesday that he plans to take a leave of absence, without disclosing a return date. The company will strip Kalanick of some duties and appoint an independent chairman to limit his influence, according to an advance copy of a report prepared for the board.
At a staff meeting, the company explained the results of an inquiry conducted by Eric Holder, the former U.S. attorney general who Uber hired to look into allegations of harassment, discrimination and an aggressive culture. The 47 recommendations include creating a board oversight committee, rewriting Uber's cultural values, reducing alcohol use at work events, and prohibiting intimate relationships between employees and their bosses.
Uber's board met Sunday to review a detailed version of the report and voted unanimously to approve the recommendations. Afterward, the San Francisco-based company ousted Emil Michael, Uber's head of business.
Upon Kalanick's return, the board will move to diminish his role by giving some of the CEO's job responsibilities to a chief operating officer -- a position Uber has been actively recruiting for but has yet to fill. This person would "act as a full partner with the CEO but focus on day-to-day operations, culture and institutions within Uber," the report said.
Uber lost or removed much of its management team in recent months as scandal after scandal emerged. The 14,000-plus workforce lacks a clear No. 2 who could run things in Kalanick's stead. Uber has started taking steps to fill out Kalanick's bench. Last week, it hired Harvard Business School's Frances Frei as senior vice president of leadership and strategy, and will add Nestle SA's Wan Ling Martello as an independent director.
Despite recent turmoil, Uber's business is growing. Revenue increased to $3.4 billion in the first quarter, while losses narrowed -- though they remain substantial at $708 million. But Lyft Inc. has stolen some market share in the U.S., and Uber's internal strife could open opportunities for competitors globally to lure partners, raise funds or poach talent.
Executives at Uber had looked to the Holder report as a likely turning point in their efforts to put the company's past indiscretions behind them and provide a road map for the future. Holder, an attorney at law firm Covington & Burling LLP, interviewed employees as part of a 14-week investigation he conducted with his colleague, Tammy Albarran. A separate examination by Perkins Coie LLP is reviewing 215 human-resources claims. More than 20 people have been fired as a result of that inquiry.
"The process was longer than we thought and more painful than we thought, but this chapter comes to an end today," Arianna Huffington, an Uber board member, said in a statement prepared for the staff meeting Tuesday. "Our task now is to learn, rebuild and move forward together to write Uber's next chapter."
The crisis was sparked by a Feb. 19 blog post by former Uber software engineer Susan Fowler. She alleged that her former manager had propositioned her for sex and that Uber's human-resources department told her it wouldn't punish him because he was a top performer. In addition to her sexual-harassment allegation, Fowler's nearly 3,000-word post chronicled day-to-day indignities women faced at the startup. In one instance, female employees were told they would need to pay for their own leather jackets even though men were getting them for free; a manager explained to her that there weren't enough women to justify buying them in bulk, she wrote.
Fowler's accusations ignited an uproar inside the company and throughout the tech industry. Many women shared their own horror stories, and the controversy prompted companies throughout Silicon Valley to reexamine their diversity practices. At Uber, Bloomberg reported that at least a half-dozen members of the recruiting team left after their attempts to prioritize diversity hiring initiatives faced resistance from Kalanick.
Business on 06/14/2017