Trouble at UBER

Uber

Interview with Global National

On Monday June 12, I participated in an interview with Mike Le Couteur on Global National, providing commentary on the sexual harassment scandal embroiling Uber.

Trouble at Uber

Earlier this year, Uber CEO Travis Kalanick ordered an investigation into gender bias and sexual harassment at Uber.  The investigation was headed by former U.S Attorney General Eric Holder and his law firm Covington and Burling.  All of this evolved from a blog post by Susan Fowler, a former Uber engineer, who complained that Uber did not act on gender discrimination and sexual harassment complaints and that a culture of retaliation existed.  Holder’s report containing 47 recommendations to improve Uber’s work place culture was released earlier this week.

Our Comments

During the interview with Global National, our comments centered on three main points.

  1. The impact on Uber could be severe. We live in a very connected world, and because of that it is possible that momentum amongst a movement of people who are very offended by the behavior at Uber could gather steam and turn against the company. And there is early evidence of trouble brewing.  A June 13 report in Bloomberg Technology indicated that Jason Fried, the CEO of Basecamp, decided that his business would no longer use Uber even before the Holder report was released.  It may also be difficult for Uber to find business partners because potential partners may be concerned about being associated with a firm with questionable ethical behaviour.  Travis Kalanick has announced that he will take an indefinite leave of absence from Uber so the company must deal with the impact of that decision.
  2. Behavior calls into question the “tone at the top”. We often help organizations to enhance their internal control environment and a significant part of that involves consideration of what are referred to as entity level controls. Entity level controls are controls that have a pervasive impact on the overall control environment.  One element that is considered is the extent to which senior management demonstrates a commitment to ethical behaviour.  The activities at Uber cast a question mark over such commitment. It is interesting to note that the Holder report included the recommendations below relevant to Uber’s audit committee.  The role of the audit committee is a consideration when evaluating entity level controls.Uber’s Audit Committee could be enhanced through an expansion of the Audit Committee to include more independent directors and a clear articulation of the oversight role that the Audit Committee is intended to play, both of which could improve the Audit Committee’s ability to oversee Uber’s management. Key among the potential roles that the Audit Committee could play is to have a direct reporting line from Uber’s Compliance organization, an appointed ombudsman, and/or Uber’s internal auditor. The purpose of this structure would be to ensure that the person(s) playing those roles will have the ability to bring significant compliance or harassment issues to the attention of the Audit Committee without having to go through management or the CEO. The Audit Committee could also be empowered to oversee a response to any such issues, including a potential investigation, if warranted.
  3. What should Uber do? Terry Lipovski, a leadership expert and advisor for OTUS Group suggests Uber must accept responsibility for the issues they facing, get out in front of it with a plan of action and be able to demonstrate tangible activity that will lead to improvement.

Will you continue to use Uber’s services?

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Francis Liska
CEO OTUS Group | OTUS Group

Francis is a Chartered Professional Accountant, Certified General Accountant, Certified Information Systems Auditor, Certified Internal Control Auditor and a Certified Management Consultant. He holds a degree in Business Administration from Cape Breton University and a Post Graduate Diploma in Applied Information Technology. He has also completed graduate studies in decision analysis at Carleton University.


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