Uber CEO to take leave, leadership team to run company

SAN FRANCISCO >> Uber CEO Travis Kalanick will take a leave of absence for an unspecified period and let his leadership team run the troubled ride-hailing company while he’s gone.

Kalanick told employees about his decision today in a memo. He says he needs time off to grieve for his mother, who died in a May boating accident. He also says he’s responsible for the company’s current situation and needs to become a better leader.

The announcement comes as former U.S. Attorney Eric Holder released a list of recommendations to improve Uber’s toxic culture. He recommended that Kalanick be relieved of some leadership responsibilities, shifting them to a chief operating officer and other senior managers. The COO, yet to be hired, would be a partner with Kalanick.

Holder also recommended that Uber use performance reviews to hold senior managers accountable by setting metrics for improving diversity and responsiveness to employee complaints.

Holder’s firm, Covington & Burling LLP, and a second firm, Perkins Coie, were asked to conduct separate examinations of Uber’s workplace culture after a former engineer leveled charges of sexual harassment. Susan Fowler posted a blog in February that detailed harassment during the year she spent at Uber. Fowler wrote she was propositioned by her manager on her first day with an engineering team. She reported him to human resources, but was told he would get a lecture but no further punishment because he was a “high performer,” she wrote.

Holder’s investigators conducted more than 200 interviews with current and former employees, including people who had knowledge of Fowler’s allegations, according to the law firm’s recommendations.

Liane Hornsey, Uber’s chief human resources officer, said implementing the recommendations “will improve our culture, promote fairness and accountability, and establish processes and systems to ensure the mistakes of the past will not be repeated.”

The report recommends that Uber make sure its workforce becomes more diverse from the top down. Uber’s diversity figures are similar to the rest of Silicon Valley, with low numbers for women and underrepresented minorities. In the U.S., less than a third of the company’s workers are female.

The report says the position of the company’s current head of diversity, Bernard Coleman should be elevated, with Coleman reporting directly to the CEO or COO. Coleman should also communicate regularly with employees and address diversity and inclusion, Holder recommended. In short, it’s not enough to hire women and minorities, but the company must ensure that they are included and supported after being hired.

In addition, the report says that diversity and inclusiveness should be a key value for Uber, included in management training as a “fundamental aspect of doing good business.” The word “diversity” appears 42 times in the 13-page recommendations document.

While Uber released all of Holder’s recommendations, it didn’t release his full report in order to protect the privacy of those filing complaints. The company’s board unanimously adopted all of the recommendations Sunday.

After Fowler posted her blog, Uber Technologies Inc. made changes in human resources and opened a 24-hour hotline for employees. Last week, the company fired 20 people including some managers at the recommendation of Perkins Coie, which probed specific complaints made to the company about sex harassment, bullying, and retaliation for reporting problems. That firm checked into 215 complaints, with 57 still under investigation.

Under Kalanick, Uber has disrupted the taxi industry in hundreds of cities and turned the San Francisco-based company into the world’s most valuable startup. Uber’s valuation has climbed to nearly $70 billion.

But Kalanick has acknowledged his management style needs improvement. The 40-year-old CEO said earlier this year that he needed to “fundamentally change and grow up.”

Besides the sexual harassment complaints, in recent months Uber has been threatened by boycotts, sued and subject to a federal investigation over its use of a fake version of its app to thwart authorities looking into whether it is breaking local laws.

Kalanick lost his temper earlier this year in an argument with an Uber driver who was complaining about pay, and Kalanick’s profanity-laced comments were caught in video that went viral.

The company has faced high turnover in its top ranks. Jeff Jones resigned as Uber’s president after less than a year on the job. He said his “beliefs and approach to leadership” were “inconsistent” with those of the company.

Experts interviewed this week by The Associated Press said Kalanick should step aside or at minimum change his behavior for the company to make progress.

Krisher and Auto Writer Dee-Ann Durbin contributed from Detroit.