What Uber should do to fix its toxic culture…earlier this month (June 2017), the US law firm of Covington & Burling LLP (Covington), released its long-awaited report (Report) to the Special Committee of the Board of Directors of Uber Technologies, Inc. (Uber). Similar to the Shearman & Sterling report to the Wells Fargo Board of Directors, http://bit.ly/2rJsQaI the Uber Board comes in for some direct criticism.
THE UBER REPORT is truly one of the most unique (and shocking) corporate documents you will ever see.
The Report is one of the most remarkable discussions of a complete workplace culture disaster that has ever been rendered for a multi-billion business.
Regardless, the state of culture, governance and internal controls at Uber can only be described as beyond abysmal. Some of the more salacious highlights included recommendations to prohibit “non-prescription controlled substances” (i.e. illegal drugs) “during core work hours, at work events or at other work-sponsored events.”
Similar but additional prescriptions were recommended for alcohol use during “core work hours”, at company events and during company travel. Finally, the advice that “Uber should also encourage responsible drinking.”
In the area of corporate governance, the Report advises that the Board should have greater independence and the “additional Board members should be directors with meaningful experience on other boards who can exercise independent oversight of Uber’s management.”
The Report also recommends Uber install an independent Chairperson who,
- “could address several of these recommendations, particularly the need to serve as an independent check on Uber’s management and the need to demonstrate to Uber’s employees, partners, and customers that the Board is taking the investigation and the need for governance reform seriously.”
The Report also stated the Board “could create an Ethics and Culture Committee” which would “oversee Uber’s efforts and enhance a culture of ethical business practices, diversity, and inclusion within the organization.
The activities of the committee could involve meeting with senior members of management who are responsible for ethics, Compliance, Human Resources, and risk.
This committee could establish and monitor metrics that are intended to measure compliance with Uber’s business values, and the promotion of an ethical and inclusive environment.” Yet apparently, there is so much work to do at Uber, the Report recommended, “Alternatively, this committee could focus solely on Uber’s remediation of recent issues.”
At the Board of Directors level, an Ethics and Compliance Committee can devote itself exclusively to non-financial compliance, such as setting a company’s ethical business culture and compliance with it going forward.
While many companies have fulfilled these obligations through an Audit Committee, clearly the better practice is to have a separate Compliance Committee.
The reason is clear, that compliance has become not only central to any well-run business but it is critical to overseeing a wider variety of risks than the typical Audit Committee has experience with, which is usually only aimed towards financial risks. The Board Compliance Committee should begin its inquiry with a basic: ‘How do we know it is working?’ and go forward from that point.
Below is the full recommendation report issued by Holder’s law firm Covington & Burling LLP.
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