Ethical Culture Analysis of Uber
Every company or organization has unique characteristics and behavioral mechanisms. Organizational culture and ethics depict the personality of the company(Johnson, 2011). Culture is composed of values, norms, assumptions, and artifacts of the company’s workers and their actions. Given time, members of a company come to sense the specific culture and ethics of the organization. The primary aim of the organizational culture is to provide shared interest and core values that may enhance mutual trust and goodwill. Also, a common set of values provide the members with a coherent set of basic assumptions which leads to a more efficient work output. Additionally, corporate culture and ethics offers control, mitigates communication problems, and fosters commitment among the workers. In light of this, the researcher chose to analyze the ethical culture of Uber company because of its success and failures in the secular market.
A Brief History of Uber
In 2008, Garret Camp sold StumbleUpon to eBay while hanging out with a fellow entrepreneur called Travis Kalanick. The camp was interested in solving Taxi problem in San Francisco. The original idea was to first obtain drivers, a parking spot in a garage, and a Mercedes S class. The cost would be split among the entrepreneurs alongside an iPhone application. By March 2009, the two businessmen came up with a name which was UberCab. In June 2009, Camp hired Kalanick as the Uber’s chief incubator as the former ran a full-time gig at StumbleUpon. Seven months later, Oscar Salazar, Camp and Kalanick changed the name of the company to Uber tested the prototype of the service on the streets of New York. With the help of investors, Uber raised $11in February 2011.
Over the next six months, Uber spread its wings to Boston, Washington D.C, Seattle, and Chicago and later on went global. By 2016, Uber was offering its services to over 540 cities(Chokkattu, 2016).
Uber’s Culture and Climate
According to Johnson (2011), ethical culture refers to the documented procedures and systems that outline a shared set of an organization’s core principles and values. Companies often design these ethical principles in formal structures or written form such as reward and incentive programs, policies and systems, organizational rules, client characters, and code of ethics. Other formal strategies that companies use to reinforce ethical standards are training, disciplinary and enforcement mechanisms, Peer behavior and other ethical norms fall under the category of informal mechanisms.
The Code of Conduct of Uber
Uber’s mission is to create possibilities for the cities, riders, and drivers. They offer services to the community through employing drivers, providing reliable transport mechanisms, and improving the cities’ economy. By being mindful and committed to their vision, they are responsible for their prospects wellbeing. In addition to this, the code of conduct of Uber for drivers tells them to avoid discrimination, aggressiveness, and always keep safe. The company also introduced a new board that reviews the safety practices and advises its employees on the roadmap for additional security features to the platform. Also, Uber invited off-duty security officials and police officers to scrutinize what they have in place. The action above is an attempt to audit the safety program (“Legal”, 2016).
General Public view of Uber
Despite the Code of Conduct laid out by Uber, the majority have negative things to say about the company. For instance, two years ago, Uber arbitrarily cut their driver rates by 50%, insisting that Uber’s 250,000, now over half million, drivers would generate more income(Chokkattu, 2016). So, after drivers drove twice as many miles, spent twice as much time, spent twice as much on fuel and maintenance expenses, drivers would feel the Uber windfall. Uber pounded this hallucination, at the same the time misleading an all toowilling public into believing the fares included a driver gratuity. Both Cornell and The Harvard Business School stood behind Uber’s no gratuity policy. The Business School and Uber’s executives insinuated and perpetuated the false narrative of a built-in tip. It certainlydidn’t seem as if those two esteemed colleges were concerned with the wellbeing of the working man. The public is completely perplexed by the total lack of consideration given to Uber’s exploitation and callousness toward labor. The fact that drivers are their bosses is again both untrue and misleading. Uber is a brilliant service, but they should surely show empathy towards the working class.
These companies are going to reach a tipping point because the undeveloped center cannot sustain the burgeoning whole. Uber was built on an opportunist recognition of the political ideology against such things as labor laws or even employee decency. It was, from the inception, a bully that aimed to take down economics of transportation and to displace thousands who had worked years to acquire their cab medallions. So, what happened was that it had managers who were misogynists.
Ethical Challenges faced by Uber
Ethical issues are a great concern for the company. Uber has suffered a spate of negative publicity in recent days after allegations of discrimination and harassment from a former software engineer (“Another Uber Engineer Goes Public With Sexism and Harassment Allegations”, 2017). The engineer complained to the Human Resource manager who, in retrospect, sided with the harasser. Such actions are unconstitutional and unhealthy. Additionally, the actions and public utterances of Uber’s top managers were questionable as far as ethics and business practices are concerned. For example, the CEO of Uber, Travis Kalamick was on record as saying that they employed rudimentary means to scare off their competitors from the market. In August 2014, Uber was reported as using dubious strategies to convince their competitor’s drivers to defect to Uber. The most affected competitor was Lyft which had most of their rides canceled. There was also another accusation of Uber prying into journalists’ personal lives.
Customer security also remains a non-prioritized issue contrary to advertisement propagandas. Unprofessional drivers are contracted by the company to offer cheap services. Such actions cost economic risks to the lives of customers who can otherwise not meet the pricing needs of more expensive services. Lack of monitoring and evaluation mechanisms that centers on customer security also puts the safety of passengers at stake. The cases of unethical drivers sexually assaulting passengers have trounced the Company and ultimately led to the cancellation of its services in some countries. Unethical conduct is caused by the fact that drivers only operate on contract terms without being permanently employed by the company.
The company has also been noted to implement price surge during emergency times which are quite unfriendly to its users. The prices are noted to at times sevenfold the normally charged rates. The firm does not own vehicles and heavily therefore heavily relies on vehicles used by their drivers; this jeopardizes the comfort of their services as some of the vehicles are not friendly to wheelchairs which may be a priorityfor some customers. Regulations extended to the company have occasioned inconveniences to its users. Moreover, some countries have come up with policies that do not support the services offered by the firm citing unfair advantage.
Another challenge faced by Uber is the lack of employee motivation. The drivers lack a coherent compensation arrangement, therefore, have suffered price cuts to cater for costs incurred in offering services at low prices. This among other challenges plays a central role in tainting the brand image of the company thus frustrating Uber’s desire to achieve full diversification across the entire globe. As a result, drivers lose their loyalty to the enterprise because they are not on permanent employment arrangements. The company also heavily charges the drivers to cut on expenses incurred in the process of offering cheap rides to customers. Cases of driver complaints have therefore been on the rise; this means that other companies stand a chance to acquire the services of this drivers, and this move will highly affect Uber. The above scenario places competitors such as Lyft in a better position to compete favorably in the market because it enhances screening of its drivers and ensure they maintain higher ethical standards while on service.
The strategic approach a firm chooses to pursue plays a critical role in enhancing and sustaining the success of its business. Uber employs diversification as a strategy toimprove the success of its operations. Diversification enhances the competitiveness of the company through widening the scope of its products and services and increasing the number of its customers. Price differentiation strategy based on nature of the product helped to meet the diversified needs of all customers regardless of their financial differences. The company as well engaged in strategic partnerships with local firms such as American Express as well as with international entities such as Times Internet (India), Baidu (China), and the American Movil (Latin America). This strategic approach enabled the company to merge knowledge from various entities as a way of bettering its services (Chokkattu, 2016).
The firm invests heavily in promotion efforts to increase brand awareness.The buzz marketing strategy is employed in ensuring customer attention to offered products. The use of Facebook Campaigns is used to enhance its dominance in the market. The promotion initiatives are also tailored towards stressing the convenience and friendly prices of available services and products. In addition to this, Uber-Company faces competition from other operators such as Lyft and has to ensure effective performance to remain competitive in the market.
The company has been able to acquire higher profits from its operations and predicts $10 billion revenue collection with an approximated summed valuation of $40 billion. The influx of revenue is attributed to the increase in customer numbers as well as the surge price strategy which doubles prices during times of higher demand and emergencies. The firm achieved product diversification and seemed to be making tremendous improvements in the enhancing customer loyalty. Specifications of the client are highly prioritized, and this has enhanced the best performance of its brands across the cities and countries of operation. The number of drivers affiliated to the Company is also seen to be shooting up despite cases of lack of satisfaction among the drivers.
The company enjoys the presence in more than 540 cities as well as 52 countries, and its services are reported to be highly effective. The strategic alignment of the company enabled it to receive higher revenues. It is an actual realization that despite the projected $10 billion revenue collections; $40 billion valuations, the company continues to record losses in profit margins; this is caused by the fact that Uber has a larger number of contractor drivers who must all receive their compensatory benefits for a smooth flow of services.
Current Leadership Use of Power
The presentleadership of Uber-Company is perceived as being unfair to its drivers. The company, for instance, has developed strict restrictions and policies that drivers have to conform with. For example, Uber-Company requires its drivers to accept 99 percent of the ride requests they receive, to undertake at least one ride every hour and to remain online for 50 minutes per hour. These restrictions hinder drivers from offering services to services that base on ride-sharing. Thelimitationsare seen to handle drivers as employees as opposed to their operation on contracts.
The advantage of this restrictions is that it ensures the drivers are constantly in operation, therefore, increasing the revenue for the company. This approach is however not a good one because it increases conflicts with drivers and may cause cases of strikes; tThis would lead to low revenues, a decline in profits as well as will taint the good name and image of the company(“Another Uber Engineer Goes Public With Sexism and Harassment Allegations”, 2017).
It is evident that Uber’s ethical behavior is questionable. Uber’s CEO was heard admitting to sabotaging its competitors. That alone should indicate where Kalanick’s moral compass directs itself. Moreover, more broadly, the company has thus far skirted tax payments by claiming that its drivers are contractors. However,Uber treats its drivers like employees demanding highly specific tasks to be done in highly specific ways. The drivers end up on the short-end with few bargaining rights. Uber has lied about what a driver can earn. The FTC recently ruled against Uber for false claims stated in its employment ads on sites like Craigs. Cities and countries around the world have filed lawsuits against the firm for violating labor laws. Its drivers have been accused of sexual assault.
Additionally, this wild west culture is common among tech startups — the imperative is to grow and grow quickly and deliver value fast. It seems like the people who developed the core business has no idea what it means to be an employer or a manager, are ignorant of the ethical requirements of having employees, and have little or no experience in growing a company (growing business being a separate thing). Add to that the fact that many of these tech startups are initiated by people who are stoked at their first tastes of positive attention.
Here’s the bottom line for Uber:The company is reminiscent of Enron, with a rank and yank culture pervading the place.Because Uber generates lots of cash ($3B/year), it needs to find a way to make its business model work at scale. It has not done that yet, which means that anything that increases driver attribution or makes recruiting harder for the company is not good for business. Scandals like the above mentioned negatively impact the company. What Uber’s CEO needs to realize is that he has some serious moral blind spots.
The company needs to build a healthy relationship with its employees. In essence, the impact will promote the image of the company and its brand. The strategy is also capable of resulting inefficient operations by the fact that more drivers will be attracted to the company. Enhancing a motivating compensatory package to the drivers will promote their loyalty to the company, and this will play a critical role in ending unethical conduct among the drives. Initiating this strategy will also result in full employment of the drivers, and as a result, professional training will be prioritized. In turn, the operational restrictions imposed to Uber shall be lifted. The strategy will, therefore, play a vital role in efforts towards realizing the need to achieve product awareness as well realize more share of the market. Despite the noted advantages of this strategy, one awareness that comes out clearly that the strategy will swell the wage bill of the firm and will result in a decline in the realized profits. Regardless of the above, the strategy turns out to a promising approach, and the company should consider implementing it. Satisfaction among the drivers will be achieved which will ensure they work tirelessly to enhance their productivity.
Uber can decide to invest in innovative efforts. The mentioned strategy is advantageous because it will play a fundamental role in sustaining the Company’s competitive advantage. The plan will ensure the company can come up with better ways of addressing its challenges thus supporting its efforts. The approach, for instance, will advance the need to get with informed mechanisms of solving the needs raised by drivers. Apart from the noted advantages of this strategy, it will help address future demands of customers by enabling the company to own electric as well as self-driven cars thus promoting the efficiency of operations. Innovation initiatives will play a critical role in developing the business leading tohigher profit margins.
The major disadvantages posed by this strategy is that it will require large sums of capital and will also render drivers jobless due to the presence of self-driven cars. The approach requiresmuch time to be fully functional. In effect, the company may lose plenty of profits in the event of awaiting an initiative which is in its experimentalstages; the outcome of the strategy is therefore not time friendly. However, this strategy is a good pick. It has the potency to help the firm solve its current problems, plan and overcome future challenges by so doing it promotes operational efficiency. Uber being highly reliant on the technology world should, therefore, consider this strategy as a mechanism towards solvingthe driver related and other problems and ensuring profit maximization.
The other recommendation is for Uber to focus on price. Focus price strategy is advantageous because it helps to enhance customer loyalty due to pleasant places. This strategy could also make Uber acquire larger market share due to it being coined around the need to improve customer satisfaction. This approach will also make the company realize more profits due to an increase in customer base. The noted increase in customer base implies that Uber will get the necessary finances to meet compensatory needs of its drivers. The cons of the approach are that it may result in a loss to the company.
The strategy as well could occasion underpayment to drivers in situations where sales are not achieved to the maximum. The focus price strategy also denies the company the opportunity to take advantage of emergencies as well as other occurrences that could otherwise necessitate doubling of the prices. The researcher would, therefore, recommend that Uber pursue the focus price strategy aimed at helping it acquire brand awareness, higher market shares, increased profits and as a result able to meet the compensatory needs of its drivers.
The corporate social responsibility should give freedom to the employees to expose the work culture of the companies. What is happening at Uber is shocking – the manager molesting female employees at a resort is underwhelming. The scope of the freedom information laws should be widened and covering employees’ rights to speak about work culture, and the confidentiality clause should not gag employees. Additionally, the management should integrate the ethical obligations to the school curriculum. Uber should also reform their internal structures and live up to the global code of conduct otherwise; it is more likely to collapse.
Another Uber Engineer Goes Public With Sexism and Harassment Allegations. (2017). Fortune.com. Retrieved 4 March 2017, from http://fortune.com/2017/03/03/uber-engineer-sexism/
Chokkattu, J. (2016). A Brief History Of Uber. TechCrunch. Retrieved 4 March 2017, from https://techcrunch.com/gallery/a-brief-history-of-uber/
Johnson, C. (2011). Organizational Ethics (1st ed.).
Legal.(2016). Uber.com. Retrieved 4 March 2017, from