Issues Affecting Ubers Performance - Case Study Example

Uber Name Institution Uber Introduction According to Armstrong & Baron (2005, p. 2), organisational performance refers to the ability to meet set targets in the areas of productivity, growth, profits, customer service, shareholder value, and quality. From a stakeholder perspective, performance will also encompass ensuring that an organisation respects the well-being of society as a whole and the environment (Hubbard 2009, p. 178). Uber is a company that has revolutionised the taxi segment of the transport industry. The company serves more than 500 cities in the world without having to become a publicly listed operation (Uber 2017). Despite the rapid growth, the company has faced numerous challenges, both internal and external, that have affected its performance. This report provides and overview of the organisation. This is followed by the identification of the main issues affecting the performance of Uber. The paper concludes with an analysis of the measures that are being used to mitigate the issues as well as recommendations to address deficiencies in its approach to solving the problems that it faces. Overview of the Organisation Uber is a firm that operates in the taxi segment of the global transport industry. The company was established in 2008 after Travis Kalanick and Garrett Camp encountered difficulties getting a cab. The trouble gave them the idea of automatic ride-hailing through the use of technology. In the subsequent years, the company aggressively expanded its operations from the US to over 550 cities across most regions of the world (Uber 2017). The company operates in what is referred to as the sharing economy. The firm functions as a medium through which individuals who want to move about are connected with privately owned vehicles that will take them to their destination (Griffin 20). The company obtains revenue by charging an average of 20% from the amount paid for each ride (Wirtz & Tang 2016, p. 626). It is apparent from the structure that Uber does not need to invest in vehicles but that it relies on individuals who own cars and want to earn an income. At the same time, the company does not consider the drivers as employees but as independent contractors. For example, Uber employs around 2,000 employees in the US, but it manages over 160,000 independent contractors (Mauri 2016, p. 68). Notably, the issue of employee and contractor status has been the subject of much controversy. Technology is the foundation from which the company functions. The company relies on sophisticated global position systems and traffic modelling technologies that allow individual to be connected with drivers within ten minutes (Griffin, 2016, p. 301). Additionally, the technology allows the company to avoid the regulatory procedures that traditional taxis have to go through before they begin operations. An oft-cited example is the case of black cabs in London. In addition to meeting the regulations covering the vehicles, drivers had to attend courses that would take up to four years before they were certified to drive in London (Tran 2016). The arrival of Uber meant that anyone with a vehicle that met the firm’s standard would be in a position to begin operations and rely on Uber’s technologies for mapping (Griffin 2016, p. 301). The company also employs technology in its pricing system where factors like heightened demand can lead to sudden increases in the amount charged. Evidently, Uber continues to exist and thrive because it has developed the capacity to employ technology to serve consumers and bypass challenges like regulation and employment. When it comes to industry position, Uber is undoubtedly the leader in the taxi industry. According to Griffin (2016, p. 301), the company had operations in 290 cities and 50 countries in 2014, earning a valuation of US$40 billion. This growth was significant given that the company was only established in 2008. At present, the company is valued at US$69 billion making it the largest privately held technology company in the world. The company’s revenues have also grown and were projected to reach $5.5 billion in 2016 (Abboud 2017). Regarding market share, the company dominates the market in the US with Lyft, the main competitor, operating in just 65 cities because of being second to market (Wirtz & Tang 2016, p. 627). The firm faces the opposite scenario in China where Uber is a distant second to Didi which operates in 360 cities in comparison to Uber’s operations in 20 cities (Wirtz & Tang 2016, p. 627). However, the size of the Chinese market means that even a 20% market share will be sufficient as it will equate to the size of the market in several countries. In Australia, the company has had to deal with Cabcharge and GoCatch, but it is still in a strong position as it has 54,000 drivers and 2.4 million riders (Khadem 2017). According to Hemming (2016) Uber is the dominant player in the industry because of the global nature of its operations that allows it to target 40% of the global market share. Issues Affecting Uber’s Performance As stated, the employment strategy that Uber has adopted has been extremely controversial. The company argues that it is a mere intermediary that facilitates transactions between the drivers and the consumers. The implication has been that drivers have been treated as independent contractors or self-employed workers, thereby allowing the company to charge minimal wages and to deprive the drivers of the rights that come with being full employees. The issue with employees has been the subject of many legal proceedings, with Britain ruling that Uber drivers should rights that are equal to those given to full-time employees (Johnson 2016). The employment issues point to Uber failing to act as a responsible corporate citizen. According to Caroll (1999, p. 289), corporate social responsibility entails making a profit but also being ethical, obeying the law, and being a good corporate citizen. Banerjee (2007, p. 6), traces the roots of social responsibility in business and notes that American firms created a system that prioritised shareholder value to the point that there were deliberate removals of legal restrictions on business activities. Uber’s activities point to a case where the company seeks to generate returns for shareholders with no regard for the effects on society. The company pays low wages and expects drivers to work long hours to generate meaningful returns. The company also actively employs technology to avoid meeting laws that used to govern the traditional taxi industry. Evidently, the company needs to shift away from the shareholder view and towards the stakeholder approach. This can be through the combination of the triple bottom line that accounts for the social, financial, and environmental dimensions and the balanced scorecard (Hubbard 2009, p. 185). According to Calas & Smircich (1999, p. 2016), the true potential of women has often been unfulfilled because of their exclusion from certain aspects of the public world. Alvession & Billing (2009, p. 157) note that while the number of women in management has been expanding, they face challenges like having to perform better than their male counterparts. At the same time, it is apparent that Uber defines leadership in a masculine way as evidenced by its bold and assertive approach to obtaining market share around the world. In such scenarios, research has shown that women tend to perform at a lower level than in more feminine business environments (Alevession & Billing 2009, p. 153). The case of Susan Fowler, a former engineer at Uber, provides evidence that the company has failed in creating a work environment that considers women to be equals. The employee faced sexual harassment as soon as she joined the company in 2015, and her efforts to report the offender failed as the human resource department argued that it was the first offence. This was despite evidence of other instances of harassment by the same worker (Levin 2017a). Susan Fowler was also denied the opportunity to transfer to a different position, and she was expected to perform better than her male counterparts despite facing sexual harassment and discrimination (Levin 2017a). Fowler published her negative experiences that took place within a year, with the post creating negative publicity for a company that already had a negative public image from its constant need to avoid laws and regulation (Levin 2017a). Many Uber users to resorted to deleting the app from their smartphones to protest against the discrimination at the company. It is apparent that instead of focusing on growth, Uber has to dedicate resources to solving problems that are directly related to its aggressive business model. Evidently, gender issues are having an impact on the performance of Uber not only in the US but other areas of its global operations. Another area of concern is the leadership at Uber. According to Mant (1997, p. 62), intelligent leadership involves having the capacity to look at the organisation in all its subtlety and complexity and not just view the separate components that make up the organisation. In other words, Mant calls for a system thinking approach where leaders at Uber become aware of the complex connections between different aspects of the business instead of focusing on one area and making decisions without regard to effects on other parts of the organisation. The issues related to the treatment of drivers provides evidence of the lack of intelligent leadership at Uber. The company considers drivers to be an unnecessary requirement that increases costs. However, it is apparent from the systems view that the poor treatment of drivers is having negative consequences on other aspects of the business. In addition to the gender issues mentioned above, the company’s founder and CEO has also taken controversial actions such as being involved in politics as part of Donald Trump’s advisory council driver (Pearce 2017). The involvement in politics relates to Bolman & Deal’s (2008, p. 246) controversial question on the role of business in altering and dominating politics, society, and the environment. These decisions highlight a lack of intelligent leadership and contribute to a negative public image that reduces market share thereby affecting overall performance. Pearce (2017) argues that Uber is a maturing firm that needs to move away from emphasising rapid growth and an arrogant culture that might not be sustainable in the long run. A key component in this strategic shift would come from replacing the founder-CEO with a more intelligent leader who can employ Mant’s ‘frog thinking’ that will prioritise both the growth and the sustainability of the firm (Mant 1997, p. 62). Recommendations Uber’s approach to leadership, gender, and corporate social responsibility have had a direct impact on its performance. In this case, performance refers to an organisation’s ability to meet and surpass targets related to quality, customer service, shareholder value, profits, and, and growth. It is worth acknowledging that the company has taken measures to mitigate some of the factors that have impinged on its performance. For example, Uber has hired Eric Holder, a former US attorney general to investigate gender-based harassment and discrimination (Levin 2017b). When it comes to employment, Uber has begun limited efforts to communicate with drivers. For instance, Abboud (2017) notes that Uber took the unprecedented step of sitting down with drivers to negotiate on work conditions and pay. This indicates a realisation that the company might need to move towards the stakeholder approach that considers the well-being of employees and the society as a whole. Given that the triple bottom line also considers the environment, there is the argument Uber and other ride-sharing platforms offer a level of convenience that can allow individuals not to have to drive or invest in vehicles. When it comes to leadership, the CEO admitted that he ‘fundamentally change as a leader and grow up’ (Solomon 2017). This admission is an important first step in mitigating the problems at Uber that can be directly attributed to its leadership. Replacing the CEO is a measure that can be used to address the performance issues affecting Uber. As noted earlier, startups and established firms require radically different management styles. While a startup prioritises growth, an established firm seeks to achieve a broader set of objectives and thus requires intelligent leadership. Regarding gender issues, it is apparent that issue can be traced to the masculine culture at the company. Given that culture is developed over time, it will be difficult to come up with a quick solution to the gender-based harassment and discrimination at Uber. In general, a change in leadership will go a long way in ushering in a more inclusive culture. Becoming a responsible corporate citizen also requires a fundamental shift in organisational strategy and culture. A change in leadership will allow the firm to recognise that it is no longer a startup that needs to disregard the needs of its drivers. It is recommended that Uber recognise that it is a market leader that can afford a gradual increase the fees charged to riders to allow drivers to earn more. Alternatively, a simple option for tipping drivers can allow them to earn sustainable incomes. Finally, a recognition of the importance of laws in society will assist Uber to become a socially responsible business that can earn the loyalty and respect of its clients. Conclusion In conclusion, was founded in 2008 with the intention of enhancing the efficiency of the taxi industry. The company has grown to become a truly global firm with operations in all regions of the world. The firm's objective is to obtain a 40% stake in the industry in which it operates. An evaluation of the firm shows that it faces issues related to corporate social responsibility, gender, and leadership. The findings of the report are that while Uber has achieved remarkable growth, its future performance will be limited by revelations of gender-based discrimination, mistreatment of drivers, and poor leadership. While the company has initiated investigations and admitted to deficiencies in its leaders, the efforts will not be enough to create optimal performance. The paper recommends a change of leadership owing to organisational maturity that requires intelligent leadership. The leadership change should then facilitate a cultural shift that values the role of women and drivers in the organisation. Finally, it is recommended that Uber begins respecting the laws in the countries where it operates. This shift will create respect and loyalty, factors that should lead to the attainment of economic, social, and environmental objectives. References Abboud L 2017, Uber's $69 billion dilemma, Bloomberg, available from Alvesson, M & Billing, YD 2009, Understanding gender and organizations, Sage. Armstrong, M and Baron, A 2005, Managing performance: performance management in action, CIPD Publishing. Banerjee, SB 2008, Corporate social responsibility: The good, the bad and the ugly, Critical Sociology, 34(1), pp.51-79. Bolman, LG & Deal, TE 2008, Reframing organizations, John Wiley & Sons. 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