Federal Reserve Board Suggests Terrifying Action

In one of the most terrifying and perplexing moves to date, the Federal Reserve Board proposes to relieve banks’ boards of directors of “excessive regulatory duties,” which makes no sense at all. Although I am not a proponent of over regulation, boards must be held accountable and provide oversight on important bank decisions that influence the long-term sustainability and reputation of the bank.

At a time when Wells Fargo is under intense scrutiny, and for good reason, Donald Trump is attempting to lessen accountability rather than increase it. How is a board expected to effectively fulfill their fiduciary responsibility, including advocating for a psychologically healthy, safe and fair workplace, if it is kept in the dark about the inner workings of their organization? Toxic cultures are perpetuated when boards are uninformed or misinformed about important organizational actions. When the board is kept in the dark about such actions, their ability to function effectively ceases to exist.

I maintain that if the boards of directors of Wells Fargo and Uber had been better informed earlier, the companies’ gross mistakes in judgement could have been avoided. As it now stands, both companies are in great peril and their very survival hangs in the balance.

In my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, I discuss the importance of good board governance and the dangers associated with its demise. Without supporting bank boards to improve their oversight capabilities, the Federal Reserve Board is essentially removing a basic and essential tool from their proverbial toolbox.

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The Consequences of Negligent Leadership at the Board Level

I really hoped I wouldn’t have to write about Travis Kalanick, former CEO and founder of Uber, again. As regular readers know, I’ve had a lot to say about Kalanick and the toxic workplace culture that led to his resignation as CEO. Now it looks like his investors are gunning for his spot on Uber’s Board of Directors as Benchmark Capital sues him for fraud, breach of contract and breach of fiduciary duty. Had Uber’s board heeded my advice they would have avoided this whole mess. My prediction: Uber cannot survive this.

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Ignorance is No Excuse for Bad Leadership

When it comes to CEOs, ignorance of the culture in your workplace is unacceptable. Former Yahoo CEO Marissa Mayer recently came to the defense of Uber’s Travis Kalanick saying that she didn’t think Kalanick knew about the toxic culture at his company: “I just don’t think he knew. When your company scales that quickly, it’s hard,” she told the San Francisco Chronicle.

This is like Donald Trump defending Vladimir Putin. To say that Kalanick didn’t know about toxic culture puts him in the same league as Amazon’s Jeff Bezos and his infamous comment in the New York Times expose on his workplace’s culture: “That’s not the Amazon I know.” Mayer’s defense of Kalanick as a “great leader” reflects the general attitude of organizational leaders today—their only concern is shareholders and they just don’t care about their workplace culture and, by extension, their employees.

Andrew Faas is the author of From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire. 

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Frustrated Board and Shareholders Put Cash Flows Before Bros -- Finally!

Activist board members and shareholders can be a last line of defense when a CEO is bullying his entire company, which is why Uber CEO Travis Kalanick resigned today.  According to reports, investors demanded that he step down, in what New York Times reporter Mike Isaac described as an “outright rebellion.”

Some news sources were more cynical about the departure. The tech news site Pando said that Silicon Valley puts “cash flows before bros,” but whatever you believe, it’s about time. I’ve been calling for Kalanick’s resignation for months as this textbook case of a Silicon Valley “bro” who mismanaged the company he founded and allowed the regular abuse of his employees has dominated business headlines. It’s amazing how motivated people can be to stop abuse when their investment is at risk.

According to Adrienne LaFrance at the Atlantic, “It was ultimately concerns over the bottom line—not merely the toxic culture, or Kalanick’s trademark hubris, or explosive allegations of sexual harassment, or revelations about Uber’s secret software to evade of law enforcement—that forced Kalanick out. Well, out of his job as CEO, that is. He’ll still be on Uber’s board of directors, and he will retain his control of a majority of Uber’s voting shares.”

This doesn’t sit well with Benjamin Edelman at Harvard Business Review. He sees Uber’s troubles as deep and systemic: “I suggest that the problem at Uber goes beyond a culture created by toxic leadership. The company’s cultural dysfunction, it seems to me, stems from the very nature of the company’s competitive advantage: Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules.” For this reason, Edelman is calling for regulators to shut down the company.

I’ve discussed all of these issues at length in my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, and dedicated the entire first third of the book to the critical question—“Is Your Workplace Culture a Ticking Time Bomb?” The bottom line is that Uber was a ticking time bomb, but shareholders finally got it right. Investors and boards have a responsibility to employees to be responsible for a psychologically healthy, safe and fair workplace. I’m glad to see that they’ve stepped up at last. Maybe now we can have a news cycle without Uber dominating the business headlines.

Illustration credit: Jack Ohman/Sacramento Bee

Why Women in Power Keep Getting Interrupted

Disrespect toward women who had achieved the highest levels of power was rampant on Tuesday. At the Senate Intelligence Committee hearings, U.S. Sen. Kamala Harris (D-CA) was interrupted during her questioning of Attorney General Jeff Sessions by Sen. John McCain, who was frankly out of order. Meanwhile, at a meeting of board and employees to discuss sexist practices at Uber, a male board member tried to shut down a female. As Arianna Huffington discussed how one female director makes it possible for others, David Bonderman quipped, “more women means more talking.”

As Susan Chira pointed out in New York Times Business section, social media outrage ensued and Bonderman resigned from Uber’s board. But that doesn’t change reality—study after study proves that when women speak up they are shut down. Who can forget the fracas when Sen. Elizabeth Warren was determined to read Coretta Scott King’s letter on the floor of the Senate? Senate Majority Leader Mitch McConnell shut her down with a little-known rule.

“Sen. Warren was giving a lengthy speech,” he said. “She had appeared to violate the rule. She was warned. She was given an explanation. Nevertheless, she persisted.” Those last three words became a rallying cry—but as Tuesday showed, they’ve done little to move the bar toward equality.

The truth is that without a systemic change, no amount of public chastisement is going to help. I’ve seen this repeatedly in the corporations I’ve worked with—they throw millions of dollars at diversity programs, but little ever changes. Without a complete overhaul of the culture of a company, no amount of pithy sayings or public outrage will make the slightest bit of difference.

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Will Findings Force Uber’s Kalanick and Michael to Drive Off into the Sunset?

The results of former U.S. Attorney General Eric H. Holder Jr.’s investigation have been released and I applaud the report for recommending that Uber undergo a systemic change. This includes dismissing Senior Vice President of Business Emil Michael, a top lieutenant of CEO Travis Kalanick, and having Kalanick take a three-month leave of absence. According to an article in Sunday’s New York Times, the Uber board has voted unanimously for all of Holder’s recommendations.

As I discuss in my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, no amount of small-scale changes will fundamentally fix a company as plagued as Uber. The only way to make lasting change is to make a complete shift in how business is conducted and institute the Ethic of Reciprocity as a core value. 

Stripping the misbehaving CEO of a key ally is a step in the right direction, but there must be safeguards in place for the health and well-being of all employees, including the founder. According to the Times article, Kalanick hasn’t taken time off since 2009, not even for an accident that killed his mother and hospitalized his father. How can such a man understand the need for a psychologically healthy, safe and fair workplace? No wonder employees have been driven to the point of suicide.

Will Uber follow the recommendations laid down by Holder and approved by his board? Only time will tell. But one thing is for sure—to ignore these findings could bring the entire company crashing to a halt.

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Issues at Uber Debunks Study that Social Responsibility is Bad for Business

It’s time for Uber to move out of the line of fire or risk losing the company. There’s a reason that I used that phrase in the title of my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire. Too often when companies install a culture of bullying and personal harassment they need to get rid of the bullies at the top in order to survive. 

Uber has given me no end of issues to write about recently and today isn’t any exception; the New York Times reports that 20 employees have been fired following a sexual harassment investigation. The outside law firm Perkins Coie was hired to look into 215 allegations of harassment, discrimination and bullying and found reason to take action in 58 cases. According to the Times, former U.S. Attorney General Eric Holder is also looking into workplace culture as part of a larger investigation.

When you add these firings to the massive exodus of top executives, including the company president, the heads of finance and product, the East Coast general manager and high-level engineers, Uber begins to look like a car wreck. This news follows shocking revelations about sexual harassment revealed by a former female engineer and the suicide of an African-American engineer.

Uber’s troubles directly contradicts studies such as the one conducted by Florida Atlantic University College of Business that report corporate social responsibility as bad for shareholders. Consistent malfeasance and bullying in the workplace doesn’t seem to be doing much to bolster Uber. Isn’t it time to set aside the teachings of Milton Friedman and Harvard Business School that only shareholders count and start building psychologically healthy, safe, fair and productive workplaces?

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Where are the Waldos?

Do you remember the children’s puzzle books, Where’s Waldo? by British illustrator Martin Handford?You would have to find the skinny guy in the red-striped shirt and glasses in a thickly populated illustration.  The Board of Directors at Uber are starting to remind me of this popular series. No matter how hard they look they can’t seem to find someone to take responsibility for what goes on in the company.

I’ve written quite a lot about Uber this year, from the shocking revelations of sexual harassment made by a former employee, to the assurances of board member Arianna Huffington that the company had no systemic problems, to the heartrending suicide of one of their engineers, Uber has been dominating the business news. Now they’re again grabbing headlines, this time for pocketing millions of dollars of drivers’ commissions due to a “miscalculation.” The company has been basing its percentage on a driver’s entire fare, rather than what the driver makes after taxes. Uber spokeswoman Rachel Holt has issued a statement according to the New York Times that “We are committed to paying every driver every penny they are owed — plus interest — as quickly as possible,” but I have to wonder how a company of this size could make not only this mistake, but expect drivers to pay the taxes on fares instead of passing that cost on to the customer.

Where is the board’s oversight in this? Either they’re ignorant of what is going on here and therefore negligent, or they’re complicit. The solution is simple. Rather than trying to find a chief operating officer to babysit CEO Travis Kalanick, they’d be better off replacing him. The buck, like their fares, has to stop somewhere.

 Andrew Faas is the author of From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire

Illustration credit: Where's Wally at Wemberley?

How NOT to Fix Workplace Culture

In February I wrote about the reports of sexual harassment at Uber and how CEO Travis Kalanick had created a culture that promoted this sort of behavior. However, I was enthused to hear that high-profile board member Arianna Huffington was stepping in and vowed to make sure that Uber would no longer be at the mercy of “brilliant jerks.”

Sadly, my rejoicing was premature. Huffington told CNN today that she and the head of human resources at Uber had spoken to hundreds of women at the company and they had found only “a few bad apples” but “this is not a systemic problem,” she said.

This is an amazingly shortsighted. Employees who work for bullies are highly unlikely to confide anything in the HR department, which is generally seen as being on the side of management. Nor are they likely to confide in a celebrity whose chief goal is damage control. An independent investigative team should have been called in that could guarantee anonymity for the people with whom they spoke. It’s already been shown that HR failed the young woman who reported her experiences on her personal blog, which went viral.

The fact that Huffington reported all of this on national television brings home how self-serving this report was. Even if, as Huffington indicated, Kalanick has “evolved,” and Uber does hire a chief operating officer to help Kalanick run the company, it is naïve to assume that this would do anything to change behavior is ingrained in the workplace culture.

It is perhaps ironic that this report dropped the day after the sitting president of the United States was proven to be a liar. I would imagine that the employees of Uber are like the rest of America—they have no idea who in power they can trust.

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How ‘Brilliant Jerks’ Can Ruin a Workplace

Yesterday I discussed the revelation by a former Uber employee that reporting incidents of sexual harassment to the human resources department was useless. This really hit a nerve with readers, who left many comments about how futile that still is. It’s no surprise that this behavior continues. In his article in the New York Times, Mike Isaac reveals how the “focus on pushing for the best result has also fueled what current and former Uber employees describe as a Hobbesian environment at the company, in which workers are sometimes pitted against one another and where a blind eye is turned to infractions from top performers.” 

In my work for psychologically healthy, safe and fair workplaces I am often challenged by executives who claim my findings and assertions are too extreme and do not reflect the real world. Clearly, they reflect what is going on at Uber, and Uber is not alone. In 2015, Amazon was exposed for their brutal culture. I discuss these sorts of toxic workplace cultures, how to recognize them, and how to change them, in my new book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire.

Change may be coming at Uber. The exposé by the brave former employee captured the attention of CEO Travis Kalanick, top management and the board. Perhaps with solid leadership a healthier culture could be implemented. I applaud board member Ariana Huffington's vow that company will no longer hire “brilliant jerks.”

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