HASHTAG LOSING

Uber is designed so that for one employee to get ahead, another must fail

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Obsession
Getting There

Corporate values were always an afterthought for Uber.

The company was founded in March 2009 but didn’t formalize its values until September 2015 at a lavish, four-day staff retreat in Las Vegas. It’s easy enough to see how that happened. In the intervening six years, Uber was busy dismantling the global taxi industry, brawling with regulators and politicians, fending off employment lawsuits, exploring self-driving car technologies, and raising billions of dollars.

Uber CEO Travis Kalanick unveiled the company’s 14 values on stage at the Planet Hollywood Resort and Casino, dressed in a white laboratory coat, according to The Upstarts, a recent book by technology reporter Brad Stone. Kalanick told the audience that he and chief product officer Jeff Holden, an Amazon vet, had spent hundreds of hours conceiving the new “philosophy of work.” He presented slides and a video for each value, headlined by phrases both trite and bro-y: “make magic,” “champion’s mind set,” “superpumped,” “always be hustlin’.” Afterward, buses took employees to a nightclub where DJs Kygo and David Guetta were performing.

A little more than a year later, Uber is learning corporate values aren’t so easy to retrofit. A cultural implosion took place on Feb. 19, when former Uber engineer Susan Fowler published a horrifying account of harassment and systematic mistreatment by the company’s human resources department. But it had been a long time coming at a company that leaned into its brash reputation, disdained the status quo, and prized results, performance, and “hashtag winning”—to use another Travis-ism—over most all other matters.

In practice, Uber’s values were codified by its internal ratings and performance reviews, a process employees simply referred to as “perf.” Uber uses stack ranking, a system popularized by GE legend Jack Welch that requires managers across a company to assign their employees numeric ratings along a bell curve. The system, alternatively termed forced ranking and “rank and yank,” is highly controversial as it demands that high performers within an organization be offset by a certain number of low performers, who are often fired or pushed out.

In interviews with Quartz, half a dozen current and former employees described the company’s internal review process as “competitive,” “very unfair,” and “a black box.” Uber managers rank their employees twice a year on a scale from one (low) to five (high). Three is average, five so rare that it’s reserved for “Jesus or Travis,” one former employee joked. Employees who receive twos or ones are considered underperformers and placed on performance improvement plans (“PIPs”), which also serve to warn that they could be fired or let go down the line.

There are other consequences to a low rating. Being an underperformer means not being able to transfer teams, multiple people told Quartz, a plight also described by Fowler in her blog post. Ratings also affect employee bonuses, which are granted largely in equity. “If you get a very high performance rating, that is a way to do very well,” a former employee said.

Uber declined to comment for this story.

It’s understandable why Uber would want to foster a culture of fierce competitiveness. Ride-hailing is a cutthroat and unforgiving industry that many believe has room for only one winner. As the most highly valued startup in the world, at $68 billion, Uber is under a tremendous amount of pressure from investors to produce results and has little if any margin for error. That its employees are held to similarly exacting standards should hardly be surprising. Nor is such a culture unique to Uber. For example, Amazon has been slammed for its “bruising” workplace and ruthless mass-firings of underperforming staff (nicknamed “purposeful Darwinism”). It’s worth $402 billion.

Advocates of stack ranking say it builds strong teams by letting employees know exactly where they stand. Critics argue it hurts performance by scaring workers and incentivizing them to undercut their teammates. “It sets up an internal competition,” says Jeffrey Pfeffer, a professor at Stanford’s Graduate School of Business. “That’s one of the costs of this. It is by definition the case that if I succeed, it comes at the expense of someone else.”

At Uber, former employees say the system bred competition and infighting that was made worse by whirlwind growth and sprawling, decentralized management. Uber has historically appointed general managers in each city to facilitate its rapid growth. These GMs were expected to master the ins-and-outs of their specific markets and in exchange were allowed to operate largely autonomously. Geographic rivalries were common. At all-hands meetings, Uber would usually start by highlighting the change in ride volume for different markets around the world. A former employee compared it to the scattered and competing factions within the Empire in Star Wars.

“Imagine you’re in charge of the outpost and you’ve got to build this planetary annihilation system, and your boss is back at HQ,” the source told Quartz. “In that universe, of course you’re going to be aggressive and competitive, because it’s your numbers that are going up on the board.”

Those who spoke to Quartz felt the performance review system could be unfair or even arbitrary, with managers awarding higher scores to friends or favorites, to the detriment of other team members. Uber’s system also includes a peer-evaluation section, and former employees said people who received glowing feedback from coworkers could still find themselves being handed a one or two by a manager, sometimes with little or no explanation of why. Another recalled at least three people who were let go without being put on an improvement plan first. An internal culture survey late last year found employees felt Uber’s review process to be stressful and opaque, according to a current employee.

Critics of performance ratings have long argued that they seldom rate performance. GE dropped stack ranking a decade ago and said it would forsake annual reviews entirely in 2015. “The world isn’t really on an annual cycle anymore,” GE head of human resources Susan Peters said at the time, explaining that millennial workers in particular wanted faster, more frequent, mobile-enabled feedback. Microsoft, Accenture, and Adobe are among other high-profile companies to abandon the stack-ranking practice.

Uber said this past week that it had hired former US attorney general Eric Holder to investigate its handling of sexual harassment allegations. Uber board member Arianna Huffington and HR chief Liane Hornsey were also said to be participating in the review, leading two early investors to accuse the company of “continued unwillingness to be open, transparent, and direct.” (Holder, in response, said his review would be conducted “with the highest degree of integrity and professionalism.”)

Meanwhile, Uber is left to grapple with whether zero-sum meritocracy tinged with brash, bro-y swagger is the culture it really wants. Kalanick may not have intended Uber’s values to be read that way, but the company’s rankings have reinforced it. And with language like “superpumped,” “always be hustlin,’” and “meritocracy and toe-stepping”— another Kalanick favorite—written into the professional code, the subtext was always there.

“It’s hard for people to know how to embody the company values,” a former employee said. “People wind up ‘stepping on toes’ in the wrong direction. Instead of challenging managers or superiors with bad ideas, they put down their peers.”

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