BUSINESS

Travis Kalanick, Uber CEO, Takes Leave Of Absence After Sexual Harassment Investigation

06/13/2017 04:04 EDT | Updated 06/13/2017 04:04 EDT

SAN FRANCISCO — Uber CEO Travis Kalanick will take a leave of absence for an unspecified period and let his leadership team run the troubled ride-hailing company while he's gone.

Kalanick told employees of his decision Tuesday in a memo, saying he needs time off to grieve for his mother, who died in a May boating accident. He also says he's responsible for the company's current situation and needs to become a better leader.

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Uber CEO Travis Kalanick speaks to students during an interaction at the Indian Institute of Technology (IIT) campus in Mumbai, India on Jan. 19, 2016. (Photo: Danish Siddiqui/Reuters)

The announcement comes as former U.S. Attorney Eric Holder released a list of recommendations to improve Uber's toxic workplace culture, which condoned sexual harassment, bullying and retaliation against those who reported problems.

Holder recommended that Kalanick be relieved of some leadership responsibilities, shifting them to a chief operating officer and other senior managers. The COO, yet to be hired, would be a partner with Kalanick.

Uber should use performance reviews to hold senior managers accountable by setting metrics for improving diversity and responsiveness to employee complaints, the report says.

Holder's firm, Covington & Burling LLP, and a second firm, Perkins Coie, conducted separate examinations of Uber's workplace culture after a former engineer levelled charges of sexual harassment.

Susan Fowler posted a blog in February that detailed harassment during the year she spent at Uber, writing that she was propositioned by her manager on her first day with an engineering team. She reported him to human resources, but was told he would get a lecture but no further punishment because he was a "high performer,'' she wrote.

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Eric Holder speaks at the 44th Annual Congressional Black Caucus legislative conference on Sept. 26, 2014 in Washington, DC. (Photo: T.J. Kirkpatrick/Getty Images)

Holder's investigators conducted more than 200 interviews with current and former employees, including people who had knowledge of Fowler's allegations, according to the law firm's recommendations .

Liane Hornsey, Uber's chief human resources officer, said implementing the recommendations "will improve our culture, promote fairness and accountability, and establish processes and systems to ensure the mistakes of the past will not be repeated.''

The report makes it clear that Uber was not doing enough to protect workers from sexual harassment and retaliation, noting that company policies need to state directly that such conduct is prohibited.

In addition, Uber must require that managers immediately report discrimination, harassment or retaliation, and ensure that codes of conduct apply to offsite events and conferences.

Uber's board said it would review Kalanick's responsibilities and reassign some to others. The board will continue its search for a chief operating officer with a background in diversity and inclusion.

The board also recommended adding independent directors and replacing its chairman, co-founder Garrett Camp, with an independent chairman. The board currently has eight voting members, three from within the company. The board also called for appointment of a senior executive to oversee implementation of Holder's recommendations.

 

Holder recommends that Uber make sure its workforce becomes more diverse from the top down. Uber's diversity figures are similar to the rest of Silicon Valley, with low numbers for women and underrepresented minorities. In the U.S., less than a third of the company's workers are female.

In addition, the report says that diversity and inclusiveness should be a key value for Uber that's included in management training.The word diversity appears 42 times in the 13-page recommendations document.

While Uber released Holder's recommendations, his full report was kept private to protect the privacy of those filing complaints. The company's board unanimously adopted all of the recommendations Sunday.

After Fowler posted her blog, Uber Technologies Inc. made changes in human resources and opened a 24-hour hotline for employees. Last week, the company fired 20 people including some managers at the recommendation of Perkins Coie, which probed specific complaints made to the company about sex harassment, bullying, and retaliation for reporting problems. That firm checked into 215 complaints, with 57 still under investigation.

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Travis Kalanick gestures while speaking during the opening of "Startup Fest", a five-day conference to showcase Dutch innovation, in Amsterdam, Netherlands on May 24, 2016. (Photo: Marlene Awaad/Bloomberg via Getty Images)

Under Kalanick, Uber has disrupted the taxi industry in hundreds of cities and turned the San Francisco-based company into the world's most valuable startup. Uber's valuation has climbed to nearly $70 billion.

But Kalanick has acknowledged his management style needs improvement. The 40-year-old CEO said earlier this year that he needed to "fundamentally change and grow up.''

Besides the sexual harassment complaints, in recent months Uber has been threatened by boycotts, sued and subject to a federal investigation over its use of a fake version of its app to thwart authorities looking into whether it is breaking local laws.

Kalanick lost his temper earlier this year in an argument with an Uber driver who was complaining about pay, and Kalanick's profanity-laced comments were caught in video that went viral.

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A private security guard stands in front of Uber headquarters on June 13, 2017 in San Francisco, Calif. (Photo: Justin Sullivan/Getty Images)

The company has faced high turnover in its top ranks. Jeff Jones resigned as Uber's president after less than a year on the job. He said his "beliefs and approach to leadership'' were "inconsistent'' with those of the company.

Experts interviewed this week by The Associated Press said Kalanick should step aside or at minimum change his behaviour for the company to make progress.

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Krisher and Auto Writer Dee-Ann Durbin contributed from Detroit.

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