Human resource management did not play a bigger role than now in the success of organizations around the globe as it is closely linked with the so-called HR practices pursued by companies. HR practices at organizations are derived from their respective Human Resource Management Plans (i.e. HRMPs). There tends to be a unanimous agreement by researchers and HR experts alike as to how there is no one-size-fits-all model in regards to a viable HRM plan.
HRM plans of companies are materially different compared to each other as they need to be in alignment with a number of factors such as organization’s vision, mission, values, strategies, policies, programs and challenges. The onus of analyzing these external and internal factors and developing a viable HRM plan is on the HR managers. This HRM report will analyze the external and internal factors impacting Uber and develop an HRM plan for Uber based on the business analysis.
Uber is P2P ride-sharing, food delivery and transportation company based in San Francisco, California. Boasting operations in around 633 cities world and some $37 billion in revenue, Uber is one of the most successful transportation startups. Recently, Uber was valued at over $70 billion.
Despite being one of the most successful startups, Uber ‘s culture, where sexual harassment and discrimination was pervasive, has proven to be detrimental to the company’s brand image. The perennial crises involving systematic failure of the HR managers of Uber have culminated in its CEO, Travis Kalanick, resigning amid increasing pressure from Uber’s shareholders. The debacle at Uber was a testament to how HR practices at the company were not viable enough to avert these and other crises (Boudreau,2017). Below are presented the organizational strategical analysis and an HRM plan for Uber to go further.
Organizational strategic analysis
Conducting an organizational strategic analysis with the use of SWOT and PESTLE is indispensable prior to developing an HRM plan, largely because viable HRM plans are always designed with regard to a number of factors (Holland, 2003). Below is presented an organizational strategic analysis of Uber.
SWOT analysis is a valuable business strategy tool utilized by strategists in order to identify the strengths, weaknesses, opportunities and threats facing a company. Here is Uber’s SWOT analysis:
- Uber has a competitive advantage in terms of brand equity. With presence in over 60 countries, Uber is easily a globally recognized brand. On the Brand Value Parameter, Uber has outperformed both General Motors and Ford.
- Uber’s business operation involves low fixed investment. Fixed investment is investment made by the company in tangible assets such as automobiles, buildings and other assets for the company’s operations to go and stay live. Uber’s operations, on the other hand, are not contingent upon having these assets (Wohlsen, 2014). Therefore, expansion for Uber in other cities is viable and requires less investment, providing a key strength for the company.
- Unlike other taxi services and companies, Uber employs a dynamic pricing strategy (Uber, 2018). Dynamic pricing strategy involves prices for services (i.e. Uber rides) changing constantly in relation to demand, making the prices more attractive consumers.
- Uber retains a laser focus on customer satisfaction. Unlike other taxi service companies, Uber is focused on providing better services, and has a dual rating system which allows both the rider and the driver to rate each other, boosting trust and safety.
- Cashless payments are more secure and faster, and it is another competitive advantage of Uber in being able to process payments as quickly as possible.
- Uber’s taxi drivers are vetted and verified before they can become Uber Partners, increasing the standards of service for customers.
- Easily emulated business model. Uber’s business model does not involve the use of exclusive technology, meaning other companies (for example, Lyft) can emulate and enter the market.
- Low barriers to entry within the transportation industry. Barriers to entry within the transportation network industry is low, and new entrant can easily penetrate the market. There are number of alternatives such as Curb and Lyft in US market.
- Does not accommodate consumers who are technologically challenged. Uber tends to be popular with users who are technologically savvy, which is another weakness of the company.
- Unprecedentedly reliant on the internet and drivers. The internet and the drivers are the backbone of Uber. This is another weakness of the company.
- Data privacy issues. Uber collects data on all of its consumers in relation to the ride and destination. This can be counterproductive as both EU and US plant to introduce more regulations relating to data privacy.
- Uber can expand into more developing markets, as the internet penetration rates going up in almost all parts of the world. Potential markets include India, China and Hong Kong.
- Rising disposable income signals that more consumers will be amenable to spending more on transportation such as Uber, providing it with another opportunity.
- Uber could introduce a reward system for frequent rides with higher rates
- Uber could diversity into booking certain services and other areas, and wean itself of its riding business.
- Lower remuneration for drivers might result in drivers being discontent with Uber, decreasing its attractiveness to prospective drivers.
- Government regulation is considered the most present existential threat. As a result of change in regulations, Uber has been banned in Italy, Hungary, Bulgaria and other places. More governments could introduce these kinds of regulations.
- Protests by traditional cab drivers. Uber has become resigned to constant protests around the globe regarding its operations. Future protest can threaten its market share and success.
- Customer retention becomes more onerous as more competitors enter the market, largely due to the low barriers to entry into the industry.
By conducting a PEST analysis of Uber, valuable data and analysis regarding the existential factors can be derived for the HRM plan. Here is Uber’s PEST analysis.
Political factors have substantial implication for Uber as a company. Some governments are concerned about the current regulations within the P2P ride-sharing industry, and want to introduce more regulations on companies such as Uber (Robinson and Murgia, 2017). In addition to that, some countries including Italy have even banned Uber altogether. These bans coupled with Uber’s poor reputation can have an detrimental impact on Uber.
Economic growth in countries such as US, China, and India translate into increased disposable income increases, signaling that more consumers are amenable to use Uber’s services (The World Bank, 2018). Therefore, these economic factors stand to benefit Uber.
Like economic factors, social factors are equally important for Uber and its business. The share of middle class people in most of the word is growing, suggesting that more consumers will be able to spend more money on services such as Uber. On the other hand, social factors including people’s perception of the company can negatively impact Uber’s business model (Enberg, 2016). Therefore, Uber needs to ensure that it sustains its acceptable brand image and decrease the number of PR crises.
Technology is at the heart of Uber’s business model. Thus, technological factors can positively impact Uber’s business.
The introduction of AI-powered driverless cars can be the technological factors Uber can use to its advantage if it invests in this area (Marshall, 2018). Driverless cars can substantially increase Uber’s profit margin, increasing its market capitalization and value.
Uber can introduce more navigation tools powered by Google Maps, and other navigation services.
The organizational analysis into both internal and external factors impacting Uber suggests that the company can apply better HR practices with a view of negating the negative impacts of some forces and maximizing the impact of positive ones.
Based on the organizational analysis above, Uber’s success as a business is contingent on its workforce with exceptional technical skills. HRM can ensure that Uber can recruit and retain the workforce it. Employee poaching remains pervasive among tech firms in San Francisco (The Economist, 2016). Therefore, HRM can ensure that HR strategies are introduced and implemented at Uber with a view of retaining the talent. Overhauling how HR recruits the best of the best is indispensable to ensuring that Uber’s success is not compromised.
HR at Uber was largely concerned with recruiting and not retention, or ensuring a workplace environment where everyone felt welcome! Startups tend to view HR through prims of recruiting, as Uber is experiencing unprecedented growth, its HR strategy should also pay diligent attention to other aspects such as retention rates (MaRS Market Insights, 2012).
PR crises involving sexual assaults at Uber has been detrimental to Uber’s brand image (Levin 2017). HRM should also ensure to develop policies which discourage unacceptable behavior, reducing the likelihood of more crisis. Stamarski (2015) suggest that to reduce sex discrimination in the workplace, organizations should resort to HR practices which are closely aligned with organizational structures, processes and practices (McKenzie et al, 2012). Therefore, by developing and HR policies and implementing them should be given precedence as Uber is susceptible to crisis stemming from sexism.
Uber’s drivers play a key role in its success as a company. Drivers tend to be underpaid by Uber, as the class action of New York Uber drivers corroborates (Garun, 2017). Disenchanted drivers can start working for other companies such as Lyft as contractors. Therefore, HR strategies at Uber can introduce points-based reward systems for drivers with a view of increasing their retention rates.
Female Uber drivers earn 7% less than male ones, testifying to how there is a gender pay gap between company’s drivers (Korosec,2018). HRM at Uber should introduce new algorithms whereby remuneration processes are gender blind. By ensuring pay parity at Uber, HRM can improve Uber’s reputation and its brand value (Ashton,2014).
These and other HR strategies can ensure that Uber is positioned to address the issues it faces, and maximize the business opportunities.
HR functions at Uber
Uber posts job opening on Uber.com, and disseminates targeted ads on social media, Instagram and Facebook. In addition to that, Uber riders can expect to play a coding game on their Uber apps, and impress the recruiters at Uber. Currently, Uber uses task-based job descriptions, and is advised to start using competency-based job description as these types of descriptions are conducive to attracting more job applicant (Hawkes and Weathington, 2014). Smith (2015) underlines the importance of drafting legal job descriptions, and the cross-analysis of Uber’s job descriptions suggests that Uber is doing good in this regard.
Recruitment at Uber can be quite cumbersome, involving multiple phone interviews, and test before a job offer is advanced to candidates. Candidates are first invited for phone interviews. Following a phone call, shortlisted candidates are invited to a round of on-site interviews. During the on-site tests and interviews, tech candidates can be questions on design, algorithms, and data structure, while managerial candidates are questioned on their analytical skills (Bradford,2018). Recruitment at Uber is viable, as the company HRM revolves around recruiting the talent it requires.
Training at Uber is about the so-called three-day ‘Uberversity experience’. ‘Ubersverity experience’ focuses on ensuring that new hires have knowledge about how the company works and its culture. (Zhuo, 2015) Training at Uber should be overhauled in way to make it focused on ensuring that the new talent is given more time to be trained. On the other hand, drivers are not trained properly by Uber. Uber has a 10-minute training video which shows new drivers how to use the Uber app. There is no more training for new drivers (Harris, 2015). To increase both customer and employee satisfaction, Uber should provide more training to drivers. Overall, Uber should offer more training to its corporate employees and drivers alike.
Managing employee relations
There is currently no reliable information as to how employee relations are managed by Uber. Nevertheless, sexual misconduct allegations and perennial crises are a testament to how HR’s managing employee relations function was overlooked by Uber. HR strategies relating to managing employees should be overhauled in order to ensure an equitable and welcoming workplace for all Uber employees.
HR challenges at Uber
There are a number of challenges as to HRM at Uber. These HR challenges are delineated below:
Firstly, HRM’s priority challenge is to overhaul the workplace culture at Uber and make it less susceptible to sexism. Following the resignation of CEO, Travis Kalanick, there have been a number of organizational changes within Uber. Despite these changes, Uber’s culture remains more or less the same.
Secondly, training all the drivers it contracts with is important for Uber. Developing a training program and implementing it among Uber’s drivers can be cumbersome, yet essential. Training penetration rate is 38% among Uber drivers, and Uber only provides one video showing how the Uber app works.
Thirdly, Uber drivers tend to be dissatisfied with their jobs and Uber. To increase job satisfaction among its drivers and corporate employees, there should be a new reward system introduced. There is an existential threat from Lyft as it can lure some of Uber’s drivers, and the introduction of new reward system is long overdue.
Fourthly, Uber has to introduce new HR strategies with a view of making managing employee relations more effective. Doing so would be more conducive to the creation of a welcoming workplace for everyone. The HR crises would have been averted were there policies in place to ensure that employee’s voices were taken into account.
Uber’s performance review system (i.e. reward system) is inequitable, as it provided bonuses eight times more than others to top performers (Donnely,2017). This sort of performance review system translates into direct bias, as studied by Davis (2011). Boice and Kleiner (1997) have cited the important role of performance appraisal review in developing motivated and competent workforce. Therefore, Uber needs to rectify the current performance appraisal review, and to achieve that Uber should introduce the so-called real‐time talent‐management system (RTTMS). RTTMS can lead to a number of benefits in terms of ensuring that the performance review systems is just and equitable (Samarakone, 2010). The costs of implementing the RTTM systems can be high, but the benefits RTTMS offers outweigh such costs. Therefore, Uber should introduce RTTMS and other systems to ensure that its performance appraisal system works for every employee.
- To decrease sex discrimination and sexist behavior within Uber
- To decrease gender pay gap
- To hire more female employees
- Develop detailed workplace policies barring sexist behavior, and ensure that employees are aware of the new policies.
- Conduct weekly meetings with employees where issues relating to sexism are to be discussed
- Make changes to the algorithms to ensure pay gap is decreased.
- Current gender pay difference between male and female drivers: 7%
- Target figure: 0%
- To provide better training to drivers
- To ensure drivers are better equipped with the right skills
- To ensure drivers have the required communication skills
- Develop a training video and an interactive training website for drivers.
- Training video has to include more information and advice to drivers on how to interact with customers, and etc.
- Develop a blog dedicated to Uber drivers and connect them with each other, so that drivers feel like they belong to one community.
- Current training video length: 10 minutes
- Target training video length: 2 hours
- Blog for Uber drivers:0
- Target blog for Uber drivers: 1
- Current training coverage rate: 38%
- Target training coverage rate: 100%
- To introduce a points-based reward system
- To ensure drivers are eligible for jobs within the Uber itself
- To introduce more perks such as health insurance to select drivers
- Developing a reward system for drivers, where drivers can earn bonus payments based on the number of trips and ratings.
- Developing and implementing a plan where select Uber drivers are eligible for health insurance, as it can entice more drivers away from the competitors such as Lyft. Ensure drivers are offered career path to jobs at Uber Technologies as employees.
- Share of Uber drivers eligible for health insurance: 0%
- Target share of Uber drivers eligible for health insurance: 0.5%
- Share of Uber drivers with career paths to Uber Technologies: 0%
- Target share of Uber drivers with career paths to Uber Technologies: 0.7%
- To improve employee relations
- To create a more welcoming workplace
- To ensure employees are provided equal treatment
- Conduct weekly meetings where employees can socialize with each other
- Ensure that all employees are provided an equal opportunity to give vent to their opinions
- Develop a HR mechanism whereby employees can submit complains and ensure timely inspection of these complaints.
Like other companies, Uber’s HRM strategy and plan are impacted by a number of internal and external factors. Based on the organizational analysis of Uber, and HRM plan has been developed. By adopting the above outlined HRM plan, Uber can both minimize the impact of negative forces, while maximizing the impact of positive ones.
- Boudreau, J (2017, March 08). Uber Is Finally Realizing HR Isn’t Just for Recruiting. Retrieved from: https://hbr.org/2017/03/uber-is-finally-realizing-hr-isnt-just-for-recruiting
- Garun, N (2017, May 23). Uber underpaid NYC drivers by millions for nearly three years. Retrieved from:https://www.theverge.com/2017/5/23/15681422/uber-underpaid-nyc-drivers-accounting-commission-error
- Korosec, K (2018, February 06). Pay Disparity Between Men and Women Even Exists in the Gig Economy. Retrieved from: http://fortune.com/2018/02/06/uber-gender-pay-gap-study/
- Ashton, D (2014, December 02). What HR Can Do to Fix the Gender Pay Gap. Retrieved from: https://hbr.org/2014/12/what-hr-can-do-to-fix-the-gender-pay-gap
- Donnelly, G (2017, October, 19). Uber Exec: Bonus System That Gives Biggest Rewards To People Who Work 70-Hour Weeks Is ‘Inequitable At Its Core’. Retrieved from:http://fortune.com/2017/10/19/uber-employee-bonuses/
- Bradford, L (2018, April 02). Things You Need to Know About Getting a Tech Job at Uber. Retrieved from:https://www.thebalancecareers.com/what-you-need-to-know-about-getting-a-tech-job-at-uber-4036276
- Stamarski, C S (2015). Gender inequalities in the workplace: the effects of organizational structures, processes, practices, and decision makers’ sexism. Frontiers in Psychology, 6 (1400). doi: 10.3389/fpsyg.2015.01400
- Hawkes, C. L., & Weathington, B. L. (2014). Competency-based versus task -based job descriptions: Effects on applicant attraction. Journal Of Behavioral & Applied Management, 15 (3), 1.
- Wohlsen, M. (2014). Uber’s Brilliant Strategy to Make Itselft Too Big To Ban. The Wired, accessed 15 April, 2018 < https://www.wired.com/2014/07/ubers-brilliant-strategy-to-make-itself-too-big-to-ban/>
- Holland, P. J. (2013). Human resource strategies and organisational structures for managing gold-collar workers, Journal of European Industrial Training
- Uber (2018). Dynamic pricing and how it works. Uber, accessed 17 April < https://www.uber.com/en-ZA/drive/resources/dynamic-pricing/>
- Robinson, D. and Murgia,M. 2017, Uber faces regulation in Europe as transport company, Financial Times, accessed 10 April 2018 < https://www.ft.com/content/6f4ac284-362b-11e7-99bd-13beb0903fa3>
- The World Bank, 2018. Global Economy to Edge up to 3.1 percent in 2018 but Future Potential Growth a Concern, The World Bank, accessed 9 April 2018 < http://www.worldbank.org/en/news/press-release/2018/01/09/global-economy-to-edge-up-to-3-1-percent-in-2018-but-future-potential-growth-a-concern>
- The Economist (2016). Tech firms shell out to hire and hoard talent. The Economist, accessed 20 April 2018 < https://www.economist.com/news/business/21709574-tech-firms-battle-hire-and-hoard-talented-employees-huge-pay-packages-silicon-valley>
- Enberg, M. (2016). The Influence of Corporate Image on the Attractiveness of Temporary Agency Work, Saimaa University of Applied Sciences Faculty of Business Administration,
- Marshall, A (2018). Uber’s Self-Driving Car Just Killed Somebody. Now What? The Wired, accessed 20 April 2018 < https://www.wired.com/story/uber-self-driving-car-crash-arizona-pedestrian/>
- MaRS Market Insights (2012). Talent for tech: Recruiting the right people for your tech startup. MaRS Market Insights, accessed 10 April 2018 < http://www.marsdd.com/wp-content/uploads/2012/02/MAR-MKI6966_Talent-Tech_White-paper_DRAFT.pdf>
- Levin, S (2017). Uber’s sexual harassment case shines light on a startup’s culture of defiance. The Guardian, accessed 15 April 2018 < https://www.theguardian.com/technology/2017/feb/21/uber-sexual-harassment-discrimination-scandal>
- Zhuo, T (2015). Study Uber’s Hiring Practices to Build a Winning Team in the Sharing Economy. Entrepreneur, accessed 20 April 2018 < https://www.entrepreneur.com/article/250720>
- Harris, M. (2015). Uber: why the world’s biggest ride-sharing company has no drivers, The Guardian, accessed 15 April 2018 < https://www.theguardian.com/technology/2015/nov/16/uber-worlds-biggest-ride-sharing-company-no-drivers>
MacKenzie, C. A., Garavan, T. N., & Carbery, R. (2012). Through the looking glass: Challenges for human resource development (HRD) post the global financial crisis – business as usual?. Human Resource Development International, 15(3), 353-364. doi:10.1080/13678868.2012.66923