If former U.S. Attorney General Eric Holder was to sum up the board’s role in the cultural meltdown at Uber that almost derailed the company, it is that directors gave too much deference to founder Travis Kalanick—something, he says, that boards need to pay particular attention to in an era of superstar founders and unicorn valuations.
Speaking at the annual meeting of the Society for Corporate Governance in Washington on Thursday, Holder, who was called in to investigate what went wrong at the privately-held ride sharing pioneer amid a slew of scandals over workplace behavior, mistreatment of female employees, said he discovered a culture that had not grown up as fast as Uber’s fortunes and tended to cater to what board member Arianna Huffington described as “brilliant jerks.”
“You have to make sure that just because they have these skills they don’t get to do things that regular employees don’t get to do,” Holder said.
He credited new CEO Dara Khosrowshahi with creating more openness at the company, as well as needed personnel changes in the HR and legal departments, and said he’d learned a lot about what makes—and breaks—a company’s culture.
“It’s hard to define,” he said, “but you know it when you see it and you know it when its not there.”
So what else did he learn from his time at Uber? Plenty. Some of his big takeaways for directors:
PROBE, PROBE, PROBE. “Don’t assume things are going well,” within the company he said. Any large organization filled with people is going to have people problems, and silence is probably a bad sign, not a good one.
ENGAGE WITH EMPLOYEES. Direct interaction with HR, compliance and regular employees is critical. Walk the floor out in the company, and listen to what people are saying.
RED FLAGS. Two big red flags on culture for board members to keep an eye out for: When the board can’t speak to HR and large numbers of complaints about a particular thing by a particular group.
BLIND RESUMES. To encourage diversity, he said boards should be open to ideas such as “blind resumes,” stripped of any racial or gender identifiers. Unconscious racial bias, he said “was not a Starbucks problem. That’s an American problem that manifested itself at Starbucks,” adding that “This is not something that just white folks have in this country.”
ROONEY RULE. At the board level, he encouraged directors looking for a more diverse boardroom to consider adapting the NFL’s “Rooney Rule,” which requires a multi-racial slate of candidates and is credited with bringing more black coaches into the league.
OBJECTIVE BOARD STANDARDS. “Simply because you’re on the board in 2010 doesn’t mean your on the board for the next 20 years,” he said. While it’s not easy to do, board member assessments are critical, said Holder. There has to be a certain amount of objectivity brought into the process,” he said, though he admitted that it was “more easy to describe” than to figure out how to do it.
Another big lesson he discovered at Uber: Private companies will be held to the same standards as public ones. “Just because you’re private as opposed to public doesn’t mean the public won’t be interested in what’s going on.
Would he ever consider joining a board? “You really have to think long and hard,” he said. “It’s not like it used to be…It really is a job. It’s not like something where you just show up.”
Read more: Will Uber’s Board Makeover Pay Off?
