Lessons From Uber’s Governance Breakdown

Lessons From Uber’s Governance Breakdown

When private companies need an ethics plan

By Eve Tahmincioglu

The latest developments in the Uber saga, including a legal complaint against the former CEO and shareholder feuding, are just another sign of how the ride-hailing company could have benefited from strong ethics guidelines.

And to be effective, those guidelines would have to have strong board oversight, maintains Patricia Harned, Chief Executive Officer of the Ethics & Compliance Initiative (ECI).

“Uber is very quickly becoming the poster child for what happens,” she says, when companies don’t make investments in and commitments to ethics and compliance programs. And that’s the case for public or private companies.

Private companies, she continues, adopt a lot of the practices mandated for public companies because they’re effective and create internal controls companies need.

What’s happening with Uber is that the rules that were in place when the company was a small startup, ones that were aggressive to promote growth. They should have changed as it became more successful in the global market place, she says, adding that at the top of the list should have been having systems in place to review CEO conduct, in addition to basic ethics and compliance practice.

“It begins with having a good set of ethical values that the company agrees to and commits to,” she stresses.

Companies, she adds, need to have a code of conduct internally for the employees that’s a reflection of the company's values. And there should be a chief ethics and compliance officer with oversight on the internal operations but who can also support the board so they’re sure management is upholding those standards.

While board members aren’t keeping track of day-to-day operations, she advises that directors need to ask good questions of management and have the information streams they can rely on so they can keep track of ethics or compliance problems and figure out how to handle them.