Trenton Tan
BM HL 12D Business & Management - Human Resources Essay on Uber
Uber Technologies Inc., often better known more simply as Uber, is a transportation network company founded back in 2009 (Lashinsky, 2015) that specializes in transportation through their mobile application which works as a platform to connect passengers and drivers (Pullen, 2014). It has since grown into an emerging, well known, successful, and yet controversial company present in 58 countries and worth over $50 billion (Macmillan, 2015). While it still is, in essence, a vehicle for hire service, Uber it presents something new in that it incorporates technology with an unusual structure organizational structure that deviates from the norms in the vehicle-for-hire-service industry. Its present rapid growth, success, and controversies can largely be traced back to this. Currently, Uber Technologies Inc., employs over 3000 employees. This does not seem too many for a company valued at $50 billion, but it does appear to be comparatively little for a vehicle-for-hire service company that is present in 311 cities (Lashinsky, 2015). The reason behind this is that the bulk of Uber’s workforce of more than 160,000 active drivers drivers aren’t directly employed as regular employees by the company (Frizell, 2015), instead, Uber considers the drivers people hire through its app as independent contractors (Isaac & Singer, 2015). This innovative way of managing resources has led to a number of positive results for the company. First, this structure of human resources minimizes the responsibilities of Uber as, while the drivers are part of the work force, they are not formally employees of the company. Uber has no obligation to pay for their employee benefits. The company also does not have to go through the paper work involved with their payroll and neither do they have to deal with the drivers’ salary taxes, social security, and healthcare benefits. Doing this greatly reduces the additional costs often associated with hiring regular employees instead of independent contractors. Moreover, Uber can easily select which drivers they want to retain or to allow to continue using their platform. Should they not be satisfied with the performance or conduct of a certain driver, they can easily remove him/her from service without creating legal problems such as wrongful termination lawsuits, and to add to this, they also have no obligation to pay for severance packages or bonuses. This goes similarly with the opposite when drivers first enter the service. The company saves both time and money on the recruitment, hiring, and training processes that often go with each employee that enters a company. Second, Uber’s workforce remains very flexible. This benefits both Uber and its drivers. For Uber, they can easily obtain the service of a lot drivers with very limited restrictions in terms of the kind of people they can hire. So long as the driver has a vehicle, has proper licensure, and has passed their background test, they can work as a driver under the company’s transportation network service (Pullen, 2014). They can easily hire part-time drivers looking for an extra source of income who will only work part time based on his/her schedule without causing much problems as the drivers can come as easily as they go. For its drivers, they can easily have their work at Uber as a sideline for extra income; they can have it as a part time job; they can have it as a second job, all being things many Uber drivers do (Frizell, 2015). They have near absolute freedom with their schedule, a flexibility that is not afforded to most employees who essentially do the same work in the industry. This is an aspect of the company’s way of managing its HR that appeals greatly to majority of its drivers.
Third, this organizational structure that the company utilizes along with its innovative technology is also responsible for attracting many drivers to Uber as their technology directly links drivers to would be passengers removing the need to park and wait at certain areas for passengers without the guarantee of getting one. This saves Uber drivers both time and effort. Lastly, Uber also obviates the need to spend a large amount of money on capital and variable costs in the form of taxi cabs, garages, fuel, and maintenance. They do this by having these costs answered for by the drivers own the cars themselves (Carney, 2015). This removes even more responsibility on the part of Uber. However, this unusual and innovative structuring of their human resources also plays a big role in the legal and ethical controversies Uber has increasingly become involved in. Its classification of its drivers as independent contractors and not employees has stirred a problems with different people. It has resulted in six different law suits wherein drivers sued Uber for worker misclassification (Isaac & Singer, 2015). There are people who argue that Uber’s treatment of its drivers resemble that of an employer’s treatment of an employee rather than an independent contractor’s because they still control the workplace behaviour of their drivers, it sets the prices that drivers can charge passengers, and monitor their performance, and have a practice of deactivating the app of inactive drivers after 180 days (Surowiecki, 2015). Because of Uber’s classification of its drivers as independent contractors and not employees, its drivers lose out on things such as job security, healthcare benefits, and severance packages if they are removed from their work. The lack of ethical consideration in this aspect of Uber’s HR practices has saved them a lot of money, but has, at the same time, caused law suits from their drivers. Another instance where its unusual HR practices and organizational structure has brought trouble would be in countries where Uber operates in while its legality is still in question. Its practice of hiring drivers who aren’t licensed taxi drivers to perform a similar job has sparked a lot of trouble that has clashed with local governments and taxicab drivers, placing its drivers in harms way. These have resulted in conflicts that range from instances of impounding of car’s of Uber drivers (Khosla, 2015), threats against Uber drivers in Brazil, to protests that have turned violent in China and France (Che, 2014). Lastly, an instance of Uber’s HR practices that brings about questions of ethics would be its fare cuts and requirements to gain access to guaranteed hourly earnings from Uber. The company has recently cut its passenger fares down by about 22% (Carney, 2015). It then lowered its commission cut of 20% to 5% to make it appear fair to its drivers. To add to this, they explained that the lowered fares would increase passenger trips. True enough, the number of passenger trips did increase, however, Uber eventually raised their commission cut by little, and required Uber drivers to be online on their app 50 minutes for every 60, do one trip an hour, and accept 90% of ride requests to gain access to hourly guarantees (Huet, 2015). This makes it nearly impossible for Uber drivers to work for other vehicle-for-hire services at the same time, something a lot of drivers do. This strategy is objectively beneficial for Uber, making its drivers more focused on just one company, itself. In the end, Uber drivers end up having to do about 45% more work for just 9% more money. These practices of Uber do not do their drivers justice. In conclusion, Uber is certainly a highly innovative business when it comes to meshing technology and human resource management. It is a pioneer in the technological transportation network industry that many companies have began to emulate. However, its unusual HR practices still generate a lot of problems and ethical questions that they would need to address to truly succeed beyond what it has achieved.
Reference List
Frizell, S. (2015, January 22). Uber Just Answered Everything You Want to Know About Your Driver. Retrieved September 27, 2015, from http://time.com/3678507/uber-driverquestions/ Lashinsky, A. (2015, June 3). Uber: An oral history. Retrieved September 27, 2015, from http:// fortune.com/2015/06/03/uber-an-oral-history/ Macmillan, D. (2015, July 31). Uber Valued at More Than $50 Billion. Retrieved September 27, 2015, from http://www.wsj.com/articles/uber-valued-at-more-than-50billion-1438367457 Pullen, J. (2014, November 4). Everything You Need to Know About Uber. Retrieved September 27, 2015, from http://time.com/3556741/uber/ Carney, M. (2015, January 9). The hidden cost of being an Uber driver and why fare cuts really do hit their bottom line. Retrieved September 27, 2015, from https://pando.com/ 2015/01/09/the-hidden-cost-of-being-an-uber-driver-and-why-fare-cuts-really-do-hittheir-bottom-line/ Isaac, M., & Singer, N. (2015, June 17). California Says Uber Driver Is Employee, Not a Contractor. Retrieved September 27, 2015, from http://www.nytimes.com/2015/06/18/ business/uber-contests-california-labor-ruling-that-says-drivers-should-beemployees.html?_r=0 Surowiecki, J. (2015, July 6). Are Uber Drivers Employees? Retrieved September 27, 2 015, from http://www.newyorker.com/magazine/2015/07/06/gigs-with-benefits Khosla, E. (2015, April 8). Here's everywhere Uber is banned around the world. Retrieved September 27, 2015, from http://www.businessinsider.com/heres-everywhere-uber-isbanned-around-the-world-2015-4 Che, J. (2015, August 12). 9 Countries That Aren't Giving Uber An Inch. Retrieved September 28, 2015, from http://www.huffingtonpost.com/entry/uber-countries-governments-taxidrivers_55bfa3a9e4b0d4f33a037a4b Huet, E. (2015, January 9). Uber's Clever, Hidden Move: How Its Latest Fare Cuts Can Actually Lock In Its Drivers. Retrieved September 28, 2015, from http://www.forbes.com/sites/ ellenhuet/2015/01/09/ubers-clever-hidden-move-how-fare-cuts-actually-lock-in-itsdrivers/
