Uber's Global Expansion and Challenges

Introduction

Uber is a Transport Network Company headquartered in San Francisco, California (Hawkins, 2018). The company is new and growing that offers a wide range of services, which includes but not limited to food delivery, bicycle-sharing system, peer-to-peer ridesharing, and ride service hailing. It is one of the businesses that has seen drastic expansion of its operation across the globe available in approximately 785 metropolitan areas across 65 countries (Ibqal, 2019). A wave created by Uber concept has been growing tremendously resulting in increased prominence of shared economy. All the changes that the company has brought is now referred as uberisation. The name Uber means “topmost” or “super” and literally, the company has grown to be “super” in the transport industry with more than 100 million users worldwide. In the United States, the company has approximately 68% market share, which makes it one of the most successful company in the recent times (Hawkins, 2018). Arguably, Uber, the company has conquered the transport industry in certain countries primarily the US and setting precedence of approaches and strategies to be adopted in attempt to conquer the business sector and heightening performance. Presently, the company is said to be a gold member of the Linux Foundation, a leading non-profit technology consortium, joining the ‘elite’ and ‘bigwigs’ companies of the like of Google, GitHub, Adobe, Cisco, and Facebook less than 10 years after its founding (Hsieh, 2018; Melanson, 2018). The company enjoys a five star privacy rating and the business name has gained a positive reputation over the years. Founded in the year 2009 by Garret together with the help of his colleague, Travis Kalanick (Hawkins, 2018), the first Uber prototype was developed by Garret Camp with the help of his friends including Oscar Salazar and Conrad Whelan who were later joined by Kalanick in advisory capacity as chief advisor. In 2012, Uber launched the mobile app where udders were able to request a regular taxi and this made its operation easier and user friendly to customers (Manuti, & De Palma, 2018).

Scandal

The year 2019 has seen many issues emerge within the company. The company employees, including drivers have faced a wide range of problems, which seem to be on the increase with time. According to the recent reports, Uber Company has been pushing the limits too far as it seeks to earn a high revenue. As pointed by Chan (2019) the company is earning high revenue at the cost of its employees. The drivers’ complaints range from being overworked, underpaid, and undermined, which collective goes against work ethics advocated by many countries and regulatory organizations. Some of the company’s employees also argue that the firm has always pushed them to work on many orders, which is an issue that has resulted in low earning, safety concerns, and increased suicide cases. In essence, it is time for the company to find an amicable solution so that its drivers and other employees can move forward and build a reputable name for the company.

Is Uber is pushing the limits too far?

Uber seeks to beat all its competitors such as Lyft but in order to achieve this goal, the company has pushed its drivers, employees, and partners to the limit demanding more commitment, input, and output. A few years ago, we could confidently say that the company was marching towards global dominance. But at the start of 2018, this situation began to change because it began to pick serious battles and facing, what it considerable, negative reputation on compromising on human concerns on the expense of financial performance (Chan, 2019). In the recent times, Uber has laid strategies to become the leader in the taxi industry. In every business, competition is one of the agendas that people must work hard to address in order to become successful. The taxi industry is very competitive because ease of entry meaning it very difficult for a company to command consumer loyalty and subsequent retaining them. In fact, the company was forced to merge its business with other homegrown rivals in different countries such as Russia, China, and Southeast Asia among others.

Overworking the Drivers In Order To Get High Income

According to research, the Uber drivers are “encouraged and incentivized,” by the company to work for long hours (Geradin, 2015). Although some people tend to disagree with statement, there seem to be some truth in it. One of the ongoing issues that have attracted a lot of controversy is overworking the Uber drivers. Since the start of 2018, there has been an outcry because of the concern that the Uber drivers are overworked, which is definitely an issue of public safety (Maiden, Yemen, & Isabella, 2019). Numerous investigation argue that the drivers are been pushed to the limits on a daily basis because the incentives and earnings are shrinking on a daily basis (Loginova, Wang, & Liu, 2019). Many drivers speak about how exhausted they become daily because they frequently work seven days a week from early morning to late hours. This is a worrying trend because overworking affects drivers’ health and it also a huge implication on the safety of the occupants. Some of the cases reported by the Uber were involved in high number of road accidents. For instance, in India, it was reported that approximately 200,000 road fatalities yearly were caused by Uber drivers because of fatigue and so on (Chen, 2018). Definitely, exhaustion and lack of rest can cause drivers to lack proper concentration and therefore, an increase in accidents. As contended by (Chen, 2018)) majority of the drivers are forced to turn to stimulants so that they can be able to stay alert for long hours. In cities such as London and Manila, it is reported that some of the app-based drivers have turned to drugs because they want to cope with the long working hours (Secunda, 2018). In addition to this, most of these drivers work under the pressure and stress of earning small amounts, which could possibly cause depression and mental health problems. According to Uber reports, many drivers are fully aware of how much driving hours they engage because the company has regularly used very careful metrics to determine what can be considered active driving (Chen, 2018). The Uber Head of Safety Product Sachin Kansal argued that the company has consulted many third-party experts to help in finding an amicable solution to the issues that have continued to affect the Uber experience from time to time.

According to a report by the BBC (2018), the European court ruled that Uber is a taxi firm and not a technological company. According to the court, the Uber Company is supposed to follow the same rules followed by the ordinary taxi firms across Europe. Sadly, Uber drivers are not treated by the company as employees rather they are considered as gig workers, which means that they do not enjoy employee benefits like minimum wage, holiday, or sick leave and so (Maiden, Yemen, & Isabella, 2019). The question of whether Uber drivers are really overworked has its own share of having different perspective. According to the GMB Union (which has more than 2000 Uber drivers), the Uber firm encourages its drivers to work for more hours. Because of this and many other issues, Uber’s license in London has been rejected and that is the reason the union went to court in an attempt to have the license renewed (DeMasi, 2016). The union argues that the best solution that can help address this issue is introducing “maximum hours worked cap,” which will limit the number of hours drivers work (Ibid). The company recent shifted the position in line to addressing the problem of working hours where the management says it is willing to introduce hours limit so that the drivers cannot be overworked (DeMasi, 2016). Although there has been an ongoing battle in regard to Uber license in London, the drivers are currently allowed to work in London but there is a concern that the appeal process may take years to come to a conclusion (Healy et al., 2017). The company has been making claims that they are doing their best to adhere to all set rules. For instance, in the UK, it has set in strategies to ensure that all drivers are licensed. Furthermore, according to the latest report of 2019 January, the company own investigators are overworked, underpaid, and traumatized (Dubal, 2017)). Ideally, the investigators have a huge workload with some of them saying that they deal with more than 1200 cases every week demonstrating the extent of work overload within the company (Dubal, 2017). A report prepared by CNN and outside risk management consultant says that for more than one year, the Uber’s investigators have been overworked since they handle hundreds of cases weekly. The investigators are tasked to handle severe cases of sexual harassment, rape, stealing, and traffic accident among others.

Sorrowfully, a high number of the investigators face mental health risks, including the potential of suicide. However, Uber’s head of safety communication say “Uber will continue to focus on the safety in 2019, including the release of an accurate transparency report" (Chan, 2019). The company maintained that their primary goal is maintain safety of all players, however the evidence show otherwise. A recent memo however, has indicated that a majority of the investigators have "serious level of stress and anxiety of team members," to a point that some of them require medical care. Another issue that has emerged is that the Uber’s employees are way underpaid. One thing for sure is that compensation is how employees measure self worth. If employees feel that they are receiving good pay, they have confidence working and one is motivated to work. It is said that the company investigators get a pay of roughly $18.5 an hour, which is low compared to investigators that work with airline and bus compared who earn an average of $26 and $21 an hour respectively (Skok, & Baker, 2019). When first Uber started, many drivers were earning considerably good pay and the business was seen as a new venture with great opportunity. As a result, Seaquist et al. (2015) view that many drivers were eager to join this new venture. In fact, some places were reported to have oversupply of fleet and drivers with a many more people pending to join the app-based cab business (ibid). However, the driver work based on targets and packages, which have changed from time to time. The changes are designed by the Uber management and are communicated on a daily basis.

The company’s approach of setting high targets aimed at maximizing individual performance has received high negativity because many of the driver have to work extra hours to attain minimum set requirements. In order to achieve the targets, most of the drivers are forced to work for long hours and do more trips. Considering that the cost of running the cab services is high, the drivers must work harder every day. Some of the costs include car maintenance, permit fees, and platform commissions among others (Healy, Nicholson, & Pekarek, 2017). The drivers make profits from any balance left when all the mentioned costs have been deducted. Recently, there has been a wave of strikes by Uber drivers because the app-based cap aggregators have unveiled targets that are sometimes, hard to achieve forcing the drivers to work for long hours (Skok, & Baker, 2019). As argued by Skok, & Baker (2019), the company has always wanted to have the lowest prices in order to lead the market but, while most of the customers are happy because of the low costs and convenient bookings, many people do not think about the heavy implication of these benefits.

Congestion and city pollution

Uber Company has been ambitious to the extent that it always yearns to improve its earning. In the City of London, as indicated by CNN report (2019), the number of Uber drivers has been increasing on a daily basis. There is no particular limitation to how many Uber drivers can work within a given region, which keeps the pressure high. The ever increasing number of Uber cars in the city is a reason to worry because of congestion and increased environmental pollution. In most regions, the city dwellers are now worried because the pollution is rising and the congestion in now a new issue that must be addressed urgently (Hong, 2018). Recent it was reported that the city mayor seeks to create new policies aimed at reducing congestion and minimize pollution. This concerns has been reflected in not only in the UK but also across other cities in the world (Hong, 2018)). Particularly, the issue of environmental pollution is worrying because the world is hoping to overcome environmental problems for sustainability (Hong, 2018)). In essence, the company should stop being too ambitious by capping the number of its drivers in order to save the population and make the world a better place (Seaquist, Bramhandkar, & Barken, 2015).

Emerging Issues and challenges

Driver criticism because of being classified as independent contractors

Since Uber started, the company has faced number of challenges and more continue to emerge every now and then. According to (REF), the taxi industry is a dynamic sector depending deeply on client’s satisfaction with the services. The ease of entry has heighten competition in the industry forcing many company in the sector to innovate and cut shortcuts in order to remain in business and be profitable. According to the TNCs Skirt Regulations, which apply to passengers, the TNCs (Uber) is in an illegal taxicab operations (Jacquet, 2018). The issue has raised many concerns and in addition to this, there has been extra regulations that were imposed. One of the many issues the company has faced is driver criticism because of being classified as independent contractors (Jacquet, 2018). In the past few years, the Uber drivers have been complaining because the company does not operate with them as employees rather, it considers them as independent contractors, which means that they miss some of the entitled rights and remedies of being employees (Jacquet, 2018). In 2016, this matter was taken to court and in the case of Aslam v Uber BV, the London tribunal ruled that all drivers that work with Uber are to be considered as “workers” but not self-employed people (Jacquet, 2018)). In 2018, Uber appealed the case, but the company lost the case at the court of appeal.

Driver criticism of compensation

The Uber Company has different prices for different route, which vary based on the supply and demand for the cars. For instance, if the demand for cars is high in a given area, but the number of drivers is low, then the fares will increase. That is how the dynamic of the pricing work with Uber. This strategy has attracted a lot of criticism from drivers. In different countries like South Africa, Kenya, India, and other European nations, drivers have complained a lot about compensation arguing that the company has always changed payment policies in order to attract many customers. The company has to engage all drivers and employees in order to sort the issue of remuneration, which tends to affect the morale to work.

Aggressive tactic of dealing with regulators

During the time Travis Kalanick was heading the Uber, report emerged that the company had very aggressive tactic in dealing with obstacles and major regulations (Jacquet, 2019). Kalanick called it “a principled confrontation.” This idea came to play when Uber commenced its operations in different cities. For instance, in 2018, Uber mobilized a public campaign, which was intended to promote its operation to the public, but it was rather seen as a political campaign, which was highly supported by the lobbyists (REF). (REF) highlight that this particular incident was not received well by the local authority and administrators. The incident led the Portland, Oregon’s transport commissioner to refer Uber management as “bunch of thugs” (REF). The aggressive strategy has been ongoing since 2014. In 2017, for instance, the CEO Dara Khosrowshahi, introduced the strategy “we do the right thing” in attempt to change the narrative and criticism coming from all corners rooted on their slogan “win at all costs,” which was an aggressive move adopted by the business.

Solutions

Cap working hours

One of the key approaches to address the issue of overworking drivers is for the company to cap on the number of work hours. In professions that actually require high concentration, it is extremely important to have limits in the number of hours an individual should work. For instance, pilots and flight attendants work under strict regulations and they have duty limitations to avoid work overload. A similar case should also apply to Uber drivers because without doubts, they require limitations, which will be beneficial in the long run. The issue has also caused a public outcry because the public is equally concerned because of errors caused by the exhausted cab drivers. It is important for the public to also participate in the discussion so that they can push to ensure that working hours for app-based drivers are capped (Secunda, 2018). It is also important for all drivers to receive mandatory health insurance benefits and continues medical check-ups. Lately, the Uber Company has introduced new policies as it seeks to get a solution to the issues of overworked drivers. The latest is “imposing 12-hour driving limits” which seems to be a good thing, but indirectly, the company has been pushing drivers in other troubling ways. At the start of 2015, the company cut the rates it used to pay per mile and minute. With this objective, it meant that the lower the prices, the higher the earnings. The company made the assumption that if the fares were low, then, the demand for rides would increase. This therefore, means that those drivers are “gig workers” would get a high earning. However, the drivers did not welcome this move because it meant that many of them would have to work longer hours and do more trips in order to achieve their targets and bigger profit margins. It therefore, meant that Uber drivers are still overworked. The public should worry more. Our hunger for cheap and more convenient transport should not make us to endanger our lives on the road. It is important to advocate for better terms for those who take the onus of ferrying the public on our roads.

Engaging the employees

Uber must and should involve all drivers and employees in all changes. The company has not involved drivers when bringing major changes, which is why there has been a lot of resistance and strikes from drivers. If the company can work in collaboration with all stakeholders, there are high chances that all these issues will be solved amicably. Employees always want to feel that they are part and parcel of the team, but when they are not involved in the decision making, they would feel that they are ignored. Uber has been making many changes especially when it comes to issue of payments. Unfortunately, the company has never involved drivers in the decision making process, which is the reason why strikes and complaints have emerged always been there. For instance, in London, Uber drivers have demonstrated multiple times because the company has changed payment policies, which leaves the drivers with little earnings. In fact, there are allegations that many of the Uber drivers do not trust the company. The issue has been debated for years with many of the drivers saying that Kalanick is the individual who started lowering the fare rates with the intention of attracting more customers but compromising the payments of the drivers. This is an issue that can be traced back to 2017, where the CEO was alleged that he has “stolen trade secrets”, which also led to a huge drop in the market share. Many Uber drivers feel that they are earning low wages and it is very disturbing when the company does not involve them in these kinds of discussion. The solution for the Uber scandal is to involve all drivers and company employees in issues of remuneration because this is a critical issue that all stakeholders must be involved.

Being consumer-driven

Uber Company has welcomed the public and agencies to suggest many ways it can bring changes in order to improve service delivery. One of the suggestions is career mapping for SIU members. In addition special training for team leaders has also been recommended. The Uber Company has been in the forefront in efforts to implement all key recommendations. Some of the suggestions that the company is willing to implement include counseling programs, better work schedule, and additional training. Uber has also opted to hire more experienced investigators, which will go a long way in promoting professionalism and creating a foundation of future improvements. To the fatigue issues, Uber must force all the drivers to take breaks. The new feature of ridesharing platform, which was created recently allow drivers to only work for 12 hours. The beauty of this platform is that it will disable drivers’ ability to accept new trips at least for the next six-hours. This program has already been launched in the US and it will also take effect in all other countries across the globe. Without doubt, drivers fatigue has long been an issue on our roads, and many professional drivers have a very strict policy on when they can take breaks, especially after long trips (Dudley, Banister, & Schwanen, 2017).

Being environmental concerned

In London, the Uber has faced a list of problems but the company seeks to find ways of resolving the issues in order to continue improving quality services to the public. London is definitely congested with high number of cabs, which is said to have increased pollution. Therefore, the company says that it will have to impose new and strict measures so that all these problems can be solved. The unsuitable rise in the number of drivers has increased pollution in London. There is a need for Londoners to breathe better air considering that the city is equally congested. The mayor has suggested a plan that will cap the number of Uber drivers in the city and recommended a plan to set a minimum wage for Uber drivers. According to the City Mayor, there is an increase in the number of private taxi operators, which is even causing more congestion, which also leaves many drivers struggling to make a living comfortably. Perhaps, bringing new hybrid cars will help to reduce the case of pollution. But more importantly, there is a need to reduce the number of Uber operators, which will reduce competition and improve service delivery.

Take a deeper dive into Green Mobility in Urban Transport with our additional resources.

Change of culture

Uber Company must change its culture to move forward positively. There are at least four areas where the company must address for a positive change, which include trust, transformation, accountability, and the 'tone at the top'. The employees must earn the company trust in order to work as a team. The Uber Company must also be willing to transform positively so that all stakeholders can feel that they working towards the same goals because the progress of the company would mean all players are 100% part of the team. Accountability is very crucial and all company is required to demonstrate transparency in all areas, especially when it comes to issues of fare and payments. The drivers want to work in a company where they feel that communication is clear and transparent so that trust be high. The top management has been very aggressive but the employees have argued that there is a need for the management to change their tone and approach. A management team that is working with a positive attitude definitely motivates other employees to work in the same manner. A positive attitude is needed in any field of work because it creates motivation to work and employees can be able to produce positive results.

Conclusion

The obvious issue faced by the Uber is that it is pushing the limits of dealing with internal and external environment too far in an attempt to make huge profit margins and become the market leader. In London and other major cities like New York, the company has reputation of overworking its drivers. Many drivers work for long hours because of the high targets. The issue of overworking the drivers has created a list of problems especially in regard to public safety. If drivers are overworked, they experience fatigue, which means that they are likely to cause multiple accidents, face depression, and mental challenges. More so, many of the drivers have complained that they are under paid because the company targets are high and the cost of operating the Uber riders is also extremely high. According to reports, the drivers are not the only ones being pushed to the limits, the Uber investigators also experienced heavy workload, which has resulted in high turnover, depression, and increased suicide cases. The need for sustainable environment is high and Uber has to reduce congestion in the cities, which has caused pollution in major cities. Being environment friendly will be an added advantage for the Uber Company because we all need to take care of the environment. The increased congestion and traffic because Uber has signed many cars is not doing good to the environment. There is a need for a change for a sustainable solution. The solution to these issues is to cap working hours for drivers, engage all players in compensation discussions, and low the limits so that all team players can work towards achieve the success for a healthy living and sustainability of the Uber business.

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