PR Crisis: A Focus on Uber

Introduction

Background 

In the modern business world, a good brand is not enough to attract and maintain customers. Consumers are now demanding their favorite brands to operate with professionalism and adhere to sustainability practices like engaging in corporate social responsibility (CSR). Further, customers only associate with businesses that show promises of delivering quality products or services, in addition to respecting the public. Primarily, the idea that an organization must pay attention to the issue of brand performance and its image signifies the concept of public relations. Public relations (PR) is a concept every business must address at some point during operations (Coombs and Holladay 2012; Watson 2012; Benn Todd and Pendleton 2010). Typically, if a company engages in processes that deal with the public, it operates a public relations business. The management must expect things such as online reviews to general customer satisfaction. Management must be aware that part of PR deals with negative news that will impact their firms’ everyday operations.

For this reason, a company should expect that an incident that could affect its image in public might arise at one point during process. This incident is what fuels a crisis. The effect will be damage to the relationship shared with customers. However, what is critical is the knowledge of dealing with these problems when they happen to mitigate losses that could face a business while addressing the crisis. The above scenario was evident with Uber. Despite the firm revolutionizing taxi transportation, it has been dealing with PR issues that demand the management act quickly, save its image, and prevent losses. This paper will examine an Uber crisis, the handling of the incident, and recommendations on what the management could have done to minimize effects on the performances of the business.

PR Crisis

The majority of companies and small businesses will face a PR crisis at one point or another during normal operations. From a simple matter like a product mishap to a severe management scandal, any negative review will significantly affect the reputation of a business. Businesses as artificial humans are expected to mess at one point, but these adverse events attract criticism more than understanding.

A PR crisis is an adverse event involving a business, which can find itself in the public domain. These adverse events could include defective products, poor customer handling, improper behavior of workers or managers, scandals involving employees of a firm, a customer accident at a business premise, or improper business practices (Champoux, V., Durgee, J. and McGlynn, L., 2012; Yannopoulou, et al. 2011; Utz et al. 2013). The risk of a simple problem becoming a PR crisis is because it will remain in the memory of customers, who, in turn, will be using it to justify why they cannot associate with a brand. In most instances, a business cannot be in a position to control the outcome of these mishaps. Despite diverse strategies to handle PR crises, the initial stages of the scandal will likely involve criticism and threats of losses until the management finds the best time to cool off the public heat (Boin et al. 2016; Yeoh 2010; Giannakis and Papadopoulos 2016). The approach used by the decision-making organ of a business will determine if the heat of the moment will cool or prolong. The paper will focus on Uber, a perfect example of a company that has undergone a series of crises because of problems originating from its employees’ relations and operations.

The most significant impact of PR crises is the loss of trust. Companies rely on customers’ trust to generate revenue and profits, boost brand position and establish a competitive advantage. The occurrence of PR crises is likely to erode all efforts placed to develop the position of a business. Although a PR crisis could appear intangible initially, it can transform into a business’s worst nightmare. The best example is Facebook and the Cambridge Analytica PR issue. However, the majority of Americans are using the social media platform, the initial dominance wane. The data privacy issue of the platform continues to be questionable, thereby affecting its association with customers. The ability of a business to minimize and handle any PR issue is vital to survival and brand rebuilding.

Situation Analysis

The year 2017 was terrible for Uber Technologies, a taxi-hailing and technological company. The organization was rocked with diverse scandals, whose impact is still felt to date (Chen and Tao 2020; Thelen 2018). In 2017 alone, Uber faced fifteen (15) PR crises that completely shook its image as a revolutionary taxi-hailing business. These crises included false advertising (January 2017), #DeleteUber goes viral, January 2017, Trump ties, February 2017, Sexual harassment scandal (February 2017), Sexual harassment scandal, February (2017), Deceiving law enforcement, March 2017, CEO caught yelling at a driver, March 2017 among others. Majorities of the scandals focused on improper handling of workers, sexual harassment, executive-related issues, and improper business conduct. The crises were detrimental to the image of the business.

However, the scandals involving its CEO, Travis Kalanick, threatened Uber’s integrity and performance when they occurred. Firstly, the CEO (in 2014) came under heavy sexism criticism when he was describing his desirability. Next, the CEO received a backlash when it emerged he was part of President Trump’s advisory council. The executive had to fight off the claims that he was endorsing the president and his agenda. The impact was the #DeleteUber campaign when there was a protest on President Trump’s travel bans. Besides, Kalanick was called upon because of his visit to escort services in Seoul in 2014 as it emerged there were demeaning gestures towards the escorts before the CEO went with them to his room. The last and the most significant PR gimmick that led to pressures for the CEO to resign was the video that caught the CEO yelling at a driver when the latter questioned the difficulties in making a living brought by the company’s declining rates.

CEO’s PR Crisis

The admission by Kalanick that he needed “leadership help” was one of the worst PR mitigation approach after he was caught on camera yelling at one of the drivers in February 2017. The victim was expressing a genuine concern that required a listening ear from the executive. Instead, the top employee ranted how some individuals fail to take responsibility for their lives as they select to blame others. The CEO directly referred to individuals like the driver, who he felt wanted the company to assist them in personal matters. It was for this reason he replied sarcastically. The public reacted violently as the CEO appeared to mock American workers who work on daily wages to fulfill their needs. Kalanick amusedly sought help in leadership, despite being at the helm of one of the global most significant businesses, did not resonate well with the public. The idea of Kalanick was that his action was justifiable, but if the people or critics assume he was in the wrong, they are welcome to offer more leadership lessons. Accordingly, Uber Technologies faced one of the worst PR crises, and in this case, it was coming from an executive employee of the business. The repercussion arose threefold in the process, hurting the brand’s image. The public called upon the employee’s resignation, in addition to raising concerns about the activities of the business.

The CEO of a company is a crucial employee as they carry the image of the business. The worker is expected to lead others in maintaining positive business culture, in addition to ethical practices. For instance, the CEO of Apple Inc. must always follow the good footsteps of Steve Jobs when navigating the business. Besides, this employee can add features such as maintaining sustainability and ethical practices to place a company as one of the top performers. In all of the above methods of the CEO, good public relations are the ultimate goal. The executive human resource must maintain customers’ trust in the quality of products or services offered by an organization. However, as mentioned in the introduction segment, a company could still experience PR crises despite the CEO and other top employees of the business operating within the set guideline or industry norm.

CEO PR crisis is one of the worst problems that could face a business during its operations. The executive officer being at the top of a company’s leadership could engage in a series of activities, which will jeopardize a brand image. In the case of Uber Technologies, CEO Kalanick was linked to a series of blunders, which had effects on Uber Technologies as a brand. The CEO is the ambassador of a company represents the actions of all employees beneath him. Therefore, any positive or negative action will have a significant effect on a brand. The conduct and private life of a CEO are also linked to the PR image of a business. For instance, if a CEO engages in sexual parties and the story leaks, it could affect a business.

Kalanick admitted that his aggressive style was part of his personality, but it always negatively impacted a brand. The action of the CEO to dismiss the driver’s claims signified the poor handling of employees by the rest of the executive members. Although this generalization is not necessarily true, it is the reality as per the public. The public is likely to react to the actions of the CEO of a business compared to junior workers. This fact is transparent with an incident such as sexual harassment reported at Uber. Although the CEO was not directly involved, there were still expectations he would bear the consequences. However, there were vocal calls for his resignation when the employee was straight at the center of the crisis. For this reason, the resignation of Kalanick from his post signified the impact of the CEO PR crisis compared to other problems that could rock a company.

A CEO crisis is one of the leading PR issues facing companies. The problem entails the executive worker engaging in activities that jeopardize the integrity of a business and industry’s norms. These crises arise because of handling a problem facing a business, normal operations of a company, and personality traits. Businesses face troubles as part of normal operations. However, the handling of the threats by the CEO is paramount.

In some cases, these executive workers worsen the situation because of their response or non-response. For example, Chipotle’s co-CEO Monty Moran’s response was one example where the response of the executive workers fueled more problems than a solution to a PR disaster. According to the CEO, when addressing an industry conference for investors in 2015, “Because the media likes to write sensational headlines, you’ll probably see, you know, when somebody sneezes … ‘Ah, it’s E. coli from Chipotle’ for a little bit of time.” The executive worker was responding to the allegation about E.coli and the Chipotle products. The resultant effect of the blunder was a drop in the company’s high and low stock price targets, as shown below.

CEO crises have also been emanating from the normal operations of a business. Specifically, PR crises have been arising from the role of executive employees to engage in business malpractices for profitability or hiding of actual performances of a company (Talesh 2016, p. 463; Clinard et al. 2017). Business malpractices are the most prevalent PR crisis that has been the grappling majority of global organizations. The problem is apparent with small and big companies as the actions of the CEO have destroyed good images of a business. Good examples include the Presidency of Donald Trump, the Wirecard Scandal (Germany), and the Well Fargo fiasco. The most famous is the Enron scandal, which shocked the entire financial world to the point of an act being introduced to deal with that kind of business crisis. The mention of President Trump is because he handles numerous problems in the United States and the negative impact it had on citizens and the image of America. The introduction of punitive immigration laws, the Capitol Hill invasion, and claims of rigging in elections affected the country’s image grossly in the international arena. The rest of the world believed that President Trump being the CEO, represented the ideology of the American people. The actions of a CEO are linked to a brand image. Accordingly, a PR crisis orchestrated by the top employee has an impact on a company.

The personality trait of the CEO is also a factor when examining PR crises. Kalanick was famous because of his abrasive leadership style, which propelled Uber as one of the successful technological companies. However, his harsh style was a factor in the video analysis where he scolded the driver. The CEO’s leadership characteristics are identified as one of the crucial features that define a firm’s performance. Having a soft or hard personality could still be a PR disaster that impacts the brand’s image (Lange et al. 2015, pp 1225). For example, the reaction of a non-confrontational CEO during a press conference could allow the public to judge a particular action of a business as being intentional. If the CEO fails to vehemently deny the role of a company for a specific scandal, it might serve to uphold its acceptance. The resultant effect is a loss of trust. On the same note, passionate denial of a company’s involvement in a specific scandal could attract an adverse reaction from the public, especially when the role of a business is undeniable. One example is the case of Chipotle and E.coli spread.

Critical Review

In an aim to minimize the risks that arose because of the release of the video showing their CEO arguing with the driver, Uber made a series of press releases, which aimed to correct the image of the business. The handling of the crises had some positive or negative aspects. The first step to address the crisis was the CEO’s personal email to the executives, Uber employees, and drivers. Part of the statement read, “By now I’m sure you’ve seen the video where I treated an Uber driver disrespectfully. To say that I am ashamed is an extreme understatement. My job as your leader is to lead…and that starts with behaving in a way that makes us all proud. That is not what I did, and it cannot be explained away.” The statement was delivered to employees and drivers’ emails on March 1, 2017. The other gesture of the business was posting the information for the public on the company’s blog platform. The decision of the company to post the message on a public venue was to ensure that it reached a broader mass. The posting of the blog was on the evening of March 1, 2017. The subsequent activity that happened with the video’s release was a meeting between the aggrieved driver and board members. The hastily arranged meeting aimed at providing the CEO with the chance of presenting his apologies to the victim. Further, the conference aimed at compelling Kalanick to engage in an act that would accelerate the acceptance of apology by the driver. The company acknowledged the occurrence of this meeting immediately after the video’s release, but it did not communicate the conclusion of the meeting.

The PR crisis saw a combination of proper and improper handling of issues that impacted the reputation of a business. The appropriate handling of the case was evident with the quick release of an apology to the organization’s workers. The aggrieved party in this scenario was the company’s driver, who complained of losing two cars because of the CEO’s improper decision-making. Therefore, issuing an apology to this group was the starting point of addressing a problem that presses them during regular interaction with the public. Situational theory played a central role in this first reaction of the CEO. Grunig and Repper (1992) noted that situational theory is always critical in addressing any PR issue accompanying an organization. The authors concluded that stakeholders would be central in influencing the public about the organization. For instance, with Kalanick issuing an apology first to the stakeholders (employees), there were significant chances that the apology would reach the broader mass, even before the company could release an official statement about the incident.

The other proper technique used by the business was the release of the public blog. Social media platforms such as blogs have risen to be one of the critical mediums for disseminating information. Typically, the release of the statement through social media intends to reach a massive mass, in addition to changing the emotions and perception of outsiders. The public, unlike employees, has minimal information about the setting and the functioning of a business. Consequently, much of their idea about an organization centers on assumptions. The use of the blog to issue an apology to the public was a good move to address the most significant source of pressure. The move aligns with the theories of persuasion and social influence. The principle of effectiveness stipulates that communication will intend to change the feeling and behavior of recipients. The persuasive nature of the CEO’s statement appearing in the blog was evident with the cognitive and behavioral impact on the public. The public and the investors believed the CEO was remorseful, especially with the mention of “the need to seek help about leadership.” Besides, the statement sought to prevent Uber drivers from demonstrating the issues and customers boycotting the services. The tactic of the business and the CEO was superb as the public was waiting to see if Uber’s toxic culture would end. However, they were disappointed as a series of succeeding scandals (sexual harassment, privacy, and discrimination) forced the CEO to resign. Since his departure was not immediately when the video was released, the PR technique worked.

However, the company failed with its attempt to integrate social exchange theory to deal with the situation. As the decision-maker of the business, the Uber board aimed at pushing its CEO to commit to the purchase of two cars. Mr. Kamel alleged he lost because of the wrong decisions of the company. The idea was for Mr. Kamel to support the efforts introduced to deal with the big problem in the organization. This PR approach was wrong and could cost the business even more. Although the social exchange theory centers on the cost and the benefits of the company’s actions, there were high chances the business could pay even more. The situation could have arisen when other drivers that lost vehicles would demand compensation. The loss in this scenario could exceed benefits.

Conclusion and Recommendation

This study centered on the PR issue that affected Uber and the technique used to handle the issue. Although the business in the same period was handling various PR crises, the CEO’s ranting with one of the drivers caught the attention of the public, investors, and other stakeholders. Findings showed that the business addresses the problem through emails, blogs, and press releases. The actions were instrumental in minimizing the impact on loss that could accompany the firm because of the negative public show—however, the move by the CEO to purchase two cars for MR. Kamel was part of a PR show gone wrong. Accordingly, the business is eligible for PR training that would boost future handling of crises as they occur.

Recommendation of Proper Handling of PR Crisis

Businesses face risks of engaging in practices that would damage their reputations. For this reason, proper planning and conduct will help eliminate more damages. In the case of a crisis, Uber has to consider the big picture, be organized, and create a response team. The management must consider the impact of its actions on the reputation of the business. Uber ought to prepare for any crisis by improving its communication levels with employees and forming a strong bond as they will be helpful during an emergency. Besides, the business must be organized, especially during times of crisis, to prevent more damage. Lastly, the company must establish a response team on standby to deal with any problems. The time of emergency calls for more than one leader to take the initiative. Although the move by Kalanick to apologize was welcomed, there was the need for assistance of a committee to enable proper communication and outcome to deal with the crisis. The handling of a PR crisis is one of the complex requirements of a business or management, and there is the need for proper planning for positive outcomes.

References

Benn, S., Todd, L.R. and Pendleton, J., 2010. Public relations leadership in corporate social responsibility. Journal of business ethics, 96(3), pp.403-423.

Boin, A., Stern, E. and Sundelius, B., 2016. The politics of crisis management: Public leadership under pressure. Cambridge University Press.

Champoux, V., Durgee, J. and McGlynn, L., 2012. Corporate Facebook pages: when “fans” attack. Journal of Business Strategy.

Chen, Z.F. and Tao, W., 2020. The association spillover mechanism of CSR crises: evidence from the Uber case. Journal of public relations research, 32(5-6), pp.178-197.

Clinard, M.B., Yeager, P.C. and Clinard, R.B., 2017. Corporate crime. Routledge.

Coombs, W.T. and Holladay, S.J., 2012. Fringe public relations: How activism moves critical PR toward the mainstream. Public Relations Review, 38(5), pp.880-887.

Giannakis, M. and Papadopoulos, T., 2016. Supply chain sustainability: A risk management approach. International Journal of Production Economics, 171, pp.455-470.

Grunig, J.E. and Repper, F.C., 1992. Strategic management, publics, and issues. Excellence in public relations and communication management, 73(1), pp.117-157.

Talesh, S.A., 2016. Insurance companies as corporate regulators: The good, the bad, and the ugly. DePaul L. Rev., 66, p.463.

Thelen, K., 2018. Regulating Uber: The politics of the platform economy in Europe and the United States. Perspectives on Politics, 16(4), pp.938-953.

Trefis., 2016,. How Is Chipotle Dealing With The Aftermath Of The E.coli Outbreak? https://www.trefis.com/stock/cmg/articles/370779/how-is-chipotle-dealing-with-the-aftermath-of-the-e-coli-outbreak/2016-08-05 [Accessed December 24 2021]

Utz, S., Schultz, F. and Glocka, S., 2013. Crisis communication online: How medium, crisis type and emotions affected public reactions in the Fukushima Daiichi nuclear disaster. Public relations review, 39(1), pp.40-46.

Watson, T., 2012. The evolution of public relations measurement and evaluation. Public relations review, 38(3), pp.390-398.

Yannopoulou, N., Koronis, E. and Elliott, R., 2011. Media amplification of a brand crisis and its affect on brand trust. Journal of Marketing Management, 27(5-6), pp.530-546.

Yeoh, P., 2010. Causes of the global financial crisis: Learning from the competing insights. International Journal of Disclosure and Governance, 7(1), pp.42-69.