Current Event: CSR issues Facing Uber

Current Event: CSR issues Facing Uber

Summary of the Article

In the article titled Uber: The Eide-hailing app that says it has “zero” drivers by the Washington Post, the reporter aims at investigating the Corporate Social Responsibility that the company faces. According to Bensinger (2019), although uber contracts drivers play a vital role in bringing the company substantial revenues amounting to over three-quarters of the firm’s revenue, the company does not treat them as such. Uber raised concern about the role of the drivers in compelling the business towards success in September 2019, when the company’s chief lawyer affirmed that the “drivers work outside the usual course of the company’s business” (Bensinger, 2019).

Currently, Uber faces several lawsuits, including concerns related to fender benders to wage disputes and other serious issues revolving around its corporate social responsibility strategy. In essence, the company resists the California Bill that would alter the employment status of most “gig” workers. This legal strategy would allow Uber to avoid responsibility for the actions of most drivers. For instance, Harris filed a lawsuit against the company, claiming that she almost lost her leg after being stuck by Ferguson, who had swerved off the road.

The several pending court cases against the company would potentially lead to millions in new liabilities, especially if the contract drivers are reclassified as uber employees. This could translate to the company bearing significant responsibility for the drivers’ actions. However, the reporter argues that, even though most firms depend on gig workers and contractors, what distinguishes Uber from other companies is the fact the drivers spend more time with the customers from the en route to destinations (Bensinger, 2019). In comparison to business such as dog walking or food-delivery services, the ratio of contract workers to direct workers at Uber is extremely high whereby, while the company has 27 000 direct employees, the number of contract drivers working for the company stands at over four million drivers.

Integration with the Topic

Corporate social responsibility entails the obligations and expectations that a company must serve the financial interests of the shareholders as well as the entire society. Even though the CSR concept may seem directly related to ethics, it is distinct in that it serves the interests of the customers, the shareholders, managers, and the entire community (Parnell, 2013). According to Parnell (2013), the idea of social responsibility centers on a company’s obligation in serving its stakeholders, including employees, customers, shareholders, the government and the society at large, beyond its ordinary course of business activities. According to the article, Uber employs contract drivers who work for the company. Despite not spending much time with the customers, Uber managers must develop a CSR strategy that ensures that drivers conduct themselves with the utmost standards while interacting with the customers. In other words, Uber should take full responsibility for the actions of their drivers.

In the discussion, Parnell (2013) affirms that most economists like Milton Friedman and Adam Smith argue against CSR, alleging that social responsibility should not be a component of managerial role or executives’ decision making.  The economists claim that organizations are successful and profitable when managers focus their efforts on maximizing revenues through the production of goods and services while abiding by society’s legislations.  Nonetheless, the modern business environment demonstrates the need for contemporary strategic managers to integrate CSR approaches in their decision-making process. Essentially, in the modern business world, CSR is directly linked to an organization’s financial performance whereby a firm that serves the interests of its stakeholders and the society is likely to garner more returns since it has created a good reputation to the general public (Hagberg et al., 2015). In Uber’s case, the pile of lawsuits will eventually affect its profits in the long-run. Hence there is a need for the company’s executives to incorporate CSR strategy in its managerial decision-making process. Consequently, the course topic on Corporate Social Responsibility and its importance in a business’s success and competitive edge is shaping the modern business environment. Firms with effective CSR strategies often have a good reputation in the general public due to “giving back to society.”

Personal Views on the Article

Uber has, over the past five years, obtained a significant market share and competitive edge over other companies. This owes to its reliability and efficiency in connecting customers with taxi drivers instantaneously. With an effective business model, Uber readily recognizes problems its stakeholders, especially customers and drivers, face in this fast pace technology era. As a result, it has developed both proactive and reactive solutions to the emerging issues arising in a rapidly changing global business environment. Nevertheless, due to the complexity of the contemporary business environment characterized by new entrants, rapid technological advancement, and intensified competition, Uber currently experiences CSR issues whereby it faces lawsuits from customers for alleged misconduct to customers.

The article exemplifies the need for Uber executives to implement a comprehensive and effective CSR strategy that covers all the stakeholders involved in its business operations. It is also crucial for the management to incorporate CSR approaches in its decision-making process to give it a high priority. The company does not only have a responsibility to offer its customers with reasonable prices, but also ensure that its drivers are competent and adequately conduct themselves to ensure customer’s safety. For example, the company should do background checks for drivers and critically screen them for potential criminal offenses. Furthermore, the executives must recognize the fact that both its employees and customers are crucial for its success. Therefore, the customer’s safety should be given priority to avoid potential legal suits against the company.

References

Bensinger, G. (October 14, 2019). Uber: The Eide-hailing app that says it has “zero” drivers. Washington Post.

Hagberg, C., Johansson, S., and Karlsson, A., 2015. The relationship between CSR and financial performance: A quantitative study examining Swedish publicly traded companies.