Week 3- Business Ethics and Uber

For the first time, ethics in business is playing a big part in how companies operate, and this is largely due to the millennial generation.

My generation grew up in the one of the largest financial crashes ever recorded and the impact of this was visible. Financial struggles seemed to be the norm, store closures weren’t uncommon and being told something was too expensive all created the picture in my head that the financial system was a gamble and unnecessary spending would come back to haunt you. Evidently I wasn’t the only one as my generation is starting to build a reputation of doing everything differently and many industries are suffering because they’re disengaged with what this new market wants. Every week it seems like millennials are being blamed for the shortcomings of another industry across the world, including Diamonds, cruises and golf.

I haven’t mentioned those three coincidentally, they are all associated with a more upper-class, luxury lifestyle. Which due to the financial crises, we are more prudent with our finances and are less likely to spend on the luxury lifestyle in favour of being financially prepared in the coming years. In the summer of last year headlines like these started to be shared among the generation.

Millennials may be first to earn less than previous generation (Guardian 17 July 2016)

Millennials ‘set to earn less than Generation X (BBC News 18 July 2016)

This acts as a reinforcement to batten down the hatches and watch every penny we can.

Despite having grown up with distrust to the financial systems and spending as a whole, millennials are willing to pay a premium on almost anything; as long as its ethics are sound. This has caused ethics and CSR to become a serious consideration of a firm if it intends to survive in the years ahead as millennials become an increasing percentage of the total spend.

Simon Sinek argues that people don’t buy what you do but they buy why you do it. Following this idea, the message behind a business and the footprint they leave behind them holds a greater influence than ever. This includes who works for the firm, how suppliers are treated, the philosophies of the firm, worker conditions etc. and now the culture of the firm is nearly just as important as the product or service that the firm provides and soon enough, there will be a number of case-studies about firms who failed to get it right. Currently Uber is a good example of a firm who has got the culture all wrong and has seen responses such as #DeleteUber and websites like https://www.whyeveryonehatesuber.com/ who have collated data across the world on everything Uber has done wrong and challenged the morals of its users. Their failings to see what the younger generations demand from a firm may be their downfall despite their initial surge in growth and potential.

Uber provides a great service and is one of the go-to examples of successful startups in the last few years but has seen numerous conflicts internally between different layers of management and their employees. These have included workplace bullying, harassment, sexism and racism, within this a top executive suggested digging up dirt on the reporters who were publishing negative stories about them. This all damages the brand and makes it easier to dislike Uber and so easier use alternate services. Yet with strong, public support from its users, Uber would have a small army of supporters arguing for the introduction of Uber in their city. The extra support would make it easier for Uber to challenge taxi companies with fewer conflicts with local governments, users and critics.

No firm wants public disapproval but challenging the monolith that is taxiing, Uber needs all the support it can get through all forms of media, social media in particular. Social media is able to update itself at the flip of a coin and as Uber know, can amass huge amounts of attention on small details that can seriously damage the credibility of the firm.

I remember when FairTrade was first being heavily advertised when I was in primary school, when I first saw it in the supermarket I never thought it was exceptional. Paying workers a reasonable wage seemed the normal thing to do and that mindset still determines my opinion in much of business. That being ethical is just the normal thing to do. But it’s not always as simple as that, in 1991 the sociologist David Gordon said ‘capitalist societies are dog-eat-dog’ and business does reward aggressive tactics. Using the example of Uber again, they now operate in over 300 cities and have faced huge competition in each one. They’ve challenged each one head-on and have bent rules and used loopholes wherever they can to be most suited for the challenges, these include operating as a tech company to pay lower tax rates, pays drivers through the Netherlands to avoid VAT and classing drivers as contractors rather than employees to avoid terms in employees’ rights. At the same time, paying higher fees to drivers to steal talent and offering rewards and gifts to consumers to tempt them away from traditional taxis.

This is the nature of business, competition breeds innovation and creativity and Uber is no different. Most of these tactics are far from uncommon, manipulating how much tax you pay is normal behaviour to many mid-sized firms with a good accountant and some of the largest firms in the world pay minimal tax and excess costs. But why do some firms, like Uber, receive more public backlash than others?

One suggestion, is the easy nature of being able to express views publicly on social media. The biggest movement against Uber has been online encouraging people to delete the app; the #DeleteUber campaign and the video of  Travis Kalanick arguing with one of his drivers has done the rounds on social media too. Uber targets younger people for their use of technology and preference of ease of access for goods and services. But those same traits makes it easy for information on unethical practices to be spread and shared. This creates a conflict in which those who have the most interest in the behaviour of Uber and those associated with it, are also those who have the most ease of access to that information and most likely to spread that info online.

Competition in business is encouraged and protected by a number of laws but Uber are competitive in an unethical manner as well as being accused of a poisonous culture filled with accusation and inquiries. This has damaged their reputation and the group which they are aiming to win over are the same group that is the most rejecting of Uber’s actions. Even though Uber is cheaper than a normal taxi, millennials are willing to pay that premium not necessarily for the higher quality, but to not fund what they don’t support.

Over and over, industries and businesses are having to readjust in order to win over the millennial spender with some of the first to respond to this being Innocent and Lush, 2 huge companies in their industries. Being ethical eats into the overheads and can make almost any process much harder but the business case may simply be, readjust or miss out. Millennials don’t seem to be holding any remorse for the diamond industry, the disdain for oil firms nor do they put an arm around all the businesses which are relying on weddings for their revenue. Each one of these could easily have an essay written about them and the growing impact of millennials will be written about for generations.

But with almost consumer focused industry expecting a shake-up in the coming years, the full impact is still a while away. But what will be interesting to see is how businesses fight for their survival and if behemoths like Wal-Mart will bow to the pressure or fight for the traditionalists.

 

 

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