Uber, an online transportation network, is one of the fastest growing startups in the United States. Currently valued at a level between $40 and $50 Billion, the ride-hailing company quickly grew from 605 to 4,900 employees over the course of just 20 months. Investors have evaluated Uber’s net worth at $51 billion in 2016, much higher than what Facebook was worth at the same startup stage six years ago.
While there is no rain in Uber’s financial forecast, the validity of its business model has been constantly questioned and evaluated, even by the company’s own employees. Just recently Uber drivers have filed a class- action lawsuit that claims they have been missclassified as independent “1099” workers and are entitled to reimbursement for gas, car upkeep and other expenses as regular W-2 employees. Additionally, the lawsuit questions the company’s policy of telling passengers that the tips are included into the cost of the ride.
The cost of turning Uber drivers into employees is hard to estimate because the company will be forced to completely change its business model and completely re-evaluate its finances. According to the analysis conducted by Fortune, some of the new costs might include; tax-sharing (up to $612 million/ year), compensation insurance ($512 million/year), medical insurance ($2,885 per employee) and unemployment insurance (additional $72 million/year).
The biggest cost, however, is the fact that drivers will lose personal motivation to join Uber, which will ultimately damage its company culture.
According to Uber’s statement to TechCrunch, “Nearly 90 percent of drivers say the main reason they use Uber is because they love being their own boss.” Besides the minimal requirements for passing background check and maintaining a clean car, drivers currently have a lot of freedom as to the number of hours they want to drive, when they want to be on the road and who they want to pick up. Take this entrepreneurial aspect out of the equation and drivers will lose the inherent autonomy and flexibility, which will ultimately lead to frustration and disappointment.
“As employees, drivers would have set shifts, earn a fixed hourly wage, and lose the ability to drive with other ridesharing apps—as well as the personal flexibility they most value.”
No matter what the court decides, Uber will have to continue to preserve and protect its company culture by hiring drivers who support the entrepreneurial business model and are willing to work independently, because this is the very foundation of this company. And, just like Uber, your company can become stronger by hiring employees who share the same values and want to be a part of your organization.
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