The Rise and Challenges of Uber: A Case Study in McDonaldization
Uber is a massive company that was launched in 2012 and has changed the way people travel by car. Uber is a modern day alternative to taxi cabs that lets you request car service through an app on your phone. Uber is different than traditional taxis because the uber drivers do not have special licenses because they use their own personal vehicles. It can be entirely cash-less with your credit/debit card information already programmed into the app. In order to use the app you must be 18 years old or over. While it undeniably has been one of the most popular car transportation services, lately the company has been dealing with some setbacks. Within in the last year, Uber has had to layoff many employees from different divisions of the company because of how much money they are losing. This organizational change is a big disturbance in the company. Since July of this year alone, the company has cut over 1,000 jobs which is “more than 2 percent of its workforce”(Conger 2019). Some of the divisions affected in the company include the marketing department, engineering and product groups. In the most recent layoff round, they focused primarily on “the autonomous vehicle unit, operations, recruiting, and customer support”(Cogner 2019). Dara Khosrowshahi is the chief executive at Uber and he issued each department head to make the cuts. The reason this company is losing money seems to be because it “had gone off course as it grew”(Cogner and Isaac 2019). Uber developed a self-driving car unit called Autonomous Technology Group(ATG) that cost $7.25 billion dollars. This type of innovative technology is risky and it has caused them a great loss rather than promising gain. Uber also had to settle many lawsuits recently relating to theft and “attempted theft of trade secrets from Google”(Cogner 2019).This car service company has been trying to branch out into more innovative projects which is costing them and their employees. Uber’s organizational structure follows modern day hierarchy. Superiors and subordinates is how this company functions smoothly. This company is a modern day bureaucracy, with a focus on efficiency, hiring experts for each division of labor, and clear rules set for how to do certain jobs. Bureaucracy is also tied with McDonaldization as a more prominent theory in today’s society. McDonaldization has four dimensions that can be applied to the company, Uber. This theory can be seen in almost every aspect of people’s everyday lives too. Its main focus is all about rationalization even though irrationalities emerge all the time. Ritzer’s “The irrationality of rationality”(pg.1) promotes inefficiency which is the exact opposite of what McDonaldization is trying to do.
Understanding Bureaucracy in Modern Organizations
Bureaucracy is implemented into modern society in organizations like the government or companies like Uber. Put simply, a group of people usually the leaders or the head of the organization make official decisions which are then turned into laws or rules of that institution. Bureaucracy is supposed to be an efficient process that everyone in the workplace follows. Max Weber was a German sociologist and economist who focused on bureaucratic theory, he believed that it was “the most prevalent organizational form in modernity”(Rotondi) Weber had 8 different qualities that described modern day bureaucracy. The first one is“governed by a set of impersonal rules”(Rotondi). These impersonal rules allow for a relationship with the organization rather than the person or worker for functional purposes. The second quality is “extensive use of written documents and file keeping”(Weber 1978:2). Without these two things there would be no record of rules, regulations, safety protocols, employment records, etc; all of which is essential to the institution for many kinds of purposes. In today’s advanced society however most places do not keep written documents anymore, almost everything is digital now. Although these important matters are now on a computer, this does not stray from the bureaucratic quality Weber discussed. The third quality is “these rules are universally applied(not based on personal influence)”(Rotondi). The rules of a bureaucratic organization are not supposed to be questioned, if the rules are set in place it is because someone at the top of the hierarchical chain believes it is essential for optimum function and efficiency of the institution. Rules are not to be made based on what the person feels is personally correct or else that disrupts the focus on the organization’s productivity. The fourth one is “employ technically qualified, full-time, experts assigned to a specific division of labor”(Rotondi). These people are crucial to the working order of the organization because if you do not have experts working on certain jobs then there is no way to get anything done. It is also important to have the best experts in the field so that your company can be number one in selling/promoting or whatever the goal may be in relation to companies who do similar things. The fifth quality is “hierarchy of superiors and subordinates”(Rotondi). Hierarchy is fundamental in bureaucratic places. There are levels of people ranked one above the other. The leader of the organization is at the very top and then it goes lower into upper management, maybe even lower management, all the way down to the workers on the floor. These clear distinctions of status lets people know who is in charge and who takes orders. The sixth quality is “subordinates obey superiors because of their office, not the person”(Rotondi). The office in this case refers to the status or title a person has because of their job. Anyone who is qualified can be in the position of upper management and it does not matter who that person, as long as they continue to have that high status, the subordinates will adhere to them. The seventh quality is “promotion is based on testing on technical skills and knowledge(merit)”(Rotondi). The best way to move up the hierarchical ladder is to display your extensive knowledge of the job at hand. Having better skills than other people around you can intrigue upper management and decide to give a promotion to the employee. However many leaders promote because of patrimonialism meaning the son inherits the father’s position no matter if they possess the skills necessary for the job. The last bureaucratic quality is “personal property is separate and distinct from organizational property”(Rotondi). This essentially means that personal life and work life should not mix. There should be a clear difference in what is personal that should be dealt with outside the organization and what is strictly work. However, this is almost never the case because of how often we see personal and organizational property/business mixing. According to Weber, bureaucracy is the best kind of organization there is. This is because it is technologically superior in terms of “precision, speed, unambiguity, strict subordination”(Weber 1978:9) and more. Bureaucracy does a great job at dehumanizing people because it wants emotion and personal thought out of the workplace and only logical ideas for optimum efficiency, it is a purely objective organization. Bureaucracy does not just take over companies but almost all aspects of life as well and there is almost no stopping it once it is in place.
Introduction to McDonaldization and Its Impact on Modern Companies
McDonaldization is a theory coined by sociologist, George Ritzer that states “the process by which the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as the rest of the world”(Ritzer pg.1) McDonaldization is recognized by its dimensions which include efficiency, calculability, predictability, and control. Efficiency is being able to get something done well with minimum effort and time. An example would be putting on the GPS before your drive to get to your destination by the most optimum method. Calculability is “quantifying the aspects of products sold and services offered”(Ritzer pg. 8) This dimension looks at time and money for an individual. The customer wants the product in as much abundance as possible in the fastest amount of time like drive thru vs sitting down at eating vs food delivery. The customer also factors in how much the product is going to cost and if it is worth the price to get said product. This can also look at workers who do a lot of laboring tasks for very little pay. Predictability is very straightforward in its definition in that it something happens exactly the way it was expected to. In relation to McDonaldization, “products and services will be the same over time and in all locales”(Ritzer pg.8) A pumpkin spiced latte from Starbucks in Riverside will be the same latte in a Canada location. According to Ritzer this provides satisfaction and comfort because people like knowing what they are getting over and over again without any surprises. The last dimension is control and this is “exerted over the people who enter the world of McDonaldization”(Ritzer pg.9). When you walk into a restaurant, you can only choose from the menu they put in front of you and only sit at tables that the waiter walks you to. In terms of the workforce, workers only do tasks in certain ways and it is the presence of hierarchical authority that reinforces them.
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The Irrationality of Rationality: Contradictions in McDonaldized Systems
McDonaldization has a concept called the irrationality of rationality. This states that rational systems become irrational or have irrationalities making the systems no longer rational. This is a huge disadvantage of the McDonaldization theory because it is basically the opposite of what it is trying to accomplish. Irrationality looks at different aspects like inefficiency, high cost, false friendliness, disenchantment, health and environmental hazards, homogenization, and dehumanization. Inefficiency occurs because of how busy and big a company can get leading to human errors. High cost can mean paying 30 dollars for a meal out where you can take that same money for groceries and make more than a single meal. False friendliness is expressed in almost every employee, especially a temporary minimum wage job. This can mean saying “hello, how are you” with a smile even though you do not care at all but you just want to show that the company cares for each individual. Disenchantment is the magic or uniqueness loss because of how sensible, standard, and concise everything is turning out to be. Almost everyone eats things that we know are not healthy for us but because its cheap, convenient, and tasty we cannot seem to give it up. The environment is in great danger because of human activities, especially meat production because that leads to “climate change, water and air pollution”(Ritzer pg.6). Homogenization is recognizing and engaging in things from home even though you are in a different city or country. Lastly, dehumanization looks at employees working jobs with barely any skill involved and low pay. Knowing you are very easily replaceable by another person is dehumanizing. Workers engaging with customers but not actually being invested/caring is also dehumanizing.
Uber is a modern day bureaucracy with a clear hierarchical ladder in place. As of recent Uber’s bureaucracy is failing because it is no longer being efficient by losing so much money because of risky endeavors rather than just people driving other people around. Dara Khosrowshahi is Uber’s chief executive and he controls and rules over all the other smaller executives and floor workers. The first bureaucratic quality can be applied here because this type of company is all about following the rules for efficient progress with little social mingling. The layoff surprisingly is an efficient method in letting the company progress forward to focus on future projects. In today’s modern world all the important documents are on laptops and computers and Uber is all about advancement and technology. In relation to the third quality, Uber’s executive gave the order to fire staff based on improving performance in the workplace, not based on any personal notion. Uber has specific divisions to divide and tackle labor and they hire experts in their field to complete these jobs, like engineering experts for their ATG. The workers and their immediate supervisors were shocked by the layoffs because they were given no warning and no real clear details. Hierarchy is bureaucracy’s structure and it can mean a lot of information is not passed down. No one questions hierarchy in this company, when your boss or leader says to get something done, it gets done no questions asked. The lower executives followed the orders of Khosrowshahi not because of who he is as a person but because he holds the title chief executive also known as CEO.
Uber as a Model of McDonaldization and Bureaucracy
Uber is a McDonaldized system that follows the main dimensions discussed previously. This company has been anything but efficient lately in terms of profit gain however, Uber strayed from its original path to branch into other areas of business like UberEats, UberFreights, and the ATG. The main reason they lost so much money was because of their ATG project. Uber misjudged calculability in terms of how much it would cost the company resulting in many layoffs and theft and trade secrets also lost them more money. They calculated that the benefits should outweigh the costs but they were mistaken and engineering, marketing, customer support, and more suffered for it. In terms of services offered, “Uber’s ride-hauling business”(Cogner 2017) is the main focus along with other popular services like Eats and Freights. No matter what Uber driver you get, the structure and experience is essentially the same every time, you get in either say nothing or very little small talk and then you get out once you have arrived at your destination. Uber controls customers by letting them request drivers but not being able to pick them. UberEats only has certain restaurants available on the app so you have a very limited section to choose from. Uber’s rational system becoming inefficient is highly irrational. In relation to high cost Uber can be more expensive in certain cities versus taking a taxi or driving yourself. Since they have been inefficient lately in wanting to become more of a “massive revenue generator”(Rotondi) they are hurting themselves in hopes that their new product works and sells. Uber is trying to get back on track after these layoffs in these last few months. Mr. Khosrowshahi is now trying to rationalize why they had to let people go, he said “in the past, we grew our teams rapidly and in a decentralized way”(Cogner and Isaac 2019). He solely wants to focus on being an efficient organization again without any mystery or magic(Ritzer pg.4) therefore highlighting the disenchantment concept of irrationality. The dehumanizing aspect of McDonaldization is inevitable if this company truly wants to be efficient. These people who were fired just to have the hiring freeze be lifted soon after and be replaced by another person with the same credentials makes them feel easily replaced and unvalued.
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