Chapter 14, Problem 1LEC

Summary Introduction

To Determine:

Is it Ethical for organizations to incentivize their Employees to Poach People from Competing Companies?

Given:

Have you used uber or Lyft instead of a taxi? These two companies are major competitors in the ride-share and car-for-hire market, and they are creating major competition for the taxi industry. Both companies rely on the use of apps to connect riders with drivers.

According to the Wall street Journal, both companies are “undercutting each other's prices, poaching drivers and co-opting innovations.” Lyft claims that Uber has “abused its service in the past several months with the goal of poaching drivers and slowing down its network. Passengers who identify themselves as working for Uber frequently order a left and then ride for only few blocks, sometimes repeating this process dozens of times a day.” Is this practice ethical?

According to an internal Uber e-mail that was sent to its drivers and reviewed by The wall street Journal, “the company offers $250 for referring a new driver to its service; $500 for referring a Lyft driver; and $1000 for signing up a Lyft mentor.” A mentor is an experienced Lyft employee who trains new drivers. Losing mentors would be a blow to Lyft.

Uber denies that it is “intentionally ordering Lyft rides to add congestion to its competitor's service but confirm the company does offer recruitment incentives.”

SOLVING THE CHALLENGE

Would you change your competitive practices if you were a senior leader at Uber or Lyft?

1. Yes. Having employees taking short rides to jam up your competitor's network is not ethical. Companies should compete on price and the quality of service, and uber seems to be using techniques that affect Lyft's quality of service.
2. No. This is hard-core competition and neither company is breaking any laws. I applaud Uber for offering incentives to poach key employees from Lyft.
3. Invent another option.

Introduction:

Uber and Lyft are major competitors in the ride-share and car-for-hire market, and they are creating major competition for the taxi industry. Both companies rely on the use of apps to connect riders with drivers.