The departure of WeWork’s CEO won’t end its problems

We Co., the parent company of WeWork, the high-flying co-working company, announced earlier this week that its controversial CEO, Adam Neumann, has agreed to step down under pressure from the board. In his place, the company’s vice chairman and its chief financial officer will jointly run the company while Neumann stays on as non-executive chairman. Plans in the near future include the possible layoffs of thousands of employees, reports the Wall Street Journal.

This will hardly be the end of WeWork’s problems. It’s facing serious investor scrutiny over its finances (last year it lost $1.6 billion) and recently announced that its highly anticipated IPO will be delayed. But what’s especially troubling about WeWork are news reports that describe what appears to be a highly toxic corporate culture plagued with sexism, age discrimination and poor managerial behavior.

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In June, former senior vice president and head of compensation Lisa Bridges sued the company, accusing it of significantly underpaying women and that WeWork put her on leave and then fired her after she raised the issue internally. According to her lawsuit, Bridges was told by the company’s former chief legal officer that the pay disparities were because “men take risks and women don’t.”

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Her lawsuit came on the heels of an age discrimination lawsuit filed by former WeWork vice president of construction Richard Markel, who said he was unfairly fired and replaced by a younger man just one year into his tenure. Last fall, former director of culture Ruby Anaya filed a sexual harassment and gender discrimination lawsuit against the company.

WeWork’s HR department has also been plagued by turmoil. According to a report by The Information, nearly a dozen HR managers have left or are planning to leave the company over the past year. Five top HR officers left the company between 2015 and last year, and the post of chief HR officer has gone unfilled since last year, The Information reports.

Neumann’s management style and personal behavior was the subject of a scathing Wall Street Journal story last week. The former CEO encouraged employees to drink alcohol in the office, according to the article. It described how, in 2016, after the company laid off 7% of its staff, Neumann explained to employees in a group meeting that the move was tough but necessary. Then employees came into the room carrying trays of plastic shot glasses filled with tequila, followed by toasts and drinks, and then an appearance by Darryl McDaniels of hip-hop group Run-DMC, who played a set for the staff. From the story: “Workers danced to the 1980s hit ‘It’s Tricky’ as the tequila trays made more rounds; some others, still focused on the firings, say they were stunned and confused.”

Although WeWork has a fairly respectable 3.3 rating on Glassdoor and a good number of positive reviews by current and former employees, there are also many reviews that indicate problems with the organization’s culture.

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WeWork still has plenty of fans, however, who say the company’s business–providing office space to telecommuters and gig workers–will continue to see big growth.

Josh Bersin, analyst and a columnist for HRE (and a keynoter at the upcoming HR Tech Conference), writes in an email that “WeWork’s explosive growth clearly demonstrates the tremendous growth in gig, contract, and flexible work. My research shows that more than 82% of companies see rapid growth in gig and flexible work, yet only 12% have integrated talent and workplace programs to accommodate this trend.”

WeWork’s movement toward “gig life” programs is also very consistent with the new world of work, says Bersin. “Research by the Freelance Union, for example, shows that when gig workers find opportunities they like, their average workplace engagement is actually higher than full time employees. This means their experience at WeWork can be very positive and developmental.”

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Andrew R. McIlvaine
Andrew R. McIlvaine is former senior editor with Human Resource Executive®.