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- Leaked documents revealed Exxon Mobil made changes to its internal employee-ranking system in April, exposing a much larger portion of its staff to performance-based cuts.
- In May, Exxon’s CEO said the company did not have layoff plans. Four former employees and one current employee said the company was obscuring layoffs in performance-based cuts.
- “We do not have a target to reduce headcount through our talent management process,” an Exxon representative said. “Employees who need significant improvement (NSI) are given a plan and opportunities to improve their performance.”
- Almost all major oil companies have taken aggressive action to weather the downturn brought by the coronavirus pandemic, which sent the price of oil tumbling.
- Are you a current or former Exxon employee? Reach out to this reporter at email@example.com or through the secure messaging app Signal at 646-768-1657.
- For more stories like this, sign up here for our weekly energy newsletter, Power Line.
The oil giant Exxon Mobil, challenged by a collapse in oil prices, made changes to the way it assesses employee performance to cut more workers without using traditional layoffs, according to current and former employees and documents seen by Business Insider.
Exxon ranks its salaried employees based on their performance, according to the documents, five former workers, and one current employee. Employees at the lowest rank, called “Needs Significant Improvement” (NSI), are at risk of being cut.
In April, Exxon expanded the number of employees required to be placed in that lowest category, the documents show, putting 8% or more of salaried US workers at risk of losing their job.
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“We have a rigorous talent-management process which routinely assesses employee performance,” Ashley Alemayehu, an Exxon representative, said in a statement to Business Insider. “We do not have a target to reduce headcount through our talent management process. Employees who need significant improvement (NSI) are given a plan and opportunities to improve their performance.”
Oil companies have been hammered this year by the coronavirus pandemic, which sapped demand for fuel and sent the price of oil into a tailspin. Today a barrel of Brent crude, the international benchmark, is down about 34% since the start of the year.
Every major oil company has taken aggressive action to weather the downturn, including Exxon. In early June, BP said it would lay off 10,000 workers, citing the coronavirus pandemic, while Chevron announced job cuts of a similar size.
Options trading ‘Today we have no layoff plans’
Exxon CEO Darren Woods told investors on May 27 that the company didn’t plan to cut jobs.
“Today we have no layoff plans,” he said.
In the statement Friday, Alemayehu said Exxon had no plans for layoffs.
Four former employees and one current employee said the change in the review process amounts to layoffs by another name because they would lead to more performance-based cuts. The people spoke on condition of anonymity for fear of retaliation. Business Insider has verified their identities.
Exxon had 75,000 employees at the end of last year, including nonsalaried workers, Alemayehu said.
Before the pandemic, if a company fired a large number of workers, it would have to pay a higher tax for unemployment. That usually creates an incentive to characterize layoffs as performance-related cuts, said Michele Evermore, a senior researcher and policy analyst at the National Employment Law Project.
But because of the pandemic’s influence on the economy, every state has waived the requirement that companies pay a premium for laying off staff, she said. So that’s likely not what the change to Exxon’s performance assessment is about, she said.
The people who spoke with Business Insider said it was about optics — Exxon doesn’t want to announce layoffs.
Options trading How Exxon ranks its employees
Exxon sorts its salaried workers into five categories within groups of peers, based on performance, from “outstanding performance” to “performance needs improvement,” according to two of the documents reviewed by Business Insider.
“The reason we chose 5 primary categories is that this is the best way of achieving the level of differentiation we need to support a meritocracy and meet our objectives,” one of them said.
Within the bottom category, “performance needs improvement,” a subset of employees must be assigned to “needs significant improvement,” according to the documents and two former employees.
Before the pandemic, Exxon required that a minimum of 3% of employees in certain groups be placed in the NSI category. In April, Exxon bumped up the minimum to 8% and expanded it to include new employees, they said.
“Establishing minimum levels in our lower performance category ensures we maintain a healthy talent pool that is motivated to continuously improve and is replenished on an on-going basis through hiring,” an internal document said.
Employees in the NSI category are given a few options, depending on whether they’re new hires, according to the former employees and additional documents Business Insider reviewed.
People who have been at Exxon for less than two years have to leave the company. Other employees ranked NSI are given the option to enroll in a performance-improvement plan.
Options trading ‘Don’t let the performance metrics fool you’
Three of the former employees, all of whom were new hires, said they were caught by surprise when they learned that they were in the bottom rank.
“Up until yesterday, I was not provided any constructive feedback or reason to believe my work would put me in the bottom bracket,” said one of the former employees, who was recently told he was in the bottom 8% and would be forced to resign. “Don’t let the performance metrics fool you. It was definitely a layoff.”
Another former employee said that during her review, she was told that her performance was not in line with her peers, but there “was nothing measurable,” she said.
Read more: Big Oil survived the market crisis, but its largest players are still losing billions. 7 top energy analysts laid out what to expect next, from dividend payments to clean-energy investments.
Three former employees also said that when they joined Exxon, they were told they would not initially be ranked.
“As new hires, we were told that we’d just get thrown in the middle, and we didn’t have to worry about rankings for the first two years,” one of them said. “Then the guidance changed.”
This story has been updated to include additional information from current and former Exxon workers.
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