Earlier today Forbes & Business Insider confirmed the rumors which had been circulating within ExxonMobil circles for the past few months. It appears ExxonMobil, in an attempt to “cut more workers without using traditional layoffs” (Jones), has adjusted its performance evaluations in order to justify more job cuts.
According to Forbes, “Exxon categorizes its employees based on their performance and employees at the lowest rank ‘Needs Significant Improvement’ are at the risk of being terminated,” (Gross). The “Needs Significant Improvement” category is also referred to as “NSI”. Oftentimes employees in this category are offered a “Performance Improvement Plan” or PIP, which is essentially a severance offer to leave the company. ExxonMobil has expanded the NSI category to include 8% or more of salaried workers in the US.
Several ExxonMobil employees have claimed that they never received any negative feedback on their job performance before being ranked in the NSI category. According to Business Insider, one employee was told repeatedly by her managers that she was performing well and was considered “in good standing” as recently as this summer. However, a few days ago she was handed a PIP and asked to resign or go through the improvement process. She opted to leave the company.
Business Insider claims, “Two people familiar with Exxon’s internal human-resources policies said it was rare for anyone to successfully complete a performance-improvement plan and stay with the company,”(Jones). A few former and current employees have stated that the review process largely depends on whether or not a supervisor is willing to fight to keep their employees. One supervisor even told Business Insider that, “he found it difficult to meet the 8% quota when he ranked employees,” (Jones).
There is some strategic value for ExxonMobil to cut jobs through performance reviews as opposed to laying people off. Business Insider states that, “by not calling job cuts layoffs, companies can avoid a requirement to give employees and state officials 60 days’ notice under the Worker Adjustment and Retraining Notification Act,” (Jones). They also get the benefit of selling future prospects on the idea that their job is stable if they perform well.
Rumors have been swirling about these ExxonMobil “layoffs” for some time now. According to Reuters, “Exxon is expected to report a $2.63 billion second-quarter loss,” (Hiller et al.). Analysts have speculated that ExxonMobil may not bring in enough cash to cover their dividend this year. In that same article Reuters claims that ExxonMobil is preparing a large spending & job cut to “preserve it’s 8% shareholder dividend,” (Hiller et al.). The payout on ExxonMobil’s dividend has been raised every year for the last 37 years, a steak which ExxonMobil had been very proud of up until this point.
TheLayoff.com/exxon-mobil, a blog frequented by many ExxonMobil employees, has had a lot of chatter surrounding the performance reviews and PIP offers. Four days ago an employee wondered, “Will we see any other reductions in staff this year after the 8% that is PIP’d are gone? Or will the next round just be the bottom of next year’s rankings?” (“ExxonMobil Corp. Layoffs – TheLayoff.Com”). Another ExxonMobil Employee even posted a document showing the changes made in April to the ExxonMobil employee review process (Please be advised that this was posted on an anonymous cite and Techstaffer cannot confirm or deny the validity of this document):
In a statement to Business Insider, a spokesperson for ExxonMobil denied that the company’s intention was to “reduce headcount through [their] talent management process,” stating that employees who find themselves in the NSI category are provided opportunities to improve their performance and keep their jobs.
The ExxonMobil CEO, Darren Woods, made a statement just two months ago that ExxonMobil had no plans to layoff employees. ExxonMobil representative Ashley Alemayehu echoed those same sentiments just this past Friday. These statements come in the midst of the Coronavirus crisis which has had a devastating effect on American oil companies. According to Forbes, ExxonMobil experienced, “a first-quarter loss of $610 million, a 126% decrease from the same time period last year, after a plunge in the price of oil” (Gross). ExxonMobil employed 75,000 people at the end of 2019, so the potential for an 8% reduction could mean about 6,000 people out of work.
Before Coronavirus hit the United States, ExxonMobil mandated that just 3% of employees were required to be in the NSI category. As of April they expanded that category to potentially include 8% of employees (Jones). One former employee told Business Insider, “Don’t let the performance metrics fool you. It was definitely a layoff.”
Prior to April the NSI category did not include new employees. That policy was amended and now anyone with less than 2 years experience in the NSI category will be asked to leave the company. Those in the NSI category who have been with the company for more than two years will have the option to complete a “performance improvement plan” (Jones).
Several ExxonMobil employees raised concerns about a clause in their “Waiver & Release” documents stating that they, “…will not apply to for future employment with XOM,” (“ExxonMobil Corp. Layoffs – TheLayoff.Com”). According to an article from skloverworkingwisdom.com these “No Re-Apply” clauses are fairly common and are, “nothing more than an attempt by employers and their lawyers to avoid future lawsuits by employees who were paid severance,” (Sklover).
- Jones, Benji. “Leaked Documents Reveal Exxon Changed Its Employee Ranking System amid the Coronavirus Pandemic, Putting More Workers at Risk of Getting Cut.” Business Insider, 24 July 2020.
- Jones, Benji. “Exxon Made Managers Dub Some Employees Poor Performers to Cut Staff – Business Insider.” Business Insider, Business Insider, 30 July 2020, https://www.businessinsider.com/exxon-managers-dub-some-employees-poor-performers-cut-staff-2020-7.
- The Retirement Group or www.theretirementgroup.com
- Hiller, Jennifer, et al. “Exxon Prepares Spending, Job Cuts in Last Ditch Move to Save Dividend.” Reuters, 30 July 2020.
- Gross, Elana. “ExxonMobil Reportedly Changed Its Employee Review Process To Increase Performance-Related Job Cuts.” Forbes, 24 July 2020.
- “Retirement Plans-Benefits & Savings.” U.S. Department of Labor, 2019, www.dol.gov/general/topic/retirement.
- “ExxonMobil Corp. Layoffs – TheLayoff.Com.” TheLayoff.Com – Layoffs Discussion Board, 27 July 2020, https://www.thelayoff.com/exxon-mobil
- Sklover, Alan. “‘My Severance Agreement Says I Can Never Re-Apply; Can I Get around That?’ – Sklover Working Wisdom.” Sklover Working Wisdom, 20 Mar. 2014, https://skloverworkingwisdom.com/my-severance-agreement-says-i-can-never-re-apply-can-i-get-around-that/.
- “Generating Income That Will Last throughout Retirement.” Fidelity, 22 Jan. 2019, www.fidelity.com/viewpoints/retirement/income-that-can-last-lifetime.
- XOM Summary Plan Description, 2017