In 2020, AT&T CEO John Stankey set a goal of $10 billion in cost cuts. During the pandemic AT&T has conducted layoffs and reduced employee benefits. However, they’ll need to find more ways to reduce costs if they’re going to reach their goal. Could AT&T be using PIP (Performance improvement plan) as a means to let go of some of their workforce? It wouldn’t be the first time we’ve seen major corporations use this tactic. Earlier this year Forbes & Business Insider confirmed the rumors which had been circulating within ExxonMobil circles for months. It appears ExxonMobil, in an attempt to “cut more workers without using traditional layoffs,” had 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.” 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 expanded the NSI category to include 8% or more of salaried workers in the US. AT&T has not been accused of broadening the pool of people who receive PIPs but there is some speculation among AT&T employees that receiving a PIP essentially means you will be let go from the company. One employee posted on thelayoff.com saying “I was put on a PIP…What are the chances that this will be an honest process and is not just a way to get rid of me?” A similar sentiment has come from ExxonMobil employees posting on the same site.
In ExxonMobil’s case there was 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.” They also get the benefit of selling future prospects on the idea that their job is stable if they perform well.
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.
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. 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”. Several ExxonMobil employees raised concerns about a clause in their “Waiver & Release” documents stating that they, “…will not apply 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.”
- 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/Transition Guide for AT&T Employees.” The Retirement Group, The Retirement Group, 11 Aug. 2020, https://telecom.theretirementgroup.com/att-guide-download-google
- 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