Last year Forbes & Business Insider confirmed rumors which had been circulating amongst ExxonMobil employees for months. It appears ExxonMobil, in an attempt to “cut more workers without using traditional layoffs” adjusted its performance evaluation process to justify a reduction in employee headcount.
Sponsored Ad
According to Forbes, in 2020 “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. This process is now continuing in 2021.
In June 2021, Bloomberg reported that ExxonMobil plans to cut between 5% and 10% of its staff annually for the next 3 to 5 years using their PIP program. These cuts will not be regarded as layoffs as they are “targeted at the lowest rated employees.”
Sponsored Ad
Casey Norton, an ExxonMobil spokesperson, stated that, “this is an annual process which has been in place for many years, and it is meant to improve performance. This process is unrelated to workforce reduction plans.”
This is very similar to a statement a spokesperson for ExxonMobil made to Business Insider about one year ago. They denied that the company’s intention was to “reduce headcount through [their] talent management process,” stating that ExxonMobil employees who find themselves in the NSI category are provided opportunities to improve their performance and keep their jobs.
In her statement, Casey Norton failed to mention that the annual process had been expanded to include a significantly greater number of employees than it had in years prior to 2020. Before Coronavirus hit the United States, ExxonMobil mandated that just 3% of employees were required to be in the NSI category. As of April 2020 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”. ExxonMobil also has a separate goal of cutting 14,000 jobs globally by 2022.
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”. However, 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”. A few former and current ExxonMobil 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”.
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”. They also get the benefit of selling future prospects on the idea that their job is stable if they perform well.
The ExxonMobil CEO, Darren Woods, made a statement about a year ago that the company had no plans to layoff employees. This statement came in the midst of the Coronavirus crisis which has had a devastating effect on American oil companies. According to Forbes, in 2020 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”.
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.”
Sources:
- Carroll, Joe, and Kevin Crowley. “Exxon Prepares to Cull U.S. White-Collar Ranks by as Much as 10%.” Bloomberg.com, Bloomberg, 21 June 2021, www.bloomberg.com/news/articles/2021-06-21/exxon-prepares-to-cull-u-s-white-collar-ranks-by-as-much-as-10.
- 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
