Leaked documents reveal Exxon changed its employee ranking system amid the coronavirus pandemic, putting more workers at risk of getting cut

Carlos Jasso/Reuters
  • Leaked documents reveal 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. Two former employees claim that the company is 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 wrought 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 bjones@businessinsider.com or through the secure messaging app Signal at 646-768-1657.

Oil giant Exxon Mobil, challenged by a collapse in oil prices, made changes to the way it assesses employee performance in order to cut more workers without using traditional layoffs, according to former employees and documents seen by Business Insider.

Exxon categorizes its employees based on their performance, according to the documents and two former workers. 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 shows, potentially putting 8% or more of salaried workers at risk of being cut.Advertisement

Click here to subscribe to Power Line, Business Insider's weekly energy newsletter.

"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 downward tailspin. Today, a barrel of Brent, 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.

Read more: Layoffs, furloughs, and budget cuts: We're tracking how 20 energy giants from Shell to Chevron have responded to the historic oil market meltdown

'Today, we have no layoff plans'

The CEO of Exxon, Darren Woods, told investors on May 27 that the company didn't plan to cut jobs.Advertisement

"Today, we have no layoff plans," he said.

In the statement Friday, Alemayehu said that Exxon currently has no plans for layoffs.

Two former employees said the change in the review process — which will lead to more performance-based cuts — amounts to layoffs by another name. The people requested anonymity for fear of retaliation. Business Insider has verified their identities.Advertisement

Exxon had 75,000 employees at the end of last year. Prior to 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 due to the pandemic's impact 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 to Business Insider said it was about optics — Exxon doesn't want to announce layoffs. Advertisement

FILE PHOTO: View of the Exxon Mobil refinery in Baytown, TexasReuters

How Exxon ranks its employees

Exxon sorts its 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 read. Advertisement

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.

Prior to 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 reads. Advertisement

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.

Read more: Layoffs, furloughs, and budget cuts: We're tracking how 20 energy giants from Shell to Chevron have responded to the historic oil market meltdownAdvertisement

Darren Woods, CEO of ExxonREUTERS/Brendan McDermid

'Don't let the performance metrics fool you'

Two former employees, both 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."Advertisement

The other 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.

The two former employees also said that when they joined Exxon they were told that they would not initially be ranked.Advertisement

"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."