Employees Flee From Energy Giant ExxonMobil. What’s Happening - Bloomberg
American oil and gas giant ExxonMobil’s earnings are breaking records, as is the value of its shares. However, employees leave the company en masse - 12 thousand people left in 2 years. Here are the problems in the corporate culture that led to this.
ExxonMobil, an oil and gas company with a century and a half history, not only survived corporate upheavals and global crises, but also strengthened its position. Thanks to rising oil prices, Exxon shares have risen in price by 72% over the year, to $112 a share. This is an absolute historical maximum. The capitalization of the company is $456 billion, which makes it the largest oil and gas company in America and one of the leaders in the oil sector in the world.
The firm is known not only for its financial results, but also for its high salaries, which start at $100,000 a year. Exxon has a social support system that includes benefits and pensions. But, despite this, the company is losing employees - over the past two years, it has lost 12 thousand people, of which more than half left on their own, and not due to staff reductions. Bloomberg figured out what was wrong with the corporate culture of the energy giant.
New labor rules
ExxonMobil’s predecessor, Standard Oil, was founded in 1870 by the famous John Rockefeller. The business he created has grown so much that antitrust laws have been applied to it and forcibly divided into several parts. The current ExxonMobil originated in 1999 after the merger of two companies - Exxon and Mobil, which originate from Standard Oil.
Since its inception, ExxonMobil has recorded annual profits. The exception was 2020, when due to the pandemic, the company suffered a loss of $22.4 billion against a profit of $14.3 billion a year earlier. This was the first loss since the formation of the company. However, over the next two years, ExxonMobil was able to correct the situation. The company’s net income in the third quarter of 2022 reached a record of almost $20 billion, three times more than in the third quarter of 2021. Quarterly revenue increased 1.5 times and amounted to $112 billion, although analysts had expected the figure at $107.2 billion.
ExxonMobil was able to fix things by cutting costs. In 2020, for the first time in several decades, the company reduced its staff by 15% at once, limited the ability of employees to save for retirement, and changed the performance evaluation system.
But now another problem has arisen - employees believe that the new approach to evaluation is designed to pit employees against each other. Subordinates should not speak out against the opinion of superiors at meetings, as this threatens with a low assessment. According to internal documents, Exxon classifies employees into categories, and those who fall into the category of “need to improve the quality of work” can be fired. In 2020, Exxon increased the share of those who need to be classified as “needs to improve the quality of work” from 3 to 8%. People who had been with the company for less than two years were asked to leave if they fell into this category.
The company itself does not confirm this information. “We do not have a goal of reducing headcount through our HR process. Employees who fall into the category “need to improve the quality of work” receive a plan for further actions and opportunities for improving efficiency ”, said an Exxon spokesman.
Fear and pressure
An unfair performance appraisal system is just one of the factors that cause employees to leave. An investigation by Bloomberg Businessweek found that the key reason that pushes people to quit is a toxic corporate culture based on fear. Such an approach slows down the introduction of innovations and discourages employees from not only taking risks, but generally being involved in the company. The founder of the modern culture of the company, according to Bloomberg, was the chemical engineer Lee Raymond, who headed Exxon in the early 1990s. As Steve Call writes in Private Empire: ExxonMobil and American Power, Raymond was famous for with his sharp remarks, uncompromising demands and public reprimands to top managers.
“Unhealthy corporate culture”, “Pressure, harsh demands”, “Lack of respect for employees”, “Shifting responsibility and looking for the last”, “No career advancement” - such comments from former and current ExxonMobil employees can be found on the site for feedback on Glassdoor employers.
Data scientist Avery Smith left, for example, because Exxon’s “ossified culture” made it impossible for him to take on projects he was interested in. “I realized that my opportunities in the company are limited, I wanted to take on larger projects,” Smith noted.
Now, as employees say, only those who share the views of their superiors move up the career ladder at Exxon. “The ability to please senior management has become more important than the potential of employees,” says one executive who left the company in 2021 after 20 years on the job. At the same time, in a sustainability report, ExxonMobil says it encourages employees to engage in open dialogue on all issues, including concerns and reporting any alleged violation of corporate policy. “The Corporation does not discriminate in any aspect of its personnel policy, whether it be hiring, appointment, promotion, dismissal, salary assignment or placement for study”, the document says.
However, employees also complain about harassment and violations of the rights of minorities. For example, an African-American employee who worked for the company for 12 years sent a letter on his last day to 300 colleagues, including executives, in which he spoke about harassment. He wrote that for more than ten years he was not allowed to climb the career ladder. The employee was forced to endure racist language from colleagues and use his own car for work trips, although those who held this position before and after him were given a working car. Exxon says about cultural diversity and inclusion: “Creating an atmosphere of mutual respect allows our employees around the world to express their own original views, contributing to the achievement of the company’s business goals.”
Not the climate
Another factor that forces employees to quit is the climate agenda. Recruiters describe the company as a leader in clean technologies such as algae biofuels and carbon capture. Mechanical engineer Dar-Lon Chang joined Exxon in 2003 because he believed the company would become one of the world’s leaders in moving away from fossil fuels. But during his work, he saw that the leadership was focused on “increasing oil and gas production by two, or even four times.” He watched as Exxon pulled back on renewable energy investments, saying they would not meet minimum profitability requirements. The climate agenda has become almost a taboo topic - people have become afraid to talk about it, because it was fraught with punishment. “The top management doesn’t like bad news, therefore, in order to stay at Exxon for the long term, you need to do and say only what the authorities want. This does not suit young people, especially those who are concerned about the climate agenda,” says Chang, who left the company in 2019.
In 2021, under pressure from investors, Exxon reformed its climate strategy, set more ambitious emission reduction targets, increased spending on clean energy, and stepped up its low-carbon division. The company even hired several new top managers to work in this direction. For example, Exxon’s chief financial officer was Diageo’s Cathy Mikells, while Dan Ammann, who previously led GM’s self-driving vehicle business, became head of low-carbon. But Exxon needs to attract and retain scientists, engineers and technologists to lead the energy transition, former employees say. “You could talk all day long about low carbon emissions. But first, we need to reduce emissions in the Exxon culture.”
Temporary phenomenon
Some employees use Exxon training programs to find new jobs. Having received a certificate, for example, in the direction of cloud technologies Microsoft Azure, they easily get a job at Amazon, Microsoft and other large technology firms. Highly qualified employees also move to consulting companies Bain, Boston Consulting Group, McKinsey. As a result, Exxon faced the problem of finding qualified personnel. “We cannot find better or even as good employees in the market as those who are leaving. We do what we can, where we can, but many of the things that really matter to employees are beyond our control,” according to Bloomberg, the Houston manager forwarded this information to the head of Exxon’s global service division.
The company, in turn, refuses to acknowledge the existence of any problems with personnel. “ExxonMobil culture stories from departed employees are unconvincing for two reasons. Every year, new people join the company and stay for a long time”, said ExxonMobil spokeswoman Amy von Walter. — There are no companies with an ideal corporate culture. Of course, it is very easy to take disparate data and use it to paint a picture, but it will not be an accurate portrait.”
By the end of 2021, Exxon in the U.S. had an employee turnover rate of 18%, roughly in line with the national average but nearly double the average of competitors such as BP, Chevron and Shell, according to labor market research firm Revelio Labs. Exxon disagrees with the numbers and says its churn rate is comparable to that of competitors. “The churn has increased over the past two years, as in almost every company, but we do not believe that this is a long-term trend,” the company says. “The important thing is that the best specialists continue to come to us both for line and management positions.”
The company does not recognize problems with the outflow of personnel, but takes measures aimed at stabilizing the situation. A year ago, ExxonMobil CEO Darren Woods at a meeting in front of employees spoke about the upcoming revision of salaries upward. Once again, Woods announced an increase in the income of employees in the United States in April 2022, promising in June to raise wages by 3% “to maintain competitiveness.” But this is not enough. ExxonMobil’s innovation, teamwork support and mental health are much lower than its oil peers, while salaries and benefits are higher, says Charlie Sall, co-founder of culture-assessment company CultureX. “Exxon seems to be trying to offset the negatives of a toxic corporate culture with financial rewards,” Salla notes.
Sources: Bloomberg, Insider (formerly Business Insider), Forbes, Reuters, Glassdoor