Exxon mishandled layoffs and morale has plummeted, insiders say. That could hamper the oil giant's r

• Exxon mishandled communication around layoffs after the price of oil collapsed last year, current and former employees say. 
• That's led to a decline in morale at the company, which could hamper its recovery. 
• Do you have information about Exxon? Reach out to this reporter here.

Exxon Mobil mishandled layoffs after the price of oil collapsed last year, contributing to a decline in worker morale that could complicate the oil giant's turnaround.

Executives were not forthright with employees about the toll the downturn would take on its workforce and, at times, came across as insensitive when they did communicate about job cuts, five current and former employees said.

Experts who study worker sentiment said that unhappy workers could hamper Exxon's recovery from a record year of financial losses.

Dissatisfied employees tend to produce lower-quality work, according to Anthony Klotz, an associate professor of management at Mays Business School at Texas A&M University. Poor morale can also harm a company's ability to recruit top talent, said Sandra Sucher, a professor of management practice at Harvard Business School. Unhappy employees tend to air their frustrations publicly, which could deter applicants, she said.

The current and former employees requested anonymity for fear of retaliation. Insider has verified their identities and affiliation with Exxon. 

Exxon is one of several major oil companies that laid off staff after the coronavirus pandemic upended demand for oil and gas last spring. BP, Shell, and Chevron, the three other leading Western oil companies, cut thousands of workers and joined Exxon this month in reporting multibillion-dollar financial losses for 2020. 

Exxon declined to comment on worker morale.

Morale began sinking this summer when Exxon quietly cut staff

Employees became frustrated with Exxon over the summer, when the company began using its performance-review process to cut workers while reiterating that it had no plans for layoffs, Insider's reporting shows.

Beginning around June, managers told 8% to 10% of the company's employees — in the US, Singapore, and elsewhere — that they were ranked as poor performers, putting their jobs at risk. Prior to April, when the price of oil bottomed out, a minimum of just 3% of employees were put in that bottom category. 

Leaked audio from an internal meeting and conversations with managers indicated that some of the employees who were ranked at the bottom didn't deserve to be there, as Insider previously reported. As of late July, Exxon told Insider that it had no plans for layoffs, and employees called the maneuver a layoff in disguise.

Employees weren't surprised that Exxon had to make cuts, as is typical for oil companies during a downturn. But calling them talent-based decisions frustrated workers, said a former employee in the company's refining division, who was laid off. 

Using performance reviews to trim staff is typically ill-advised, Sucher said. Employees view it as deceptive and it undermines actual efforts to improve performance, she said. 

"It takes something that is supposed to be developmental for employees and turns it into a tool for managing workforce change," said Sucher, coauthor of The Power of Trust: How Companies Build It, Lose It, Regain It, which will be published in July. "No one is fooled by this, and employees, in fact, resent it more."

The result hurts morale she added: "No one is excited, no one is happy, and everyone's just waiting to leave."

In response to questions about Exxon's performance-based cuts, spokesperson Ashley Alemayehu pointed to previous statements Exxon provided to Insider. 

"We do not have a target to reduce headcount through our talent management process," Alemayehu told Insider in July. "We have a rigorous talent management process which routinely assesses employee performance."

Executives came across as out of touch or insensitive when they delivered the news of layoffs, some employees said 

Exxon cost itself goodwill again later in the summer when employees caught wind of other cost-cutting measures including a suspension of Exxon's matching program for retirement savings, said the former refining employee. The firm also froze education benefits. 

In the fall, when Exxon executives said there would be workforce reductions, some of them came across as out of touch, according to two former employees.

Speaking in one internal forum in the fall, Darren Woods, the company's CEO, said he was late because his company plane had trouble landing in the fog, said one former worker, who attended the forum. It was hard to find sympathy, he added.

In another meeting warning employees of cuts, a company director in Exxon's refining division said he was worried, too, because he had kids that worked at Exxon, a former employee recalled. That didn't sit well with people in the meeting, the person said, because they thought that relatives of a senior director weren't likely to be laid off.

Exxon announced in late October that it would cut 1,900 workers in the US through 2022, as part of a broader reduction that would affect 15% of the company's workforce, including contractors. US employees found out whether they'd be cut just before the winter holidays.

It's difficult to measure employee sentiment across a company as vast as Exxon, which had 88,300 employees, including contractors, at the end of 2019. 

But as one measure of employee attitudes, one former worker pointed to the fact that anonymous commenting in an internal forum was disabled in the fall because there were so many disparaging comments pertaining to management.

In a different internal forum, employees questioned why Exxon would maintain its dividend instead of saving jobs, according to comments reviewed by Insider.

The year ahead 

US employees who were told they'd be laid off will be taken off payroll from now through April. One of them said Exxon continues to fumble the process, sending boxes to employees to return company property that have the wrong employee's names on them. 

Some workers who weren't laid off are handing in their resignations or applying to new jobs anyway, said a current employee in Europe, who's actively applying for roles outside Exxon himself. One of his former colleagues who resigned was able to find a job at another energy company.

It's typical for productivity to go up after a layoff because employees are terrified of losing their jobs, and there's more work to do per employee, Sucher said. But there's a downside, as well. 

"On the other hand, concerns about quality and safety fall," she said. "If you're in the energy industry in a business that depends on both of those things hugely, that's a very definite risk. You don't really see the effects of that in top-line revenues. It's a quiet deterioration from the company on the inside as people lose engagement." 

And the effects could endure as it tries to recruit the next generation of oil workers, Klotz said. 

"Maybe Exxon's reputation is still peerless," he said. "But even if it goes down a little bit that's going to affect your recruiting."

Get the latest ExxonMobil stock price here.

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