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ExxonMobil is one of the largest publicly traded international oil and gas companies in the world. So why is this successful 140-year-old company dealing with an allegedly toxic organizational culture?
What is organizational culture?
Organizational culture is a firm’s shared values, beliefs, traditions, principles, rules, and role models for behavior. Also called corporate culture, an organizational culture exists in every organization, regardless of size, organizational type, product, or profit objective.
COVID-19 exposes cultural problems
According to a Bloomberg article, the pandemic was a difficult time for Exxon employees thanks, in part, to low crude oil prices. Salary increases were halted, benefits were reduced, and the company faced layoffs.
Morale was low, so after about a year and a half, Bill Keillor, global IT vice president, wanted to help. His leadership teamed arranged an awards ceremony and promoted it on the company’s internal social network Yammer. According to anonymous reports, the award ceremony, which was largely virtual, turned into a tense town hall with attendees voicing concerns and asking tough questions. Exxon is known for having an authoritarian, top-down culture, so this did not sit well. Allegedly, Keillor snapped at attendees and brushed off their questions.
Turnover
After the event, employee-created memes circulated private chats, slowly making their way across the company. Some joked about quitting, but for others, it wasn’t a joke. The company’s turnover rate is the highest since 1999 when Exxon merged with Mobil. In the last two years, 12,000 employees have departed, less than half of which were from layoffs.
According to an Exxon statement, every company has experienced attrition in recent years due to the Great Resignation, and the oil and gas company does not consider this to be a long-term trend. Revelio Labs, an intelligence company that uses public employment records, says Exxon’s turnover rate is in line with the nationwide average but higher than competitors, including BP, Chevron, and Shell. Exxon disagrees with this analysis.
Inside Exxon’s culture
Bloomberg Businessweek’s investigation suggests there may be a deeper problem at Exxon. The publication interviewed more than 40 employees (current and former) and reviewed dozens of Exxon’s internal documents, and found evidence that Exxon has an insular, fear-based culture that is out of touch with the outside world.
Exxon uses a performance ranking system. Previously, employees were ordered from 1-to-100 on a bell curve, but the system was reworked in 2020 to make the processes more transparent and helpful to employees. Instead, employees are placed in performance categories. Anyone in the lowest category can choose between a performance improvement plan or severances. According to Reuters, about 5 to 10 percent of the company’s workforce is assigned performance improvement plans. Employees in the lowest-performing tier can save their job by improving their performance, but a significant portion of them will leave.
A senior corporate advisor says the system should not be feared or a source of anxiety because it helps employees succeed and keeps their performance in line with organizational objectives. On the other hand, some individuals say the ranking system makes employees hesitant to share bad news or unpopular opinions.
According to an analysis by CultureX, an MIT organization that uses artificial intelligence to evaluate organizational culture using Glassdoor reviews, Exxon faces toxicity challenges and ranks below 143 out of the 196 industry benchmarks CultureX measures. The most frequently discussed cultural values, according to more than 1,400 Glassdoor reviews, are agility, performance, and execution.
Exxon on the defense
An Exxon spokesperson responded to these criticisms, saying they were unfounded. The spokesperson pointed to the number of new employees hired every year and how long people tend to stay with the organization. She suggested Bloomberg’s investigation made broad observations with few data points.
Despite these questions about ExxonMobil’s organizational culture, the company is performing well financially with its stock nearing a record high. If there is indeed an organizational culture problem, Exxon will have to address it to attract and retain the best talent.
In the Classroom
This article can be used to discuss organizational culture (Chapter 7: Organization, Teamwork, and Communication), morale (Chapter 9: Motivating the Workforce), and turnover (Chapter 10: Managing Human Resources).
Discussion Questions
Define organizational culture, morale, and turnover.
What evidence is there to suggest ExxonMobil has a negative organizational culture?
If ExxonMobil has a top-down, authoritarian culture, why do you think employees spoke up during the award ceremony about their concerns? Why do you think more than 40 employees agreed to speak with Bloomberg?
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.
References:
"ExxonMobil," Sloan Review, https://sloanreview.mit.edu/culture500/company/c289/ExxonMobil
Jennifer Hiller and Shariq Khan, "Angst at Exxon as Managers Begin Employee Performance Reviews," Reuters, June 21, 2021, https://www.reuters.com/business/exxon-cut-us-workforce-by-up-10-annually-bloomberg-news-2021-06-21/
Kevin Crowley, "Exxon’s Exodus: Employees Have Finally Had Enough of Its Toxic Culture," Bloomberg, October 13, 2022, https://www.bloomberg.com/news/features/2022-10-13/exxon-xom-jobs-exodus-brings-scrutiny-to-corporate-culture
https://www.mheducation.com/highered/blog/2024/06/does-exxon-have-a-culture-problem-march-2023.html