Mike laid out the case for transformational change 2 years ago. He was right then-and now the whole industry/ global economy/social setting has imploded as well. Let's gave an adult conversion. Why do you think the change has been so limited???
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Human Energy means letting go thousands during a pandemic.10
Hey, I receive my two paychecks like clockwork each month, get a bonus in February each year, get paid vacation days, good healthcare and dental insurance, also enjoy a liberal work/life balance. Why even change anything? It’s perfect already.
Change is scary!
Our leaders are all 30+ year Chevronites who have been trained by the company to think the way they do. They are incapable of imagining a future different from the past. They cannot think outside the box because they cannot even see outside the box.
Chevron is running the numbers for various prices of crude: high-med-low and sizing the budgets to fit. Once the first layoff is done and they know better where the price of crude settles and how long the recession might last . They will keep sizing accordingly, 2020 is basically written off, In 2021, they will keep cutting staff as needed but you won't hear much about it. By 2022 who knows. It will be interesting to see just where the consumption if gas and oil settles though. Obviously demand will come back, at the moment no-one knows how dramatically the structure of the economy will change, in terms of demand for Gasolene, aviation fuel, base oil and so on. Obviously the ICE id going to be replaced by electric the Question is how soon and by how much. This pandemic may have simply accelerated the trend?
When oil prices collapsed in 1983 they didn't really recover for 20 years. During this time Chevron merged with Gulf, Texaco, Union and Tenneco (GOM) that's how they survived. In short order after the Gulf merger the head count went for ~80,000 down to ~40,000 and same for the other mergers more or less. In other words a lot more people were laid off (or spun off) than survived to have a Chevron career. Believe me that management is good and that they will cut sufficient to survive the current downturn. During those 20 years there were almost constant layoffs and reorgs. So actually the current environment is the norm for this industry. Exxon used to layoff regularly the bottom 10% of staff every year, thus inducing a sweatshop environment.
I left Chevron 5 years ago and changed industries so I don’t have recent experience but this is what I think. I felt like the Chevron was culturally 10-15 years behind other industries. You can see it in the IT systems, the PM systems. They didn’t set up theirs workforce to change with the times and the leadership has been so insular they don’t know any better. After leaving it was a huge culture shock to see how other organisations do things. Until there are leaders that come in from the outside or other people who join from outside the industry I doubt there will be meaningful change.
They have basically been planning this current company-wide reorg since then. They had to bring in consultants to tell them what to do b/c of course they aren't sure themselves. So they'll apply weird random numbers to different groups; cut some not enough and others completely. Then in 2 years when everything is totally jacked, we'll start over. It is known.
Chevron leadership is capable of massive and well thought out change. For example, when we switched to using lower case letters for all our branding in order to make the world like us and convince everyone that we’re humble. Why continue leveraging hundreds of years worth of grammatical precedence at no cost when you can spend money implementing a Chevronized version of the English language? Makes total sense.
Because they have no balls to do it, in other words the change requires a lot of payment to top executives to leave and the cost would be astronomical. Also they all very well know thos industry is in decline and will never get better, but cosmetic changes and talk of change will make them good to the eyes of wallstreet. After this pandemic, nothing will ever be the same and the demise of oil is accelerated. There will be far less demand for petroleum and travel the way we used to have and far less commute to work.