Since Chevron will be wanting a lot of these folks back over the next 2-3 years, why not just implement salary cuts of 20-25% across the board? It would be the rough equivalent of cutting 10-15% of the workforce. Most of the folks I know in the company are living well within their means, have quite a bit of disposable income, and could weather it until the inevitable turnaround comes, at which point you simply reverse course. Sounds too simple? Ever hear of Occam's Razor? Let's be honest folks, we really have seen this movie before - this generation of Saudis are fundamentally no different than the last 2 or 3 were - and quite a lot of highly experienced and high value added employees are being let go now because they are viewed in the current nearsighted, beancounter thinking (thanks again, BCG and everyone in management who actually listened to these charlatans) as unnecessary expenses. Certainly, there were some underperforming individuals who needed to go, but the manner in which the current layoffs are being undertaken is disgusting, and will trigger a landslide of legal actions against the company. Yes, nepotism rules, fear and loathing is widespread, and everyone knows it. You had several options on cutting costs that would have benefited both the company and loyal employees in the long term, as well as please the shareholders and analysts at the same time. You could have come out of this downturn over the next few years as the company that actually practiced what you have been preaching for years with the Chevron Way. You would have had your pick of top recruits coming out of universities over the next 10-20 years as a result, because you would have been seen as the obvious employer of choice. Instead, you chose the opposite: let's bring in an expensive consulting group to spend a year partnering with our best and brightest (taking them away from their day jobs) to build a culture of fear, stretch it out over 18 months, cut people in dribbles and drabs, utilize the local police to escort them out of the offices, and then watch the stock price tank all along the way. Well done, boys and girls. Well done, indeed. On a personal note, the only thing I would ask is that you dump some underperforming assets, make your staff cuts, and do whatever else you need to do in the short term to get the stock price back up, so I can then sell what remaining stock I have, cutting the last remaining ties I have to this once great company for good.
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@2gau - capital spending and Opex are two completely different things. Chevron can eliminate Capex altogether, and it would have a negligible impact on the day to day operating expenses, unless you start cutting all this DEAD WOOD, mofos!
Chevron to Reduce Capital Spending by 24% Next Year - The Wall Street Journal, Dec 9. When the company plans to invest 1/4 less in 2016, that comes with a sizable reduction to Opex and Payroll as well (aka: headcount).
@EQHC9Nn-1avf - The ranking meetings a joke. I don't know how many times I have heard someone bring up something that happened years ago. You are so correct, it depends on how your manager represents you. I had one manager tell me, you are right with what you are proposing, but I am not going up against my manager, I have two kids that I need to send to college. Also, the cliques get their favorites ranked the way they want. Go look at the connections. One of the worst is the ones who worked on Olympic. They thought they saved the world, even though they were over budget by a significant amount.
@1ttt, I think that is the point of the OP. The high performers understand the economic environment better than anyone, and very few will jump ship just because of a pay cut. Actually, they would probably be the first to call for it to maintain the company's economics, and preserve the intellectual and historical capital.
I am a very well known petroleum scientist who heads an established consulting firm. I am presently visiting some oil companies in China. This past week, I worked with a "top three" oil firm, reviewing its research projects - all aimed at $100 oil. The staff was motivated despite the downturn. Why? Because no one had lost his job - there have been no layoffs so far. However, everyone's salary had been cut, from the Chairman down to the lowest level professional. Of course, people have to live with fewer resources, so no one is happy. But people do not continually dwell on salaries, knowing that these will recover. They continue in their work and progress is made, slowly but surely.
I am a very well known petroleum scientist who heads an established consulting firm. I am presently visiting some oil companies in China. This past week, I worked with a "top three" oil firm, reviewing its research projects - all aimed at $100 oil. The staff was motivated despite the downturn. Why? Because no one had lost his job - there have been no layoffs so far. However, everyone's salary had been cut, from the Chairman down to the lowest level professional. Of course, people have to live with fewer resources, so no one is happy. But people do not continually dwell on salaries, knowing that these will recover. They continue in their work and progress is made, slowly but surely.
@1jga - the only issue with that is how the rankings are determined. Have you ever been in a Pay Determination meeting? It comes down to which supervisors are the better speakers, come to the meetings better prepared, and actually support their employees. You can be a shining star and earn the respect of nearly everyone, but if you are considered a threat by your supervisor, or are a better worker/performer/speaker/presenter/writer than he or she, then you will likely be toast come PD time. All personnel are ranked on a standard distribution curve, and every supervisor has their favorites they are pushing. If your supervisor comes into the PD meeting with you ranked as a 2- or 3, it is very rare that another manager will challenge it, as your loss becomes their favorites' gain. It's simple math. So, for anyone who believes employee rankings really mean anything, remember that it all comes down to the opinion of one person: your supervisor. That person is either your support or detriment in the ranking sessions. So, if you wish to earn a good ranking, and potentially remain with Chevron, your path is simple: make your supervisor happy. That's it. Everything else is superfluous. Of course, it's too late for 2015, as those meetings have already taken place. Just keep this in mind should you survive 2016.
@1jga - the only issue with that is how the rankings are determined. Have you ever been in a Pay Determination meeting? It comes down to which supervisors are the better speakers, come to the meetings better prepared, and actually support their employees. You can be a shining star and earn the respect of nearly everyone, but if you are considered a threat by your supervisor, or are a better worker/performer/speaker/presenter/writer than he or she, then you will likely be toast come PD time. All personnel are ranked on a standard distribution curve, and every supervisor has their favorites they are pushing. If your supervisor comes into the PD meeting with you ranked as a 2- or 3, it is very rare that another manager will challenge it, as your loss becomes their favorites' gain. So, for anyone who believes employee rankings really mean anything, remember that it basically comes down to the opinion of one person: your supervisor. All that rhetoric about "feedback" from your peers really means nothing. If you wish to remain with Chevron, and earn a good ranking, simply do this: make your supervisor happy. All else will then fall into place.
FYI, John Watson already answered this question in a video message earlier. He explained why Chevron will not do this.
I thought they already cut the 3's and some 2-. There are only a handful of 1's, so that only leaves 2+ and 2's!! There has always been overstaffing with the majors and Chevron is no exception.
The CIP Corp factor will be 0. There's your paycut.
Paycuts sound really logical...but it has an unintended side effect of having top performing people leave. They know what they are worth (and Chevron knows it) so they can get better pay from another company. Same with early retirement and voluntary layoffs. The people who volunteer are usually the people who know they achieve and actually have something better lined up. Chevron does not want those people to leave...they need to somehow drop the bottom performers. Something like other posters mentioned, like cutting all the "3's" or something. Then again, the people with a "3" ratings will then complain about "good 'ole boy" networks, discrimination, nepotism, and chevroids.
Like the previous poster said, in Chevron "Politics and the Buddy system reign supreme."
We had an 8% "petrotech" bonus that was automatically applied to our base salaries as an engineer at Chevron. They always said this petrotech bonus could go away at any time. I suspect it will disappear in early 2016. That 8% bonus was just to get Chevron's pay to equal what their competitors have generally paid for the same experience level. They have also asked all contractors to take a 10% cut earlier this year, and asked them to take another cut last month.
@udt, don't be so damn naive. The 'Good ole Boy' network is alive and well. Surely, many unproductive people may take an easy shot of blaming someone else for their fate, but don't you try to dismiss what everyone know exists in Chevron (and in all companies). Politics and the Buddy system reign supreme.
It wouldn't take 20-25%. A 10% across the board would prevent layoffs....keep in mind that most of the layoffs are coming from the lower end of the salary scale so 10% of a high dollar employee takes care of more than you think.
It's not a good boy network, that's what losers and -2 employees blame it on. Do your job and you are fine.
They still need to do another sweep of all the 3s and 2-s. The last rae didn't catch them all and politics /friendships / nepotism got in the way. It should be corporate culture to cut 3s annually as part of pmp process. 2-s get a year to improve and if not, gone. 2- more than once 8n 5 year period and gone. We keep a lot of fat around that needs trimming.
It's the 'Good ole Boys' network in action. If you are not well known or well liked, then you are laid off.
What you say makes too much sense. The people making the decisions are clueless. One PM who left was managing 3 projects. Now they have 3 PM's managing the projects. How much does that save them?
There has been little logic involved with the cuts we have seen to this point. It has all been a continued exercise in management ego. Remember 'Project Alpha'? Purely personal compensation for Geagea not being tall enough to ride the roller coaster of the real world.
Salaries? How would anyone know the details unless you are HR? Anybody from HR here? Raise your hands. LOL
Well the honest truth is that Chevron was the employer of choice for college interns and new hires. Always hiring the good, well rounded, common sense upperclassmen. Chevron had plenty of locations and we want to give you the broadest, rounded, experience, you are going to have to demonstrate leadership to move up....Those were the days. I remember talking to students at career fairs and the line would be 6-8 students deep. Seemed like the majority wanted to get in a helicopter and go offshore to work. Sadly that will no longer be the case for interns and new hires in the future. Best case they'll go fly out to Deepwater and spend 20+ days watching BOP testing with 8 other CVX site managers and engineers. I've got so much more to say but at another time. The pay reduction idea...what is the $$ amount they plan to save by laying people off? Does anyone know what CNAEP/MCBU/DWEP/GOMBU/
AMBU/SJVBU pays in salaries (benefits) to employees? Couriers as to what they are actually saving.