Forced distribution ranking is such a bad idea. Why does Exxon insist on keeping it? They are willing to follow the advice of consultants on other things why not this? Is it because they know it is corrupt but they benefit from it? Are they afraid under a modern system they wouldn’t be the high performers any longer?
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Those who could change it have only benefited from it and it picked them so they see no flaws with it. This is why it will never change.
In the system from about 1990 to 2005 (Lee raymond), there was forced ranking and generally you were informed of quintile, but top 10% and bottom 10% were informed and there was a PIP (effectively no pay raise or promotion for bottom 10%)...PIP system was less rigorous, but usually bottom 10% was not terminated unless 3 years in bottom 10%. (but there was alot of variation.
Forced ranking is a salary budget and promotion tool. IT determines how to allocate a budget. The middle 3 quintiles at constant YEE and perforamce make with 10% of each other, but the difference between top 10% and bottom 10% was over 50% difference in pay. and difference between middle quintile and top 10% was over 30%. plus the promotion guide with potential gave promotion much quicker (so the term "30 by 30" was heard which was CL30 by age 30 was possible. So Forced distribution will stay because it is the only way to allocate a fixed budget and allow higher performers to get higher pay. Also, non exec did not receive RSU or cash bonus in the old system.
The post 2005 system was similar but pushed RSU down to CL 28, recently this has been expanded to CL 26. But essentaily the same system of forced ranking to allocate salary budget to higher performers and less to low performers. This essentially incentivized low performers to quit.
The problem became the pension system incentivized older low performers to stay. so XOM began to allow lump sum of pension to encourage low performers to leave. same with prorating vacaction.
So the company is trying to allocate a salary budget according to merit while incentivizing high performers to stay and encouraging low performers to leave.
Unfortunately, with asset managagment, productivity, we need fewer employees so PIP needs to be more aggressive (vs just laying off prorata like the layoff of 2021). So PIP is more aggressive.
Next the problem became high cost countries and too many expats...so these incentives were reduced.
Finally too many executives, and pip and reclassification and revised promo guidelines were adjusted for the forecast or needing fewer executives. Add to this the fact that the company is much more willing to test the market with external hires, this means fewer high level, home grown talent is needed. If the experienced hires do not work out, then internal talent development will be revised to encourage internal development. IF the company is happy with external hires expect much less hiring on campus and much less internal training.
Forced ranking will stay unless someone can figure out the ideal ranking system and ideal salary budget system, but salary surveys, external hiring and attrition of top ranked people are key inputs.
In first half of the year, XOM lost a large number of traders (especially in Europe, LNG and in US oil and gas trading). The market is sending a signal because XOM is losing talent. Eventually (but usually after much time and major talent losses) the company changes the ranking and salary system. BUT these changes usually come slowly and only after disasterous losses to talent pool.
PS xom experienced horrible nlosses of talent in the early 1980s when Jimmy Carter put wage and price controls on salaries, so attrition was over 25% because you had ti quit to get a pay raise. Once Reagan was elected on price controls dropped...average pay raise was over 30% in one year plus retention bonuses ("golden carrot" , company cars and faster promotions)...Back then it was common to make it to CL 26 within 5 years and CL 28 with 10 years).
The system is about budget, needs, matching needs and hopefully retaining the top 50% over time. Hence "non regrettable resignation" are bottom 2 quintiles. IF youa re ranked in bottom 2 quintiles, you should be looking.
This system is strongly embeeded...Expect changes only at the margin. This system looks essentially the same as 50 years ago with only minor tweaks..
Insecure managers ‘punish’ those who stand up to their BS by bringing top performers to the bottom — and no one blinks an eye, because no cares.
Anything can be we-ponised, like maybe you didn’t smile at them one morning. and there is no check, because HR or the session chair ( typically VPs ) don’t care or know better do do the right thing.
The worst part of the new system is you can go up and down unlimited categories, just at the whim and fancy of a egotistic manager, which we all can agree are more prevalent than sane and fair manager.
@ac I heard this also. Is there someone who can confirm? That is 7x the advertised rate.
@a5 promotions are a death kiss. You will be promoted if they don't like you in order to get your PA onto the slippery slope. Ask anyone who was happy in January.
@a5 5%?! Think again. 20% in some rank groups this year. Ask HR!
@a5 100% !!!!
under the old system (pre-2019) there was forced ranking, but the bottom "bucket" that put you in danger of losing your job was usually reserved for people that management thought truly deserved it. Putting people in that bucket was not usually forced the way it is today, although some years a quota would be made. also, a person could not rise or fall more than 20 "positions" (think 0-100) without high level management approval. This was to prevent someone moving under a manager that just has it out for you. So not a perfect system, but far more fair than what we have today.
Then in 2019, under the guise of being more "transparent", they announced they will now tell you the exact quintile you are in (they used to tell you what 3rd you are in although in the background the quintiles always existed). That part was good, the rest of the changes were worse: there would now be a mandatory 3% NSI quota (which was a lie, they changed to 8% the very first year which continued for years, then 5% a few years later where it remains today), AND there was no longer any protection against going from the very top to the very bottom in a single cycle. Couple that with the subsequent policies taking away NRE protection, taking away the 3 strikes and you're out (to 2 strikes and you're out), and then only months later, saying oh yeah if you get NSI and pass the PIP and don't get AT LEAST VG the next cycle you're out.
I would love to see someone explain with a straight face how all of this is not designed explicitly to get rid of people...not just people who are adding no value...but just brute force removal of people under the guise of "performance". Add to that the fact that they are giving almost all promotions to people in lower cost countries. If you want to stay here you need to understand you are not wanted, put your head down and do your job, and expect no raises or promotions...then and only then may you potentially be granted permission to retire, if you are close to retirement eligible.
Why?
EM senior leadership is largely staffed with career EM employees who did well with the historical forced rank system. It helped them move ahead, so they think it's a good measure.
They seem to truly believe that it's fair and objective, despite it truly being a fickle popularity contest.
@OP Unfortunately Chevron and BP are planning to use this corrupt system too
@OP they want to do a reduction in workforce without paying severance to those dismissed. This is 100% the reason why.
I laugh when people think working at Exxon offers stability. You are always just an assessment away from ruin.
Your career will be far more stable, predictable, and merit-based outside Exxon.