I’m beginning to think that they still have no clue how to do the reorg. They know how they will cut the costs. Not really a difficult thing to do when you target employees first and look at just how much each one of them cost the company. Merit, contribution, criticality of a role, experience, none of it plays a role in the decision-making. What they don’t know is what they will do once people are gone.
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McKinsey is going to squeeze out every million in their $55MM contract by making sure this process is as slow as possible.
Lewis Carroll: “Would you tell me, please, which way I ought to go from here.” “ That depends a good deal on where you want to get to” “Then it doesn’t matter which way you go”
I’m on one of the project teams and can confirm that it’s a bunch of sloppy excel documents being built in silos. They do not have a number yet.
There's only two outcomes that many see from how this is all being handled. 1) Yes, ELT truly has no idea what they are doing and how to handle this. Thus needing to continue to say it's still being worked on... OR 2) that the plan is set, and it's such a huge cut they aren't sure on when the best time to implement it is. I'm voting for the latter, only because of slips and hints from management out next year.
It's foggy because it won't be arbitrary. One number does not fit all for all functions or BU's. You should know more or less when your group stands, if not, start looking lol
I've been on the other side of the table whereby they perform cost benchmarking. Per-employee cost is largely arbitrary, they are more focused on the net result (i.e., G&A burden vs. capital spend, G&A burden vs. BOE produced, LOE burden vs. BOE produced, G&A capital adds per well drilled).
Chevron is bottom quartile (i.e. worst) in cost not because they pay their people particularly well (most independents pay better). Chevron is bottom quartile because it takes an organization of 1000 to run 10 rigs vs. an independent who may run 5 rigs with 150 people.
The consulting companies haven't told MN how to do it yet. They just benchmarked cost VS other companies. We pay too much compared to ATT,Verizon and Home depot per employee. The goal is to be in top quartile of cheapness. US and Australia are going to get Hammered as India and the Philippines swell.
I think someone who knows more than Chevron folks how to run an oil company is guiding who stays and who is fired. One of big 4 consulting firms.
When you use bs metrics (like $/head count) you get false signals of success by cutting staff. Sure, on paper things improve. In reality most things don’t change and performance get worse. But we don’t have any way of actually measuring, so we go for the Wall Street sugar rush.
Our financial and competitive perfomance has increased a lot since 2020 and the clear success of that layoff combined with Engine and AI has given execs the courage to eliminate a lot more staff. Tough to take but true.
No surprise, the twin layoffs of 2016 and 2020 eliminated all the experience and savvy in Chevron, leaving only clueless high pots and MIT wunderkind to chart the course of the "transformed" Chevron, swayed by whatever flavor-du-jour fed to them by consultants. Couple that with senior management only interested in bonuses, stock buy-backs and the dividend, and you have the formula for the now-sinking Chevron: no strategy, and willing to continually downsize the company to meet those 3 management goals. Very reminiscent of Texaco.