Energy producer BP will cut about 15% of its workforce in response to the coronavirus crisis and as part of Chief Executive Bernard Looney’s plan to shift the oil and gas major to renewable energy. The company announced this in a town hall yesterday. 

The Chief Executive Officer, Bernard Looney said to the employees that the cuts will affect office-based roles in BP's global workforce of 70,000 people and come mostly this year. The changes are expected to significantly affect senior levels, cutting the number of group leaders by a third.

The CEO has spoken to staff about pay, promotions, bonuses, and jobs and how we plan to support all those affected by these tough decisions.

He said, “As much as I would love to, I can’t make your worries disappear. But what I can do is remove uncertainty as much as possible by sharing our plans with you.”

Key announcements from the CEO’s webcast.

Pay: Back in March – at the outset of this crisis – we said we were delaying the 2020 pay raises that were due to take effect from 1 April. We have decided to proceed with the raises starting 1 October, but only for employees in levels up to and including level G. There will be no pay rise for senior level leaders or group leaders through to 31 March 2021.

Promotions: In March we also froze all promotions occurring after 1 April. We have now decided to take the freeze off with effect from 1 July. Promotions can then restart at all levels, but in a measured way that reflects the challenges we are up against.

Bonuses: The Board’s remuneration committee, Kerry and I have been considering how the current economic environment and our financial condition will affect cash bonuses for 2020. Cash bonuses are paid dependent on performance, and obviously affordability. So, I can tell you now, cash bonuses under the Annual Cash Bonus plan are very unlikely this year. As you think ahead about your personal finances and plans, please do not factor an ACB payment for 2020 into your plans.

Jobs: We introduced a three-month redundancy freeze back in March to ease some of the immediate worry for people. That moratorium ends today. We will now begin a process that will see close to 10,000 people leaving bp – most by the end of this year. The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritizing safe and reliable operations. 

The company is working to bring down its capital expenditure by 25% this year – which is a reduction of around $3 billion. It currently costs around $22 billion a year to run the company – of which around $8 billion is people costs. So the organization is driving down those operating costs by $2.5 billion in 2021 – and likely have to go even further.

Image credit- Swangroup