So You Want to Be Chairman of Exxon?
Or maybe you don’t.
In May of this year Woody Dinstel sat down at his desk in Houston to write a letter. First he looked at the watch. It was a gold Hamilton Masterpiece, slim and heavy. On the back was engraved WOODY DINSTEL UPON RETIREMENT FEBRUARY 1, 1978, EXXON.
He was writing to Dr. Tom Barrow, senior vice president of Exxon Corporation in New York, the highest-ranking geologist in the company and a hero to the older generation of explorationists, an emblem of the best in the company. Dinstel had once made a presentation to Barrow in England and had been very impressed; he thought perhaps Barrow might remember him.
The letter was an appeal for help, for Dinstel was having some serious problems with the company. It had been his plan to take early retirement from Exxon—to receive a pension of $611.13 a month and perhaps in a few years to move to the country house he and his wife owned in Mississippi. For a while, it had appeared that there would be no problem with that. Dinstel had signed all the requisite papers, had had his farewell lunch at a fancy restaurant in Houston, and had received the gold watch. But at the last minute the company had changed its mind, perhaps because it had learned that Dinstel was planning to take another job at higher pay with a smaller oil company, and called the whole thing off. Either stay on or quit with no early retirement benefits, Exxon had told him. “My best recourse,” Dinstel wrote Barrow, “is to contact someone I know as high up in the corporation as possible. Perhaps that executive will react by thinking, ‘This guy had 23 years with the company; did we give him the shaft?’” Dinstel told Barrow his story, and ended his letter this way:
“I deserve to be an annuitant; it is my right; I have earned it.
“I used to love Exxon.
“Your consideration of my situation will be appreciated.”
Barrow never wrote back. Woody Dinstel, who was so loyal to Exxon that he drove around with the company’s marketing symbol, a plastic tiger tail, attached to the gas cap of his car, had lost his loyalty and was going elsewhere, so the company’s loyalty to him was at an end.
This is a story about success and failure in the world’s largest industrial corporation, and about loyalty and love too. It’s a Texas story, and not just because Exxon’s domestic operations are headquartered here or because 15,000 Texans work for Exxon. This is a state that has drawn much of its sense of itself through success stories—the taming of the land, the discovery of oil and gas, the growth of businesses, the building of cities, even the victories of football teams. One of the classic success stories is that of the founding of Humble Oil & Refining Company in the oil fields of the Gulf coast by a roughneck, a shopkeeper, a banker, and six other men, who ventured into a new area, took some risks, and built the state’s biggest oil company. These men rose through strong individual, entrepreneurial achievement. They broke new ground and, through determination and talent and effort and luck, built something that hadn’t been there before.
Now Humble is Exxon USA, the largest subsidiary of Exxon Corporation, headquartered in a Houston skyscraper, a symbol of how success in Texas is changing—and with it, our identity. The men who run Exxon are not entrepreneurs; they are managers. Success or failure in Texas is no longer linked to venture and risk. Increasingly, it means rising or not rising through the ranks of a large, established organization. That will mean that different kinds of people will rise, on the strength of different skills. And it will mean that those who do succeed will draw their sense of pride and self not from what they have built so much as from how they have risen in the organizations that selected them and shaped them to lead. That’s why, in a corporation with 128,000 employees, loyalty and love are operative concepts, strongly felt by those who have succeeded, painfully absent for those who have not, like Woody Dinstel.
And it’s why top executives of Exxon, by and large a tough, calm, competent breed, wander into emotionalism when they talk about how they feel about the company. Back in the days when Exxon was Standard Oil Company (New Jersey), its chairman, Monroe J. Rathbone, told a reporter from Fortune, “Working for Jersey has been a great thing for me. I’ve never in all these years been disappointed in this company. It’s been an exhilarating experience.” Ten years later, Clifton C. Garvin, Jr., Exxon’s present chairman, asked by Forbes how he felt about being in charge, said, “I think of it as a proprietary relationship. Like running a company of which I am the owner. It is just my duty, but my deep personal desire is to keep it in the best shape possible for the men who will come after me.” When Garvin was named chairman in 1975 and Howard C. Kauffmann president, Monroe Rathbone wrote them a note. “Your job right now,” he said, “is to develop some more Garvins and Kauffmanns.”
These are company men who obviously feel strongly about the organization and about the importance of developing more company men to run it in the future. The reason the feelings are so strong (try to imagine a government bureaucrat saying those things) is that what Garvin said about a proprietary relationship is, in a way, true. Certainly the people who run Exxon are in name managers, not owners, but the nominal distinction obscures the true nature of most large corporations. The owners of Exxon are diffuse and almost invisible. The board of directors is made up mostly of men who may not be founders, but who have been with the company for thirty years or more, since they were 22 or 23, rising up from the oil fields and refineries. The six senior men on the board own close to $8 million in Exxon stock and are paid salaries ranging downward from Garvin’s $485,592 (with benefits, $729, 267). They run a company with operations in more than a hundred countries and gross revenues larger than the annual GNP of Mexico or Australia. No wonder they feel proprietary.
Of course, most bureaucracies in the United States are staffed by a career service; the best-known examples are the civil service and the military. But in those a person can rise only so high through the ranks, and the policy decisions are made by outsiders, appointed secretaries of Defense or State. The job of the career service is to see that these policies are carried out. Exxon, however, is a self-contained world, where the career service provides everything. It doesn’t hire hot young vice presidents away from Union Carbide. It doesn’t bring smooth investment bankers to run the show. Until 1966 the company’s board was made up entirely of employees (now they hold eight of seventeen seats on it). Other companies farm out much of their legal work to law firms; Exxon, for the most part, relies on its in-house legal department. Other companies, when they want to raise money through a bond sale, let an investment house arrange it; two years ago, Exxon shocked the financial world by underwriting and distributing a $54.9 million bond issue itself, via a rare procedure known as a “Dutch auction.” Other companies have career systems of varying sorts, but Exxon’s (along, perhaps, with AT&T’s) is known as the most carefully run and the best at providing talent and continuity.
One result of the career system is that, while there are no old-fashioned, overnight wildcatter success stories at Exxon, rises from rags to riches almost as dramatic as in the old days are still possible. The company is run by engineers and geologists, most of them from small towns and state universities—men who couldn’t be more different from the leaders of the oil business of two generations ago, but who share with their predecessors enough drive and hunger to have done what is necessary to get to the top. Most people think the positions of greatest responsibility in the dominant institutions in this country are held by members of a loosely knit establishment made up of people from privileged backgrounds who know and tend to help one another. At Exxon, that notion just doesn’t apply.
For that reason, the personnel system is of paramount importance to the company, the key to its continued health. In effect, it is the company’s reproductive system too, doing for Exxon what pistils and stamens do for flowers. Exxon has to be absolutely sure that within the last five years it has hired someone right out of school with the talent to assume the chairmanship one day and do well at it. In part that’s a matter of faith, but there are good reasons why the faith in the personnel system is so strong. The system is meticulously planned and operated and absorbs considerable amounts of time and effort and money. One company publication recently said Exxon spends $203,000 on each employee every year. The company carefully recruits and trains and rates people. Those who, for reasons of ability and temperament, aren’t suited to a high position in a major corporation stay in the middle ranks, and those who do rise are the ones who have shown themselves to be so suited. Those tough, calm, competent men in the boardroom weren’t just born that way. They were shaped.
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