Goldman Sachs is reportedly gearing up for another round of workforce reductions, with job cuts targeted at employees considered to be low performers. According to sources familiar with the matter, this annual exercise is expected to begin as early as next month, primarily impacting parts of the core investment banking and trading divisions.
Effects on a Global Level
Typically, this annual review results in the removal of approximately 1% to 5% of the company’s global workforce. Goldman Sachs aims to stay towards the lower end of this range. Considering Goldman’s total headcount, which includes asset and wealth management, as well as operational roles, a 1% reduction equates to approximately 440 jobs.
The initiative, known as “strategic resource allocation,” was paused during the pandemic but was reinstated last year. The 2022 job losses were also at the lower end of the historical range.
Managers throughout Goldman Sachs have reportedly compiled lists of employees who may be affected by these upcoming layoffs. Final numbers are still being determined and could be influenced by any voluntary departures before the layoff notices are issued.
Goldman Sachs declined to provide a comment regarding the reports.
Goldman to Start Annual Layoffs in October
Previous Job Cuts Earlier This Year
Goldman Sachs has already implemented several rounds of job cuts this year, including a significant reduction of approximately 3,200 jobs in January, accounting for 6.5% of its workforce. These measures were enacted in response to cost-reduction efforts, prompted by a slowdown in investment banking activities and losses in the consumer banking sector.
Additionally, several senior executives have left the bank.
The reduction in compensation and modest bonuses for 2022 has taken a toll on morale within the organization. Goldman Sachs’ CEO, David Solomon, has faced substantial criticism in the media regarding his leadership.
Addressing The Concerns
During an interview with CNBC, Solomon addressed these concerns, stating that the caricature of him in the media was not one he recognized. He acknowledged that 2022 marked the first significant decrease in compensation in over a decade and that this had contributed to employee dissatisfaction within the bank.
Goldman Sachs’ net profit for the first half of 2023 declined by 35%, and employees have been bracing themselves for another challenging year in terms of compensation.
In an effort to mitigate employee concerns, senior executives at Goldman have engaged in conversations with staff members, indicating the possibility of higher profit-sharing this year. Detailed remuneration plans are expected to be developed later in the year.
