Last Updated on: 22nd November 2023, 12:19 pm
Goldman Sachs Readies for Latest Employment Trims Targeting Underperformers
Goldman Sachs is gearing up to instigate a fresh series of employment reductions targeting those regarded as underachievers, insiders have revealed.
This anticipated shift is a regular yearly procedure which historically sees a 1% to 5% decline in the firm’s overall employee count. For this round, sources suggest Goldman Sachs will lean toward the minimal end of this scale, especially within its core sectors like investment banking and trading. The commencement of this reshuffle could be as soon as the latter part of October.
To provide context, a 1% decrease in Goldman’s workforce, spanning areas such as asset management, wealth management, and operational roles, translates to approximately 440 positions.
The bank had previously shelved its “strategic resource allocation” during the peak of the COVID-19 crisis, only resuming last year with terminations also skewed toward the lower spectrum.
Goldman’s managerial echelons have purportedly compiled potential lists for the layoffs, though the final figures are yet to be solidified. Factors that might influence the final count include potential resignations prior to the official announcement, which could trim the total number of terminations.
Although the bank refrained from commenting, it’s worth noting that Goldman has already made substantial reductions this year. January witnessed a decrease of around 3,200 positions, equivalent to 6.5% of the workforce. This decision was driven by the aim to minimize expenditures after significant drops in investment banking and deficits in its consumer banking sector. This wave of downsizing also saw several top-tier officials part ways with the institution.
Employee morale has seen some strain with the bank’s compensation witnessing a downturn in 2022, coupled with the recent layoffs and trimmed bonuses. CEO David Solomon, amidst the media scrutiny on his leadership, clarified in a CNBC interview, “The portrayal that has been presented doesn’t resonate with my self-view.”
Solomon acknowledged that the significant reduction in compensation in 2022 was a factor in the bank’s current sentiment.
Goldman’s first-half profits for 2023 saw a 35% dip, setting the tone for another potential year of subdued compensation. Yet, senior bank officials are reportedly discussing potentially awarding a larger slice of the profit pie to their staff this year. Concrete compensation strategies, however, are slated for determination later in the year.
As Goldman Sachs recalibrates its focus from consumer banking due to sustained losses, it’s steering toward burgeoning sectors like asset and wealth management. Nevertheless, industry observers opine that these areas are unlikely to match the profitability and revenue contribution of their investment banking and trading divisions.