Goldman Sachs is planning to cut a substantial number of underperforming staff as part of its most recent cost-saving exercise, said sources close to the situation. This follows as the investment bank giant looks to make operations more streamlined and more profitable in a difficult economic climate.
The cuts, which are anticipated to be in the hundreds of employees across the world, will be largely aimed at underperforming staff across divisions such as investment banking, trading, and asset management. Although the firm has not specified the number of layoffs, sources indicate that the cuts will be larger than the customary yearly performance-driven dismissals by the company.
Goldman Sachs has also come under pressure to reduce its costs as it experiences weakening revenues in some of its core lines of business. Its investment banking business, in particular, has been hit by a deceleration in deal-making activity, fueled by increasing interest rates and economic uncertainty. Its consumer banking operation, Marcus, has also suffered, leading the bank to pull back from its plans for the retail business.
The job cuts are part of a larger initiative by CEO David Solomon to retool the bank for its core capabilities and enhance efficiency. Under Solomon, who has been at the helm since 2018, the bank has undertaken multiple rounds of job cuts and restructuring measures with the aim of positioning Goldman Sachs for sustainable growth. Yet the recent layoffs highlight the continued woes of the financial sector, even as other industries start to emerge from the pandemic-driven recession.
Workers at Goldman Sachs have been preparing for the layoffs, many of whom were said to be on tenterhooks as the company goes about assessing performance standards. Goldman applies a very rigorous assessment procedure for determining its weak performers, better known as “bottom performers,” who get picked for redundancy. Although this has been an existing procedure, the magnitude of this round of dismissals has served to alert staff to security issues in employment.
The job cut decision has elicited mixed views from industry commentators. Some analysts believe that the action is necessary to ensure profitability and shareholder value, especially in a turbulent market. “Goldman Sachs is making hard but prudent decisions to remain competitive,” one financial analyst said. “This is about keeping the firm lean and agile and concentrated on its core strengths.”
However, critics caution the job cuts might hurt staff morale and damage Goldman’s reputation as an elite employer. “Eliminating jobs, particularly in volumes, can spill over into how employees feel at work,” commented a human resource expert. “It is vital that Goldman Sachs conducts this in an open fashion and helps laid-off workers.”
Those layoffs have also underscored pervasive trends in the financial industry, which continues to grapple with economic headwinds and shifting market dynamics. Push has come to shove, and firms have had to resort to cost-cutting measures strategies of hiring freezes and below-par bonuses to get through this uncertain state.
To Goldman Sachs, this layoff is just another way of responding to changing circumstances. While these measures offer short-term pain, they believe such measures ultimately improve their chances for long-term survival. The ability to control costs and strategically expand will continue to rely on Goldman Sachs and other industries.
