Goldman Sachs is preparing to cut a few hundred jobs as part of its annual performance review process, targeting employees who have been identified as low performers. This move comes after the investment bank reinstated performance-related job cuts in 2022, following a two-year pause during the COVID-19 pandemic.
In a statement, a Goldman Sachs spokesperson described the annual talent reviews as “normal, standard, and customary,” adding that the bank expects to have more employees in 2024 than in 2023. Last year’s performance review process reportedly led to the termination of 1% to 5% of Goldman’s workforce, with the exact percentage varying based on market conditions and the bank’s financial outlook.
As of June 30, 2023, Goldman Sachs had a global workforce of 44,300 employees. The bank has undergone multiple rounds of workforce reductions this year due to challenging market conditions, including a slowdown in dealmaking and the impact of persistently high interest rates on the macroeconomic environment. However, the operating environment for banks has shown signs of improvement, with Goldman reporting a more than doubling of its second-quarter profit in July, driven by strong debt underwriting and fixed-income trading.
The resilience of the U.S. economy has bolstered corporate executives’ confidence, leading to increased activity in deals, debt sales, and stock offerings. Despite this industry-wide recovery, dealmaking activity remains below historical averages. Nevertheless, Goldman Sachs has outperformed broader markets and an index tracking large-cap rival banks, with its stock surging 32% this year.
Earlier reports suggested that the layoffs, which have already begun, will continue through the fall and could affect more than 1,300 employees, representing 3% to 4% of the bank’s workforce. These cuts are part of Goldman Sachs’ ongoing effort to align its resources with its strategic goals while maintaining a strong financial position in a fluctuating market environment.
Despite the planned layoffs, Goldman Sachs remains optimistic about its long-term growth prospects, with expectations of increasing its overall workforce in the coming year. The bank’s commitment to rigorous performance assessments reflects its focus on maintaining a competitive edge in the financial services industry while navigating the challenges of a dynamic economic landscape.
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