Goldman Sachs to Cut 1,300+ Jobs in Latest Annual Review
Goldman Sachs has initiated a series of layoffs affecting over 1,300 employees as part of its annual review process, a strategic move aimed at streamlining operations by culling low performers. The Wall Street giant, which manages $2.8 trillion in assets, will see its workforce reduced by approximately 3% to 4%, translating to between 1,300 and 1,800 employees. This decision comes as part of a long-standing practice within the firm, known as the “strategic resource assessment” (SRA), where the company reviews and trims its workforce each year.
Impact on Various Divisions
The layoffs are expected to impact several divisions across the bank, with some teams facing more significant cuts than others. This distribution of layoffs aligns with the company’s historical approach to workforce management, where performance factors determine who stays and who goes. According to insiders, the layoffs have already begun and are anticipated to continue throughout the autumn, potentially affecting more employees in the coming months.
Historical Context and Industry Practices
This reduction in workforce, while notable, is not unprecedented at Goldman Sachs. The firm typically cuts between 2% and 7% of its employees each year, with the specific percentage fluctuating based on market conditions and the bank’s financial outlook. “Our annual talent reviews are normal, standard, and customary, but otherwise unremarkable,” stated Tony Fratto the Global Head of Communications for Goldman Sachs. He also noted that, despite the current reductions, the overall headcount at the firm is expected to be higher by the end of 2024 compared to 2023.
Goldman Sachs is not alone in this practice. Other major asset management banks, such as Citi and JPMorgan, also conduct similar layoffs during this period. These actions are part of broader industry trends aimed at maintaining efficiency and competitiveness in a fluctuating market environment.
Financial Performance and Future Outlook
Despite the workforce reductions, Goldman Sachs has recently reported strong financial performance. The bank posted a 21% increase in investment banking revenue in the second quarter compared to the previous year, along with a 27% revenue jump in its asset- and wealth-management division. These gains suggest that the firm’s cutthroat culture, often criticised for its intensity, is yielding positive financial results for shareholders.
Looking forward, Goldman Sachs aims to continue its growth trajectory, with expectations for an increased overall headcount by the end of 2024. This forward-looking stance reflects the bank’s commitment to strategic management and its ability to adapt to changing market conditions while maintaining operational efficiency.
Conclusion
Goldman Sachs’ recent layoffs are part of its annual review process, a practice aimed at maintaining high performance within the firm. While these cuts may seem drastic, they are in line with the bank’s historical practices and industry norms. Despite the reductions, Goldman Sachs remains financially robust, with plans to increase its workforce by the end of the year, signalling a continued focus on growth and competitiveness in the global market.
