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Goldman Sachs is considering year-end job cuts ahead of tough economic times

By Nagasunder in Employment News, posted July 20, 2022

Goldman Sachs has delayed recruiting and is aiming to reduce vendor fees, and job cuts could be on the way.

New York-based Goldman has another weapon in its inventory to keep costs in check: a potential comeback of year-end job layoffs. according to a source within the company.

Long-standing practices on Wall Street include culling individuals who are underperformers near the end of the year, as the business gets ready to award bonuses to the survivors.

This yearly process was put on hold during the Covid-19 pandemic as banks scrambled to fill positions to capitalize on a record surge in transaction activity.

According to data released on Monday, June 18, the head count at Goldman increased by 15 percent to 47,000 people in the last year alone.

Now that revenue from debt and stock issuance has sharply decreased, Wall Street's top investment bank is thinking about resuming the annual custom.

In terms of expenditures for an investment bank, employees are sometimes the single largest line item. Through June 30, Goldman has put aside $7.78 billion, or 50 percent of total operating costs, for workers' compensation and benefits.

On a conference call with investors on Monday to discuss the company's second-quarter profits, CFO Denis Coleman stated that the company will halt recruiting to replace employees who leave and that yearly performance evaluation will "probably" resume by year's end.

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That is “something that we suspended during the period of the pandemic for the most part,” he said.

No numbers have been revealed yet, and the company says the plans could change.

Previously, managing directors and partners were requested to compile a list of persons who may be released if necessary.

In an interview with CNBC's Jim Cramer earlier Monday, CEO David Solomon mentioned the matter.

“We’re always looking to add talent to the firm,” Solomon said. “But at the same point, we’re going to manage the growth of that going forward a little bit more cautiously given the macro environment.”

Source: CNBC

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