Goldman Sachs Plans Job Cuts Amid Annual Performance Review

Goldman Sachs is set to reduce its workforce by a few hundred employees as part of its annual performance review process. This review focuses on identifying and managing low-performing staff, according to a source familiar with the matter who spoke to Reuters on Friday.

Resumption of Performance-Related Cuts:

The investment bank resumed these performance-related job cuts in 2022 after a two-year pause due to the COVID-19 pandemic. A Goldman Sachs spokesperson described the annual talent reviews as “normal, standard, and customary,” noting that despite these cuts, the bank expects to have a larger workforce in 2024 than in 2023.

Historical Context and Workforce Reductions:

This review process eliminated 1% to 5% of Goldman employees in the previous year. The scale of these cuts has varied over time, influenced by market conditions and the bank’s financial outlook.

As of June 30, 2024, Goldman Sachs’ global workforce stood at 44,300. The bank already underwent several rounds of workforce reductions in 2023, driven by challenging dealmaking conditions and the impact of prolonged high interest rates on the macroeconomic environment.

Improved Operating Environment and Market Performance:

Despite these challenges, banks’ operating environments have improved. Goldman Sachs reported a significant increase in second-quarter profits in July 2024, with strong debt underwriting and fixed-income trading performance. The resilience of the U.S. economy has bolstered corporate executives’ confidence in pursuing deals, debt sales, and stock offerings, although dealmaking activity remains below historical averages.

Goldman Sachs shares reacted positively to the news, closing 0.6% higher on Friday. This year, the stock has risen 32%, outperforming broader markets and an index tracking large-cap rival banks.

Layoffs Expected to Continue:

Earlier reports from the Wall Street Journal suggested that the ongoing layoffs could continue through the fall, potentially impacting over 1,300 employees or 3% to 4% of the workforce. However, Goldman Sachs disputed these figures in its statement to Reuters, asserting that the numbers reported were inaccurate.