Goldman Sachs has planned to initiate a series of job cuts in coming weeks. Therefore, several employees are at risk of losing their jobs. Significantly, Goldman Sachs will become the first major Wall Street firm which will layoff its employees in a bid to rein their costs.
Reinstatement of employee cull
In wake of showdown at Wall Street, the bank has decided to resume their annual cull of underperforming employees. Although the employing culling was halted by the by Goldman Sachs during the coronavirus pandemic due to high workload. However, the bank will follow the historical targets of laying off 1% to 5% low performing workers. There are hundreds of workers who lies on the extremes of the parabola and may face axing. The New York based firm was employing 47,000 employees by June this year. Moreover, these employees are working across various domains including investment banking, trading, asset and wealth management, consumer banking and operational functions.
Previous reports of job cuts
New York Times reported the planned job cuts at Goldman Sachs on Monday. However, the firm’s spokesperson refused to comment on it. Although the company’s finance chief Denis Coleman hinted about the dismissals in July. He stated that the bank was evaluating various options to slash costs. Significantly, one major strategy shift was the reintroduction of year-end performance review of its employees. Similarly, Financial Times previously reported that the bank has stopped the replacement hiring for some of the departing employees.
Slashing costs by managing compensation
Compensation and benefits of employees is the largest expense head for Goldman. Furthermore, the bulk of compensation related expense come in form of bonuses of revenue generating employees. Therefore, the bank make adjustments in variable pay by cutting poorly ranked workers. Goldman Sachs compensation and benefits are down by 31% during first half of 2022. Morgan Stanley chief executive James Gorman said in July that the bank’s “ultimate weapon” to manage a slowdown is pay.
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