Goldman Sachs (GS), the renowned Wall Street investment bank, is set to trim its global workforce by more than 1,300 employees as part of its annual performance review process, according to sources familiar with the matter who spoke to The Wall Street Journal.
This move, aimed at culling low performers, is expected to affect between 3% and 4% of the bank’s total staff, potentially impacting up to 1,800 individuals across various divisions.
The Wall Street Journal’s sources revealed that the cuts have already begun and will continue through the fall. This process, known internally at Goldman as a “strategic resource assessment” (SRA), is a regular occurrence at the firm, typically targeting between 2% and 7% of the workforce annually based on performance metrics.
Tony Fratto, a Goldman spokesman, emphasized the routine nature of these reviews, stating, “Our annual talent reviews are normal, standard, and customary, but otherwise unremarkable.” He also noted that despite these cuts, Goldman’s overall headcount is expected to be higher at the end of 2024 compared to 2023.
Interestingly, The Wall Street Journal’s sources highlighted that in-office attendance has become a more significant factor in these performance evaluations. Following the relaxation of office presence requirements during the pandemic, Goldman, along with peers like JPMorgan Chase (JPM), is now tightening its stance on remote work, expecting many employees to be present in the office most days.
The Journal’s report also shed light on Goldman’s recent history with these annual reviews. The SRA program was paused during the pandemic when dealmaking hit record levels but resumed in 2022 with cuts at the lower end of the historical range. In January 2023, the bank eliminated roughly 3,200 positions, or about 6% of its employees, followed by additional layoffs in May and further cuts last fall as part of the annual SRA program.
Despite these workforce reductions, Goldman has shown signs of recovery in certain areas. The Wall Street Journal noted that in the second quarter, the bank posted a 21% increase in investment-banking revenue compared to the previous year, along with a 27% revenue jump in its asset- and wealth-management business. Goldman CEO David Solomon expressed cautious optimism in mid-July, stating, “From what we’re seeing, we are in the early innings of a capital markets and M&A recovery.”
However, the Journal indicated that the current round of layoffs follows a challenging bonus season for employees who worked on fewer deals in 2023. This underscores the volatile nature of the investment banking industry, where performance and market conditions can significantly impact job security and compensation.
Price Action
As of the latest update, GS shares were down by $0.13 or 0.03%, trading at $510.12 per share.
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