Goldman Sachs to Cut Jobs as Part of Annual Review Process

Goldman Sachs is set to reduce its workforce by several hundred employees as part of its annual review process targeting underperforming individuals, according to an unnamed source familiar with the matter. The investment bank had put a pause on performance-related job cuts for two years due to the COVID-19 pandemic but reinstated them in 2022. Last year's review resulted in approximately 1% to 5% of employees losing their jobs. Goldman Sachs currently employs around 44,300 people globally, and the bank expects to have more employees in 2024 compared to 2023, as stated by a company spokesperson.

The number of job cuts was reported differently in a Wall Street Journal article, where it stated that the layoffs, already underway, could affect more than 1,300 employees, amounting to approximately 3% to 4% of the bank's workforce. However, Goldman Sachs responded to these claims by stating that the reported figures were not accurate.

Goldman Sachs' decision is part of its strategic resource assessment, which adjusts workforce size based on market conditions and financial outlook. The bank had undergone multiple rounds of workforce reductions in 2023 due to a challenging operating environment for banks, with decreased dealmaking and the impact of higher interest rates. However, the bank's fortunes have turned around, as it reported a more than doubled second-quarter profit in July, attributed to strong debt underwriting and fixed-income trading. The resilience of the U.S. economy has boosted corporate confidence, leading to increased dealmaking, debt sales, and stock offerings.

Despite the industry's gradual recovery, dealmaking activity has still remained below historical averages. Despite this, shares of Goldman Sachs have performed well, surging 32% this year and outperforming both the broader market and a benchmark tracking other large-cap banks. The stock showed positive gains in afternoon trading, closing 0.6% higher.

Goldman Sachs remains optimistic about its future, expecting a larger workforce in 2024 compared to 2023. The bank's commitment to its annual talent reviews aims to maintain a high-performance culture and align its workforce with its evolving business needs.