Goldman Sachs to layoff 4,000 'low performing' employees
What's the story
Goldman Sachs, one of the leading global investment banking, securities, and investment management firms, is planning to lay off as many as 4,000 employees. As per reports, the top management has asked managers to identify potential cost reduction targets as the company looks to optimize its cash outflow ahead of a looming recession. The job cuts are expected in early 2023.
Context
Why does this story matter?
During the pandemic, tech companies as well as multinational banks hired and invested aggressively. Many believed that the boom will carry on. However, inflation, recession worries, and lackluster quarterly results have pushed companies to recalibrate. Goldman Sachs is the new entrant in the long list of companies that have fired or preparing to fire employees in order to reduce costs.
Fragile future
Layoffs possibly due to a slowdown in the business environment
The anticipated layoffs at Goldman Sachs are due to the slowdown in the business environment for dealmaking and slumping asset prices. The New York-based bank is said to have incurred steep losses amid the costly expansion into the retail banking sector. The firm has not yet made any official word regarding the identification of "low-performing" employees and possible job cuts.
Desperate measures
The latest layoffs are beyond the annual weed-out exercise
The anticipated layoffs in the firm are beyond the annual exercise of weeding out 'low-performing' employees from the company. In the recent years, Goldman has completed several acquisitions to build a more diversified company. Since 2018, its workforce has increased by 34% and surpassed 49,000 in the third quarter of 2022. Now, up to 8% of the bank's workforce may face the ax.
Other optimizations
'Reviewing other business lines to manage headcount and limit costs'
David Solomon, who took over as chairman and CEO of Goldman Sachs in October 2018, is focusing on limiting the input costs of the company. He is reducing the firm's ambitions for consumer banking and also reviewing other businesses to manage headcount and limit costs. Goldman Sachs may also cut the compensation of its investment bankers by 40%, the most significant reduction since 2008.