Goldman Sachs to Cut Over 1,300 Jobs in Global Workforce Restructure

Goldman Sachs is planning to lay off over 1,300 employees globally as part of its annual assessment aimed at phasing out low-performing staff, according to people familiar with the matter.

The cuts are expected to affect between 3% and 4% of Goldman's workforce, equating to approximately 1,300 to 1,800 employees, given that the company's total staff count was about 45,300 at the end of last year. The layoffs will span various departments within the bank, with some teams being more significantly impacted than others.

Typically, Goldman aims to release 2% to 7% of its staff each year based on various performance metrics, a range that fluctuates in line with market conditions and the firm’s financial outlook. The bank has already initiated the layoff process, with expectations for it to continue through the fall. This exercise is part of Goldman's annual "Strategic Resource Assessment," an evaluation process encompassing numerous factors to gauge employee performance. An increasingly critical element in recent performance appraisals has been office attendance.

During the pandemic and for some time afterward, Goldman, along with other financial firms, had relaxed their requirements to allow for remote work. However, the trend is now reversing, with banks penalizing employees who do not regularly show up at the office.

Goldman Sachs spokesperson Tony Fratto mentioned that the bank's overall employee count by the end of 2024 is projected to be higher than in 2023. Goldman had paused its annual "Strategic Resource Assessment" layoffs during the pandemic when trading volumes were at unprecedented levels. The program was reinstated in 2022, though layoffs that year were at the lower end of the historical range. In September of the same year, the bank laid off several hundred employees, followed by a more significant cut of about 3,200 positions in January 2023. The bank was also prepared for additional layoffs in May 2023 due to a sharp decline in trading volumes.

Recently disclosed financial reports reveal that Goldman Sachs saw a 21% year-over-year increase in investment banking revenues for the second quarter, with its asset and wealth management revenues rising by 27% during the same period. CEO David Solomon noted during a mid-July call with analysts that they are witnessing the early stages of a recovery in capital markets and mergers and acquisitions.

Despite the layoffs, Goldman's recent financial performance has been robust enough to sustain investor confidence. The second quarter's net earnings of $3.0 billion marked a 150% year-over-year increase, indicative of a more stable outlook.

This restructuring comes as Goldman aims to shift its focus back to its core Wall Street businesses after deciding to exit consumer lending. The ongoing economic volatility and an uncertain political landscape ahead of the upcoming U.S. presidential election add layers of complexity to the bank's operational strategies and workforce adjustments.