American financial services company Goldman Sachs is cutting costs as reduced profits and a bleak forecast as company executives scramble to keep operations running smoothly. The Goldman Sachs layoffs will reportedly affect hundreds of jobs, according to people in the know.
The bank is known for its annual job cuts wherein it trims its underperforming workforce by anywhere between 1% and 5%. According to an insider, the bank is set to reinstate this practice.
Goldman Sachs Layoffs
The Goldman Sachs layoffs come close on the heels of various cost-cutting reports doing the rounds. Yearly performance reviews and resultant job cuts were an annual practice at Sachs, which were suspended during the pandemic.
Even if the bank decides to cull 2% of its workforce, it translates to around 750 to 800 people updating their resumes in search of new opportunities. In July, CNBC had first reported that the bank is looking to revive its annual tradition of year-end job cuts. After a record-breaking 2021, investment revenue for the bank fell by nearly 41% compared to the previous year. To add to this, Goldman’s profits fell by nearly half, compounding concerns.
In July, CEO David Solomon had hinted at tough times ahead and mentioned that the company will “slow hiring velocity and reduce certain professional fees.”
The company’s Chief Financial Officer Denis Coleman had mentioned that the firm is considering “reinstating our annual performance review of our employee base at the end of the year, something that we suspended during the period of the pandemic for the most part and just being much more disciplined and focused on utilization efficiency of our human capital resources”.
Sachs was not alone in reporting declining profits. Most major US banks fell short of expectations and reported double-digit declines in profits.
Solomon asserted that it would be prudent to take a cautious approach as it is hard to gauge how things will play out. “There’s no question that economic conditions are tightening to try to control inflation, and as economic conditions tighten, it will have a bigger impact on corporate confidence and also consumer activity in the economy,” he added.
As of mid-year, the financial services firm had over 45,000 employees worldwide. It is unclear exactly how many will be affected by the Goldman Sachs layoffs. Meanwhile, the job cuts might start as early as the coming week.
Inflation and Reduced Profits
Declining investment bank activities have put Wall Street on high-alert as it prepares for an economic downturn, accelerated by rising inflation and unstable geopolitical issues. Mounting uncertainty has also given pause to companies planning public service offerings.
As interest rates continue to climb, with no respite in sight, bank executives are also worried about a possible recession. Inflation has eaten into household budgets, hurting customers. More and more people are dipping into their savings to maintain their standard of living while battling rising costs for rent, groceries, and fuel.
Goldman Sachs employees returning to office from the Labor Day weekend were surprised to see that coffee carts were missing. One employee told the New York Post that it was a pandemic-era perk to attract workers back to the office. But now, the culture is slowly going back to how things were before the pandemic. Junior bankers told the Post that a few first-year bankers quit en-masse in August citing an unhealthy working environment.
The financial giant also announced that everyone will have to come to office, regardless of their vaccine status. Apart from rolling back Covid-19 measures and coffee perks, it is also ending free car rides to and fro from work, which were introduced during the pandemic.
