Goldman Sachs is planning to cut thousands of employees and potentially eliminate bonuses for underperformers, as the struggling investment titan deals with the ramifications of an aggressive hiring spree over the past two years, The Wall Street Journal reported Friday, citing anonymous sources.
The company grew quickly as the mergers and acquisitions industry boomed in 2020 and 2021, swelling from 38,000 employees in 2019 to 49,000 as of the end of September, 2022, the WSJ reported. The company is expected to cut roughly 8% of its workforce, which would amount to just nearly 4,000 employees, according to CNBC, citing a source familiar with the matter.
“We continue to see headwinds on our expense lines, particularly in the near term,” CEO David Solomon said at a conference last week, CNBC reported. “We’ve set in motion certain expense mitigation plans, but it will take some time to realize the benefits. Ultimately, we will remain nimble and we will size the firm to reflect the opportunity set.”
Firms across the industry aggressively raised salaries to recruit and retain workers during the pandemic-driven boom in mergers and acquisitions, but the potential of an impending recession has significantly weakened the market, the WSJ reported. It is unlikely that Goldman Sachs will be the only major deal-maker that will have to make cuts in the near future, according to CNBC.
After Goldman brought back performance reviews this year, which had been suspended in 2020 and 2021, the company cut hundreds of jobs in early September as a result. The next round of layoffs, set to occur in January, will target underperformers across the company, CNBC reported.
Tech-focused investment bankers might be particularly hard hit as the tech industry has slowed in recent months, according to the WSJ. Although the firm may not explicitly lay off some workers, it is usually understood that those who receive no bonus are being asked to resign.
Goldman Sachs declined to comment for this story.
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