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Goldman Sachs will fire several hundred employees over the next few weeks as a part of an annual process to remove its lowest-performing staff members from the company.
According to a report from Reuters citing people familiar with the matter, the bank plans to continue its yearly cull in 2024, which it recommended in 2022 after pausing for two years during the Pandemic.
A spokesperson for Goldman said that the dismissals, which usually take place in September following performance reviews, are standard practice.
"Our annual talent reviews are normal, standard and customary, but otherwise unremarkable," they told Reuters. "We expect to have more people working at Goldman Sachs in 2024 than 2023."
Why is Goldman Sachs cutting hundreds of poor performers?
According to a report on last year’s cull from the Financial Times, the investment bank refers to the process as a “strategic resource assessment” which typically leads to around 1% to 5% of its employees being dismissed; though a report from the Wall Street Journal indicates the typical range lies at around 2% to 7%.
In 2023, the Financial Times heard Goldman was aiming for “a number at the lower end of that [1% to 5%] range.”
But in 2024, the affected percentage of the company looks set to be higher. A report from the Wall Street Journal indicated that between roughly 1,300 and 1,800 employees could be affected by the cut – around 3% to 4% of its workforce which was around 45,300 people as of late 2023.
All divisions at the bank are set to be affected by the performance-based cuts, but some units will be more affected than others.
The scope of the ‘strategic resource assessment,’ according to the Financial Times, typically varies depending on market conditions and Goldman’s financial outlook. Goldman has shown signs of recovery in recent financial reports as the US economy recovers.
A variety of variables will be used by Goldman to determine employee performance, reportedly including in-office attendance. Most employees at the bank are expected to be in the office five days per week.
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CHROs & employees unhappy with performance review processes
Citigroup, JPMorgan, and other banks also have annual processes to dismiss underperformers each year as they aim to keep costs down while making room for the acquisition of new talent.
Studies show employees and HR leaders across industries do not approve of their company’s performance review processes.
Research from Gallup earlier in 2024 revealed that just 2% of CHROs are happy with their performance management processes.
Another Gallup study found that only 20% of 18,600 employees said their performance reviews are transparent, fair, or performance-improvement-inspiring.
