People go through the New York Stock Exchange on May 12, 2022 in New York City.
Spencer Platt | Getty Images News | Getty Images
Goldman Sachs has slowed its hiring and seeks to reduce the commissions it pays sellers as the investment bank prepares for more difficult times.
But New York-based Goldman has another tool in its arsenal to keep spending under control: a possible return on job cuts by the end of the year, according to someone familiar with the situation.
Wall Street companies have long selected those that are considered to be underperforming, often at the end of the year, as companies prepare to distribute bonuses to those who remain. This annual year came to a halt during the pandemic, as banks contracted furiously to take advantage of a record boom in bidding activity.
At Goldman, for example, the number of employees rose 15 percent to 47,000 employees last year alone, according to figures released Monday. Some of these workers may have gotten on board through acquisitions, but that’s still a big increase.
Now, amid a sharp drop in income linked to debt and equity issuance, Wall Street’s leading investment bank is considering returning to the year-end ritual.
Employees are often the single largest order item when it comes to spending on an investment bank. At Goldman, the company allocated $ 7.78 billion for workers ’compensation and benefits through June 30, or half of the overall operating expenses for the period.
Chief Financial Officer Denis Coleman told analysts Monday at a conference to review second-quarter earnings that the company will delay hiring to replace those leaving and will “likely” reinstate annual performance reviews by the end of the year.
That’s “something we suspended during the pandemic period for the most part,” he said.
There is still no target for reducing the number of people, depending on the person, and plans are dynamic and could change. In the past, general managers and partners were asked to draw up lists of those they could publish if necessary.