BOOM BUST

Layoff talk at Goldman Sachs follows a major hiring spree. Here’s how other banks stack up

Goldman had grown its headcount by 34% since 2018. Were its competitors as aggressive on hiring?

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A screen with the Goldman Sachs logo below a stock ticker
Culling season is back.
Image: Andrew Kelly (Reuters)

Goldman Sachs is reportedly looking to lay off 4,000 employees, as the bank cuts costs to deal with a profitability slump. The reductions are expected to affect 8% of the firm’s global workforce, according to Semafor; unnamed sources told the Financial Times the cuts would happen in January.

In a typical year, somewhere from 2% to 5% of Goldman employees are laid off or given no bonus, as a way of culling low performers. But this process had largely been put on pause during the pandemic, and amid a hiring boom.

Since Goldman CEO David Solomon took the helm in 2018, the firm’s workforce has grown 34%. That’s a big number even by Wall Street’s boom-and-bust standards.

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Goldman competitors also increased headcount in that timeframe, but at a slower pace. JPMorgan’s workforce grew 13%, while Citigroup’s grew 17%. Perhaps that’s why layoffs at other big banks have been far less severe—CNBC reported in November that Citigroup was laying off some 50 employees, while Barclays said 200 people will be cut.

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Why did Goldman Sach’s grow its headcount so aggressively?

Goldman’s sharp headcount growth in recent years is due in part to a hiring spree in engineering talent for Marcus, its consuming-facing digital bank, as well as from various acquisitions like fintech lender GreenSky. Talent has gotten costlier, too; during the pandemic, big banks had to bump up pay to retain junior employees.

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Despite market volatility and a dramatic slowdown in the kinds of deals that proliferated in the pandemic, staff increases at Goldman, and at investment banks broadly, continued into the third quarter of 2022.

Now though, Goldman plans on pulling back its consumer banking ambitions to reach profitability targets. Its bet on Marcus, which has been viewed skeptically by Wall Street and has yet to turn a profit, is set to cost the company billions. Goldman’s shares are down 1.4% today and have lost nearly 13% since the start of the year.