Goldman Sachs' new job cuts may hit mediocre MDs hardest
If you're a poorly performing managing director (MD) at Goldman Sachs, the Financial Times' revelation that Goldman will be cutting up to 5% of underperforming employees, or 440 people, by late October, may give you reason for concern.
It's an MD year at Goldman, and before the firm promotes a new class of MDs, it will probably want to cut some old ones.
Goldman promotes managing directors on a biannual basis. Last time it did so, in November 2021, 643 people got the call. "The firm needs to lose 300+ MDs every year to keep the total number of MDs flat," says one insider. "If MDs haven't jumped ship already, the September cut is the obvious time to get rid of them."
The firm already cut around 125 MDs in late May. Superfluous MDs at Goldman proliferated during the good years, when the insider says "pet projects with no short/medium term cashflow/pnl possibilities" multiplied.
At a more junior level, insiders say teams are already "super lean" and that underperformers were already been trimmed when Goldman cut 3,200 jobs in January. As deals (hopefully) revive in 2024, the risk is that Goldman will be understaffed. - Banks like Deutsche Bank are already out there, hoovering up headcount in preparation for the coming rebound.
Some people at Goldman will welcome the new cull. The FT also says that GS might be paying a higher proportion of profits as bonuses this year. The fewer people who receive them, the larger the individual shares.
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