Goldman Sachs’ layoff hits VPs; report says underperformers on the chopping block as firm tightens belt

Goldman Sachs is taking a big step towards enhancing its efficiency, with CEO David Solomon's plan to shed 3% to 5% of its employees with a major emphasis on underperforming vice presidents, as per a report. The cuts will translate to more than 1,395 personnel out of the firm's overall workforce of 46,500, according to New York Post.

While layoffs are part of Goldman Sachs' yearly talent management review, the company's total headcount will remain the same as it plans to bring new hires on board later this year, reported New York Post.

Who's impacted and why?

The layoffs will focus on staff members who were given poor annual assessments or small bonuses compared to expectations, which would imply that their performance did not meet the firm's expectations. For most, the layoffs would be perceived as a direct outcome of underperformance, according to Wall Street Journal.


A few insiders think that pay reductions, especially in bonuses, were part of a strategy to improve Goldman Sachs' bottom line, as per a New York Post report.

David Solomon's plan

Solomon, who has led Goldman Sachs since 2018, has been trying to reorient the firm on its core asset management and investment banking business after some mixed success with its consumer banking experiments, as per the report.

When he took the position of Lloyd Blankfein, the former CEO, Solomon had hinted at possible cuts and said there were “significant opportunities to drive further efficiencies,” reported New York post.

According to the New York Post, the Ceo will also have to navigate the bank's move to roll back diversity, equity, and inclusion policies due to the threat of lawsuits from the Trump administration’s Department of Justice.

Leadership shifts and succession planning

Goldman Sachs has also made a leadership shift by adding Solomon’s long-time friend John Waldron, the firm's president and chief operating officer, to its board of directors. The action is being interpreted as part of Solomon's succession planning over the long term, as per Wall Street analysts.

CEO voices caution for future

Despite a strong fourth quarter, driven by successful deal-making, Solomon remains cautious about the future due to uncertainty surrounding the impact of US president Donald Trump’s immigration, trade, and tax policies, as per the report. Solomon said the tariffs on Canada, China, and Mexico are designed “to level the playing field aggressively,” as quoted by the New York Post.

FAQs

Why is Goldman Sachs laying off employees?
Goldman Sachs is cutting 3% to 5% of its workforce, focusing on underperforming employees, particularly vice presidents, as part of its annual talent management process.

Will Goldman Sachs’ total workforce decrease?
No, while the layoffs are happening now, Goldman Sachs plans to hire new employees later in the year.