As a recession looms around the US economy, banking major Goldman Sachs is planning to fire hundreds of its employees as early as next week. Reportedly, the layoffs will mark the resumption of its annual practice which was halted the last two years due to the pandemic.
Wobbly macroeconomic conditions, uncertain geopolitical climate due to the Russia-Ukraine war and sky-high inflation have contributed to the decision.
According to data available, without any layoffs, the company's headcount had grown to more than 47,000 globally, at the end of June, which was a 15 per cent increase from the similar period last year.
Experts believe that Goldman Sachs could clip as many as one to five per cent of its low-performance employees, come the next week. This will mean losing anywhere between 500 to 2,400 employees.
It is not like the banking giant had not signalled this move. In July, during an earnings call, Chief Financial Officer Denis Coleman warned that the company might slow hiring and cut expenses as the economic outlook worsens.
"Given the challenging operating environment, we are closely re-examining all of our forward spending and investment plans to ensure the best use of our resources," said Coleman.
"Specifically, we have made the decision to slow hiring velocity and reduce certain professional fees going forward, though these actions will take some time to be reflected in our results." he further added.
Coleman stated that the company had witnessed a 48 per cent slump in quarterly profit, forcing it to clock in the tough changes.
It is pertinent to note that wobbly macroeconomic conditions, uncertain geopolitical climate due to the Russia-Ukraine war and sky-high inflation have contributed to the decision.
In addition to reinstating the annual tradition of trimming down the employee count, Goldman Sachs is also expected to bring back its annual performance review policy for employees at the end of the year.
Previously, other banking majors on Wall Street such as Citigroup, JPMorgan Chase & Co., Wells Fargo & Co. have also terminated the contracts of their employees to downsize.