Goldman Sachs shed more than 3,000 employees this week — but some insiders claim the bank has a plan that will soon raise that number to 4,000.
Reports surfaced in December that Goldman planned to ax as many as 4,000 workers this month. When the bloodbath came to a head on Wednesday, however, sources said no more than 3,200 got pink slips.
Nevertheless, that discrepancy of 800-some employees may quickly narrow next week after Goldman hands out annual bonuses, according to insiders. That’s because the payouts are expected to be skimpy — so skimpy that disgusted recipients will pack up and leave.
“The expectation is people will quit the following week,” said one source close to the bank.
Next week — mostly Tuesday and Wednesday after Goldman reports fourth-quarter earnings — thousands of Goldmanites are expected to learn the size of their annual bonuses. Many are bracing for getting stiffed following “David’s Demolition Day” — the moniker that employees used for Wednesday, when chief executive David Solomon unleashed the bloodbath.
“The best way to encourage people to consider leaving is to decrease the size of the bonus … they’re not going to go zero but they might do substantially less to encourage someone to leave,” John Breault, CEO of recruiting firm Breault & Smith, told The Post.
The plan already appears to be working. “Morale is super low here … everyone’s very depressed,” one Goldman employee told The Post.
Bonuses often account for most of a Wall Street banker’s yearly compensation, and are expected to take a dramatic hit this year industrywide. Investment bankers will likely be hit hardest, with their bonuses slashed by as much as a third as banks brace for revenues to plummet as much as 50% in 2023, according to data from compensation consulting firm Johnson Associates.
Partners may bear the brunt: Solomon will shrink the bonus pool for the roughly 400 partners by as much as half, according to a report. Traders also are facing cuts to their bonus pools even though the global markets division brought in $25 billion in 2022 — a 15% increase in revenue from 2021, Bloomberg reported.
Goldman’s effort to nudge people out the door isn’t a new concept. In fact, it’s the resurgence of a term initially coined by media mogul Barry Diller: “Firing by process.”
Diller’s thinking: It’s much easier — and cheaper — to convince someone to leave instead of firing them. Voluntary departures mean that companies don’t have to pay severance or face potential litigation.
But not everyone needs to be alarmed. Recruiters still say that even in a tough economic environment, banks will figure out a way to compensate rainmakers and high performers.
“Banks will still find a way to pay someone … they go through and make sure they take care of the top 5% of the people at the firm,” Breault adds.