Over the weekend, rumours about the forthcoming redundancies at Goldman Sachs have been getting more and more detailed and specific. The precise number hasn’t been locked down, but four thousand is certainly within the bounds of possibility and some “people familiar with the matter” are only prepared to say that the headcount will remain higher than its pre-pandemic level. It seems that David Solomon is planning to take on the biggest challenge for a chief executive of an investment bank – making big cuts to the workforce without damaging the franchise.
The reason why this is a difficult task is that in the banking industry, you tend to lose about fifteen employees for every ten you intentionally get rid of, and the extra five are usually ones that you really wanted to keep. This is an easy phenomenon to understand – when redundancy is in the air, people tend to update their resumes and refresh their headhunter contacts, just in case. They start returning calls from lower-status competitors that they would previously have ignored. And over the course of a few months, a few high-performing teams and individuals exit the building along with the dead wood.