Average salary of people laid off at Goldman Sachs? $63k
When Goldman Sachs let go of 3,200 people last week, the immediate - and perhaps inevitable gripe - was that the junior ranks were the worst impacted. Hardly any senior people were let go, complained various insiders: the axe allegedly fell mostly on VPs, analysts and associates.
This is perhaps to be expected given that junior employees are more populous. It also seems to be confirmed by the ongoing cost savings incurred by the cuts.
Speaking during the investor call on Tuesday, Goldman CFO Denis Coleman said the firm will make ongoing cost savings of $200m a year from its 3,200 layoffs. The implication is that the average unwanted employee was earning $63k (or less, given the cost of paying for the technology associated with each seat).
The implication is that many of Goldman's cuts weren't in the front office and probably weren't in major financial cities like London or New York. Cuts in Bangalore, Dallas and Salt Lake City look more likely.
At the same time, though, Goldman appears to have been very generous in terms of severance pay. Coleman said the firm is spending $275m on the upfront costs of its layoffs, amounting to an average of $86k per head.
A handful of expensive Goldman MDs were certainly let go in London and elsewhere. Financial News reported that Goldman's cuts included Zeynep Yenel in financial sponsors, Mohit Sial in fintech coverage, Bertie Milward in corporate broking and James Brodie, who covered European gaming, leisure and real estate. An MD in Paris was also among the victims, and several of those let go were only promoted to MD in 2021.
In equity capital markets, where Goldman's revenues fell 83% last year, we understand that around 20% of London staff went in both last week's layoffs and the cuts before Christmas.
"The most exposed roles at Goldman were newly promoted MDs and execution-focused senior VPs," says one London headhunter. "Those people look expensive and are not bringing in accretive business."
That may be the case, but on a global basis, low cost employees working on easily automatable tasks appear to have borne the brunt of the last round of layoffs.
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