How surprising is this?

Goldman Sachs ‘to slash jobs’ amid global economic slowdown
US bank intends to slash at least 5pc of its workforce this year, according to reports

Don’t they fire 5% every year anyway?

i thought that was their management technique? You’re shit, fuck off, to at least 5% of staff every year?

31 thoughts on “How surprising is this?”

  1. Yes but they’re usually replaced by more shiny eyes youths marching with outstretched arms towards the mincing machine. I think they’re actually targeting a headcount reduction.

    As an aside, any back with mining or energy debt is going to be taking huge write downs and losses this year, and many many bankers will get sacked. It’s going to be very unpleasant and run into many billions of losses

  2. It’s an easy way to lower staff numbers – all you do differently is not replace the 5% that you’d have fired in any case.

  3. Regardless of Goldman Sachs 5% policy the fundamental non-surprise is ‘jobs lost during slowdown’.

    The unstated assumption is “in a slowdown, companies should be trying to save jobs”. Behind that is the unstated assumption that companies will deliberately think of the short term and maximise profit at the expense of workers.

  4. I used to work there. Every year come review time it was basically a corporate version of the hunger games.

    You have to give a minimum of 8 peer reviews, and receive at least 8. Now In theory the optimum solution would be for everyone to organise it so that everyone gives everyone good reviews. GS are wise to this. They make you give 2 in the top quartile, 4 in the middle 2 quartiles and 2 in the bottom quartile – and if you don’t you own reviews get moderated down. So you have to find enough people to review you well and do likewise to them, whilst finding a few unfortunates to smash. Those you do review badly (if they collect enough bad reviews) are likely to see their bonuses affected at best, and their job at worst.

  5. GS have obviously gone seriously short on copper again… They’ve just forecast $4300 / ton for this year and $4000 / ton for next year – a wondrous self-fulfilling prophecy thanks to their massive clout in the market. Time to get some short CFDs mayhap.

  6. @Tyler, that sounds an absolutely horrible way to pit employees against each other and cause stress (and time wastage).

    TBH, the only person making a review should be the line manager.

  7. @Tyler, that sounds an absolutely horrible way to pit employees against each other and cause stress (and time wastage).

    I agree.

    TBH, the only person making a review should be the line manager.

    I disagree: 360 reviews can be useful if done properly, as this post explains. But it should be the line manager who is responsible for what is done with the reviews, but only if he/she is properly accountable for the department’s performance.

  8. @Tim,

    where I worked before, the line manager had quotas of various “box markings” that he could give out. To his credit, he gave the “very goods” out to the higher performers as far as possible according to who could benefit from them in the highly rigid fast-track career methodology.

    But he had a directorate of 28 people that was skewed towards high performers, which presented problems within the constraints of the highly bureaucrated. In a system such as that mentioned for GS applied to us, the few low performers would have been absolutely savaged, and people who would have been upper quartile in an “average” directorate would have been heavily disadvantaged.

  9. But he had a directorate of 28 people that was skewed towards high performers, which presented problems within the constraints of the highly bureaucrated.

    I’m reminded of a post I wrote years ago:

    Far too much recruitment of youngsters by certain oil majors is done on personality instead of competence (whereas the older guys are recruited on length of tooth alone). If they see you are a super-bright born leader who speaks four languages and played hockey for your country at university level, you’re in. If you’re a plodder who has found himself in unglamorous, shit locations on shit projects but hung in there and made the best of it, they don’t want to know. I’m a plodder, who has been in many an unglamorous, shit location on a shit project. In fact, that’s pretty much all I’ve known. I’m no high-flyer and I’ll not reach the top in any organisation. I gob-off too much for that, and am pretty skilled in saying things to people which are wholly inappropriate (in my defence, this is always when faced with blinding incompetence, laziness, dishonesty, or any combination thereof). But I can dig out blind and get stuff done in pretty much any circumstances, and that – as I am proving now – is of considerable value to an oil company. My advice to BP? Stop trying to recruit wankers to be the next CEO. Find the guy who has been through the contracting mill in a tough location or two, and get him on board. And then listen to what he tells you.

    Looking back, BP obviously didn’t pay attention: they’ve just posted their biggest ever loss, running into the billions.

  10. @TimN,

    Reminds me of BAe recruitment of engineers (I applied so went through the mill… and didn’t get on the grad scheme.) They let the “pro” HR lot do it, so they give the same damn tests to the Engineers as to the bureaucrats. With hilarious results!

    I made the mistake of presuming that they were looking to hire people as engineers, and were hence looking for engineering knowledge and aptitude. How wrong I was… They were looking for this “all rounded” bullsh1t whereas they should have been looking for the semi-autists who were happy to spend months in an office on the CAD-CAM and then months in a tent at a site somewhere in Darkest Peru trouble-shooting some bit of kit and focus on that. But no, in the problem scenario of recovering a secret plane from Lake Titicaca they were more interested in political / enviro concerns and so on, i.e. sh1t that’s Not the Job of the Engineers, whose job it is to raise the damn plane and get it away.

    I’m still a little sore about the foolishness of it all, but from what I learned about the organisation from someone else, I’m glad I dodged a massive bullet there (someone in HR found out he was a .22 target shooter and screwed him…)

  11. Whenever a recruitment agent calls (and I am looking for work) the first question I ask is “Is it Goldman Sachs?” Any answer other than “No” finishes the conversation.

    I wouldn’t work for them if they were the last job in existence.

  12. @abacab,

    This doesn’t surprise me in the least. Having done Mech Eng at Manchester I knew a few lads who applied to BAe through the graduate training scheme. They also didn’t speak too highly of it all, even the guy who got the job afterwards!

  13. “I knew a few lads who applied to BAe through the graduate training scheme. They also didn’t speak too highly of it all, even the guy who got the job afterwards!”

    The people in charge of recruitment and promotion recruit and promote those in their own image.

    For large companies it is a serious problem, as they will of course have ‘specialist’ HR departments “taking care” of this sort of stuff.

  14. So what happens to the 5% who get kicked out of Goldman Sachs each year? Please don’t tell me they all go into politics.

  15. It’s not just GS. It was the same at LargeUKBank when I worked there as a contractor for 3 years from 2003.

    Each line manager would have to performance rate their reports into 5 categories. The ‘E’s either got no bonus or were fired. Business is business, but again, like the post above, the manager was forced to have a certain %age split across the categories to fit an arbitrary bell curve.

    Anecdotally, I heard somebody who’d spent years putting together a great team of A and a few B people was forever hiring ‘E’ types or anyone who could subsequently be rated as ‘E’ in order that they could be given makework and later be fired to preserve the rest of the team.

    Above a certain grade, there were only 4 ratings, and the bottom 10% (I think; been a long time) were always fired. Twice a year this happened. Somebody at that level was moaning once that they only spent 20% of their time doing actual work. The rest was making sure they looked good – or worse, in a number of cases that I saw documented, actively sabotaging the projects run by peers to undermine their grades. One example I saw subsequently cost the bank something like £70m.

  16. How much productivity is lost to these arbitrary schemes? And how many peverse incentives are institutionalised?

    I presume it’s the management consultants recruited straight from university who come up with this nonsense? I can only imagine that someone who would come up with such a system has never been exposed to one themselves.

    And people wonder why my ideal is “salaried partner in a very very small firm”…

  17. At the place I work there’s a so-called “forced distribution” system. My line manager must put people into four different categories. Although euphemisms are used they effectively mean: great, good, ok and rubbish. The number of people in each is a gaussian/normal distribution. You don’t get fired if you’re rubbish for one yearly review, doing it for two though is likely to get you sacked.

    The problem with this system was shown recently. Several of the people in the lower end of the distribution left. My manager didn’t want to shaft the rest of us. So he deliberately hired rank amateurs to back-fill their jobs.

  18. As someone said, Jack Welch was keen on this.

    It’s foolish to force yourself to fire or demoralise good staff. It’s also foolish to allow soft-hearted managers to keep bad staff. Above all it’s foolish to give HR the power to determine these things.

    My erstwhile employers were tolerably sensible about it. I found forced rankings painful, but they never made me fire anyone I didn’t think was in the wrong job.

    It’s perhaps worth mentioning that “fire” in investment banking circles usually means “make redundant on generous terms”.

  19. To be honest, you can prove that these types of systems are counter-productive over any reasonable timeframe and will result in firing perfectly competent staff or deliberately hiring muppets so that someone can take the hit.

    If your hiring is any good, you shouldn’t be hiring on a bellcurve anyway. So it’s already skewed to the right (although this all applies even if you are hiring randomly on the bell curve). Then you fire the worst 5%. Fine. This skews the distribution more to the right. So you hire to replace them, the distribution again being skewed to the right. Rinse and repeat. So ultimately this 5% shifts up the ability curve, putting thoroughly solid, albeit not stellar, staff at risk.

    Do this for many years according to the book and you’ve got a staff consisting largely of upper two quartile staff, and then everyone is petrified of pissing off the management and becoming one of the sacrificial 5%…

  20. “management consultants recruited straight from university ”

    This is one of the great mysteries of corporate life. These people are, by definition, of no use as management consultants (which is a job for older, experienced people who want to semi-retire).

    Everyone knows this, and yet the practice still continues. My last experience of this shed some light: our CEO and their CEO were long-term buddies, and it wasn’t our CEO’s money.

    Creationism has more logic.

  21. I always found that the problem with work wasn’t incompetent underlings – you learn to cope with all but the very worst, who you ought to get rid of without necessarily waiting for an arbitrary review date – but incompetent bosses, the sort in whom you can see no redeeming features at all, except perhaps sanity.

  22. @TimN BP obviously didn’t pay attention: they’ve just posted their biggest ever loss, running into the billions.

    How much of the loss is simply the result of the declining price of oil? (Genuine question – I’ve honestly no idea.)

  23. To all those ragging against HR: I recommend a read of ‘Up the Organization’ by Robert Townsend (TL;DR fire the lot of them) – one of only three business books worth reading (the other two are ‘The Peter Principle’ and ‘The Mythical Man-Month’.

  24. Now I’m wishing I had already completed the short story I am currently writing. The fictitious company I use has these exact hiring and firing practices. I’m sure some industry insiders would give me great tips.

  25. @abacab agreed, and I expect it’s worse in more mature companies. The decent but not stellar group are more likely to be expert in your business’ quirks, tech debt and workarounds. Sure, you hope you’ve been eliminating that stuff as you go along…

  26. @NielsR – the decent but not stellar group form the backbone of many organisations. They’ve typically been there a while so have got ancienité and know the company very well, and are unambitious so are unlikely to bugger off. Eliminate these people and you get massive churn.

  27. “the decent but not stellar group form the backbone of many organisations”

    In banking they not just be the backbone either.

    Given the last 30 years of mis-selling fines, and more recent bail-outs and related scandals, banks might usefully attempt to determine profitability by employee band.

    Having a policy of automatically sacking the top 5% would be interesting at review time.

  28. How much of the loss is simply the result of the declining price of oil? (Genuine question – I’ve honestly no idea.)

    A large part. But perhaps BP should not have assumed record-high oil prices were going to last forever, and gotten their costs under control accordingly. ExxonMobil managed it, but few others did.

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