Top Firm Said To Have Agonized Over Staff / Pay Cuts

Pile Of Coins

Cutting heads and comp is never easy.

Top executives at Goldman Sachs have been considering deep cuts to staffing levels and pay for at least two years, but feared too many layoffs would leave the firm unprepared for an eventual pickup in business, people familiar with the bank said.

Reuters reports that they instead chipped away at staff levels and focused on non-personnel expenses that are less painful to cut.

But investors pressured the bank to cut costs further, the sources said, and on Wednesday, Goldman gave in.

The largest standalone investment bank said in the fourth quarter it cut the percentage of revenues it pays to employees in half to 21%. That brings the ratio for the entire year to its second-lowest level since the bank went public in 1999.

Goldman first publicly signaled its intent to get serious about cost-cutting in July 2011, when Viniar outlined a plan to reduce costs by $1.2bn a year, partly by laying off employees. Since then, Goldman expanded that cost-cutting plan by $500m and has winnowed staff almost every quarter.

Staff reductions have targeted big earners, including dozens of partners, who have left since the start of 2011. Sources inside the bank expect that exodus to continue this year as Goldman makes way for younger employees to move up the ladder.

Hit the link below to access the complete Reuters article:

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