Goldman Sachs cuts staff in annual review process

Goldman Sachs cuts staff in annual review process

www.reuters.com

The job cuts follow 2,400 positions Goldman eliminated last year, and further reductions are possible as the company continues to reduce costs to raise profitability, the sources said.

The latest round of cuts is part of Goldman's annual culling process in which the company fires employees who miss performance targets or can be replaced with technology or less expensive staff.

(visit the link for the full news article)

This reminds me of how Enron used to operate - the bottom 10% of trading floor staff weer sacked every year (or some similar number) - as a result they were "incentivised" to do whatever it took to not be in that number.

The result was fraudulent deals, deals done so close to the end of the quarter that the risk management processes could not be carried out, etc.

And of course as a result of such institutionalised corruption the whole house of cards collapsed.

This is much the same sort of behaviour - and it is the same sort of thing that led to the "Mortgage parties" prior to 2007-8 - it is the wrong signal to be sending to staff.

Contrary to popular belief, IMO incentive schemes always work - whether negative (like this one) or positive - staff will ALWAYS work to maximise their incentives (or minimise their losses) - and they are very good at reading what the incentives actually are - as opposed to what it is that management THINK they are!!

Hence schemes that provide reward for numerical targets will see those numerical targets met - regardless of any quality considerations.

It's deja vue all over again!!

www.reuters.com
(visit the link for the full news article)

Makes you wonder how they feel about us common folk who make an honest living who got sacked because of their wheeling and dealing,doesn't it.

reply to post by kdog1982


Pretty much the same as anyone else thinks of anyone else I reckon.

Yes, Goldman Sachs are the archetypical evil corporation. Yes, they will eventually collapse.

Money rewards a certain degree of ruthlessness. It doesn't reward complete, unrestrained entropy. Goldman will eventually be served notice of that.

reply to post by petrus4


Yes that's well said!

Thanks