How Goldman Sachs Lays People Off | Hacker News Reader

How Goldman Sachs Lays People Off

bloomberg.com

129 pointsJumpCrisscross107 comments

For all we know GS could have closed a coffee shop in the building as employees wanted fresh air and go to Starbucks across the street anyway.

34,000 employees. Hundreds of job openings on their career site. 20 people being laid off is not news nor is this "how GS lays people off".

Also "front office" vs "middle office" employees go through very different processes when entering and leaving the company. By custom and by contract.

I highly doubt employees bonusing there would suddenly be laid off in November. That would be news.

The YoY compensation drop and -5% fall in total headcount are more informative about whats happening than a 20 person lay off notice.

Goldman Sachs Elevator on twitter is more accurate than this article.

500 people over a relatively short period is noteworthy, even if one of those events only had twenty people in it.

Also those twenty people likely weren't in a union so I doubt they had service jobs like running the coffee shop.

Coffee shop workers/service workers are rarely unionized, even in the union-obsessed NYC/NJ area

what the hell does "union" obsessed mean?

A union is a group of people who unite for a particular purpose, often contract negotiation.

They meant to ask about "union-obsessed."

Yes, I thought the meaning of obsessed was clear. The poster was referring to people who are preoccupied with (presumably, `others'`) community contract negotiations.

New York has the highest union rate amount states[1].

[1] http://www.bls.gov/news.release/pdf/union2.pdf

... which is approximately the same as the union rate for the United States as a whole, 1950-1970.

Your point? That's more than 40 years ago. The Unionist movement in the rest of the US is essentially dead (outside of government).

By that the commenter means (I guess) that to be pro-union in the United States of 2016 (where obviously things work swimmingly well for wage earners, without the union-enforced wage and job protections commonplace in other countries) is sufficient grounds to have one's psychological well-being questioned. Indeed, it may be a sign that one is suffering from a bona-fide psychiatric disorder.

This is Goldman Sachs. I can tell you with certainty those 20 people were not part of a union.

The real number is also not 500. It's closer to +1000. Many layoffs at places like Goldman are handled in a way that they do not appear to be a layoff to outsiders nor are they disclosed in that way.

The coffee shop comment was a bit of sarcasm but who do you think is getting laid off here? Millionaire VPs? MDs? Goldman is struggling to hire and keep younger managers right now.

why are they struggling to hire and keep younger managers?

In 2009, the company I worked for was laying people off while it had job openings listed. They would even interview for some of those roles. But it was all window dressing as they never hired anyone for quite a long time. The openings are for when some real superstar comes along and can be exploited. That way, there is an open req they can use.

An open job req is useful in an environment of layoffs. Your boss comes to you and says "I need you to reduce headcount by three." If you have an open req, you can trade that in and only have to give up two employees.

I know D.E. Shaw did something like this in 2009.

I've seen a number of tech companies do this, even if they aren't laying people off. They just leave open reqs for every position, with no intention of filling them all.

It's a win for them in at least three ways. They get to project a sense of growth and selectivity via the posting, they get a collection of potential candidates, and they get to grab any true superstars they see (or any normal hires who underprice themselves).

The most distinctive experience I've had was applying to a position, getting radio silence and then a call two years later asking if I was interested. Further conversation made it pretty clear that they had finally turned a fake opening into a real one, and were contacting the applicants who had piled up in the meantime.

The whole point of the article is that "20" is not representative of the whole number.

Banks are pumping the brakes on hiring, they are losing good talent to other trading shops and investment firms, and they just aren't competitive when it comes to recruiting young people.

If comp is dropping and the firm is carrying out rolling layoffs, then there's not really much of an argument to be made that all is well at GS.

For all we know GS could have closed a coffee shop in the building as employees wanted fresh air and go to Starbucks across the street anyway.

Yeah, right.

Hundreds of job openings on their career site.

Really now?

20 people being laid off is not news nor is this "how GS lays people off".

But as far as naked attempts at misdirection go, this one's just ridiculous. We may be missing some context, and the significance of the layoffs does seem open to question. But I'm quite sure you're perfectly aware that this is not simply a matter of "20 people being laid off".

Worth pointing out that, you, too can see this layoff data for yourself (depending on your state):

The 20 recent layoffs mentioned in the article: https://labor.ny.gov/app/warn/details.asp?id=5714

California updates a PDF daily, and a lot of tech companies can be found in the listing (including Theranos's layoff of 62 Palo Alto employees a couple weeks ago)...I think it's where some news outlets find out about otherwise unannounced layoffs: http://www.edd.ca.gov/jobs_and_training/Layoff_Services_WARN...

Cutting like this creates an environment of paranoia and completely destroys morale. Though perhaps employees at Goldman Sachs understand and accept this as their terms of employment. Definitely something to bear in mind if considering a job there.

I think the pay and the career move is definitely a strong argument for working there, despite of that. Also you could make the argument that it's the same for everyone there.

Eh except if you can work there you can work at several other places in the financial industry, and the pay and future career benefits aren't that special if you are already in that league.

You're right - the employees accept the bargain. GS and many other banks run a force or stack ranked grading system. Those at the bottom are shown the door when there's a round of cuts. I know from first hand that after several rounds of cuts the people at the bottom of the stack rank are strong performers because all the duffers are long gone. A lot of politics surrounds the ranking system, so the results can be brutal. It's a Faustian pact accepted by all the players in the hope of getting those juicy bonuses. And I have even mentioned the complete lack of work life balance.

At the risk of repeating the current top comment, does a 20-person layoff notice in a company is 34k with hundreds of open positions on their website really do anything to "completely destroy morale"?

Did you read the article or just the top comment? The most recent layoff is 20 people. The total for this year is more like 500.

"Total employees, including consultants and part-time workers, fell 5.4 percent to 34,900."

> perhaps employees at Goldman Sachs understand and accept this

This is the banking industry as a whole. Unless you have events like 2008, major banks just trade employees. None of them really care all that much about being fired. It's more of an inconvenience.

So how does getting fired/finding a new job work when you get fired from a bank like GS? It seems like usually you job prospects and negotiation power are much better when you are already employed. I'd think a fired employee would at least lose out a lot of money while negotiating salary from not currently having a job.

If you're senior and respectable, you call a friend at a firm that's got open positions and they set you up. After all, you're competent and the firing is a reflection on GS more than you. They don't lowball you, because you'd either call another friend or take the job and then flip it into a better offer elsewhere - you're employable enough that "already employed" seems less significant.

If you're new, you act like you're fresh out of college, slap GS on your resume, and hit up a bunch of banks. Someone will need you if you're good, and you won't get any more lowballed than you were for being junior anyway. You're in it to move up the ranks at this point regardless.

Honestly, it plays out a bit like the Valley. If some regulation or move by Google crushes a startup, the people leaving it aren't particularly stigmatized, and there's too much competition to weaken their negotiating position much.

I was comparing it a little bit to tech. I had a friend graduate from college and get a very respectable five figure increase in his offer for converting him to full-time by looking around at other companies. I don't think he would have gotten it without looking around though.

> It seems like usually you job prospects and negotiation power are much better when you are already employed

Definitely, but it tends to be less significant if your move isn't finance -> finance. Having GS on your resume for several years will get you in any door. People have a distaste for finance due to recent events, but it's a pretty huge industry with highly transferable skills. A shrink in the finance sector is rarely a shrink of available jobs to employees in that sector. Employers in other sectors tend to acknowledge how demanding an industry it is. For example, I worked as a discretionary equities trader for half a decade. As more and more algorithmic trading encroached on my territory, I moved to software development. I was hired for back end development at a point in which the extent of my programming skills was data munging in R. 4 years later, I still struggle to adjust to a work atmosphere that continually tells me to chill out and go home. Sure, I took a pay cut. But it's not even close to the % reduction in hours worked.

The flip side of banks letting people go with ease is (a) higher compensation and (b) the ease with which rivals will hire. The banking job market is extremely liquid (unless you did something naughty).

Cutting like this creates an environment of paranoia and completely destroys morale.

Data gathered from acquaintances who have worked at GS suggest that, unless you fit a certain "mold"... paranoia and various forms of psychic collateral damage basically come with the air you breathe, in that shop. So the atmosphere of suspicion you describe is already part of your "environment".

Another way that banks like to stealth lay people off is to relocate entire offices. JPMC did this consistently for years.

Relocate to a less-attractive location with an inadequate relocation package. For JPMC, the first year it was NY -> NJ no cash offered. The following year NJ to Ohio $2-3k for relocation. Two years later I think it was Ohio to Maryland, from what I heard.

At least on the tech side, most people don't move.

> At least on the tech side, most people don't move.

Recency bias. GS moved their tech to NJ in 2005 after they put up their building in jersey city, while also shedding weight on some I-Bankers who didn't want "New Jersey" on their business cards. Nowadays, it's true. They can't put tech in NJ because no 25-30 year old NYC-dweller would do that commute when the city is filled with tech jobs. My brother works there and told me how odd it was that during the interview they explicitly stated they would never move him to NJ. He didn't understand what they meant until we had this exact discussion.

2nd tier at GS is now in Salt Lake City and 3rd tier is Bangalore. They will never move him to New Jersey because they'd sooner move the role to SLC.

The JPMC moves were something like 10-15 years ago and none of the tech people I know there moved (only a handful even made it to Jersey). They all quit instead.

Note the language used by Goldman Sachs, not even coming close to acknowledging they have people. All about the 'revenue environment'. Such is the dismal, values-free world of the capital ideology.

People who work there are quite happy to accept that. While at work, you are nothing but a money making machine. If you can bring money to GS (or any other investment bank) — you will be well compensated. If you can't — there's no need to keep you around.

If you don't share this life attitude, you probably shouldn't work in high finance.

Well, for sure that's how it works. I do believe noting this is valuable for social political and values entrepreneurship reasons. Often, people round here don't just want to fit into the machine.

You don't need to if you do not want to.

For Goldman Sachs, you are indeed a resource, a money making appliance. However, for _you_ (assuming you are lucky/hardworking/talented enough to get a job at GS), they are not a family, nor a prison or army or anything else. They are an _instrument_ to achieve your personal goals.

E.g. if I am a successful algo trader, I can start building my track record, bringing money from external sources (not only for investment, but for technical/administrative costs as well), and, after say 5-10 years of gruesome work, I can launch my own hedge fund. Or fail at it.

OR -- I can apply for a quant trader job at GS, and get access to their vast financial resources, knowledge, connections, and whatsnot. Yes, they will take, say, 99.5% of money I earn with my trading algorithms, but 0.5% of a billion is much more than 100% of those $20000 I can make per year trading on my own account.

Win-win.

> Win-win.

That's not complete. It's win-win-lose. Win for you, win for GS, and lose for the society.

That assumes the allocation of capital provides no value to society. Mortgages, business loans, loans to governments (bonds), etc.

Regulatory capture, M&A corporate raiding, wiping out middle America one rotten deal at a time. The allocation of capital at the top has been demonstrably destructive to our society. It has enabled the near total destruction of our Constitutional Republic. You're all fucking heroes.

I am a part of the society. So are Goldman Sachs directors, and their clients, and their clients, and clients of those clients etc. GS is an investment bank. Their main activity is investment -- meaning giving money to the entrepreneurs (not directly -- but instead investing in funds who assemble venture funds who give money to the entrepreneurs), as well as providing financial lifelines to existing companies.

For me, investment banking is what enables society's economic well-being. Without investment banks, there would be much less companies created, jobs retained, and economic activity in general.

Investment banks make high profits? Good, every business should strive to do that -- Apple have much better profit margins than GS. Nobody blames Apple to be ruthless capitalistic profit-takers, as long as their new iPhone is better than the old one.

That's a very generous view of the investment banking sector, and one that doesn't quite align with my 17 years experience in that line. For example, your view doesn't accommodate how GS packaged credit derivs designed to fail and sold them to AIG, then sold default insurance on the same instruments to hedge funds that would profit from their failure.

Investment banks exist to extract a profit from each transaction they do. Nothing more or less. A very large proportion of that profit goes to the management and staff of the bank as bonuses. Some of it goes to shareholders as dividends, but a much lower proportion that in other sectors. Which is why I don't buy IB equity.

You also forgot to mention how they took order from clients at one desk, then swiveled the chair around and told the prop desk what the order was so the house could front run the order or do one of any number of other unethical things to the clients.

I think the country could get along just fine without out. Better, in fact.

That requires belief in a certain type of economic religion. Compare:

  - "God is good, and we do as He commands, because
     we are His people."
  - "Our work is what enables civilization to exist,
     and its economy to grow."

From my perspective, investment banks are less virtuous and necessary. They are like a hydroelectric dynamo. They appear to sell cheap renewable power to the surrounding communities. But no one seems to notice that is only because they dammed the entire river, such that no one downriver can provide their own (possibly cheaper?) power with their own waterwheel. They made themselves the only game in town, and then they made the game crooked. Anybody that doesn't have a lakefront mansion abutting the reservoir has to make do with the silty low-head trickle that comes down the spillway.

They, in conjunction with the rest of the global financial system, partially caused the problem that they appear to solve. The monetary system is engineered to concentrate capital at the top. It makes it easier to make money just by already having money than by efficiently executing a great new idea.

I am biased against banking by my personal experiences. So take the above with that in mind.

That isn't an absolute and you know it. Why even perpetuate the narrative, without pinpointing specific actions?

Someone pointed out M&A consolidation and regulatory capture. Specific actions with specific discussions, and a very small portion of the functions of these institutions.

I'm reminded of the Trotsky quote:

"You may not be interested in war, but war is interested in you"

Ignoring the reality of how organizations function is probably the easiest way of dealing with the realities of day to day employment but that doesn't mean that you also get to ignore the unexpected all-hands meeting with the HR department...

It is feared and avoided at all costs, but well expected in the industry. Like taxes. :)

You probably shouldn't be working in any organisation if you can't understand how you deliver value to that organisation.

GS are probably just a bit more up front about this.

This would work much better for everyone if it was gamified and kept away from real money.

Do you think any company isn't the same? When your manager refers to you as a "resource" what do you think she means?

I will wager that all the people affected will get a decent package and the name GS on their CVs will still open doors.

At least it's honest and clear. People know where they stand, rather than http://www.thedailymash.co.uk/news/society/boss-admits-staff... . (And I suspect it ends up being a much fairer workplace for disadvantaged groups, if e.g. promotion is based on straight numbers rather than subjective "cultural values")

This isn't aimed at you, but I think it's interesting that a couple of days ago (yesterday?) we had a thread where people said they would like a company to be honest and upfront about the need to make a profit, and clear about its goal of continue to increase profits.

Here, we're exposed to a company that does that and there's contempt about how the organisation expresses itself.

Yes, this clarity is actually good - you come in knowing that the company has no culture, and you're not family. All performance, no illusions.

Better than being propagandized to love your terrible job.

There _is_ a culture at GS, or any other investment bank, and it is designed to bring in the right sort of people.

I never worked at GS, but I do work in finance and some elements of this culture I enjoy. E.g. at my last place, we had no perks, ping pong tables, gym discounts, fancy office etc. (the office building was cheap ex-factory floor at the suburbs), but the salary was above the market. I liked it, "don't tell me what to do with my money"

You're right, all groups of people have norms. I used culture to mean the fluffy, icky, non-true kind of talk about what management values.

That was the culture at my first job out of college - no perks, but above-market compensation. I look for that everywhere I work now too, and instituted it at my last startup. Everything else just seems childish cargo-cultish BS by comparison.

Unfortunately in the US the tax system means perks can be substantially advantageous to both the employer and the employee. Otherwise I too would prefer salary over perks.

Yes, you and dilemma make great points. I Agree, that given these companies exist this is beter than a pretence at being 'nice'. However, it's the prediminance and ruling of our lives by the existence and systemic power of such unvalues that is what ruins lives (time, overwork), and the environment. It's simple agent shortish term maximising, for a money game, rather than what would be better: a human / AI collaborative effort to figure out optimal outcomes, and work towards them in informationally rich ways.

Wouldn't the world fall apart if GS bankers weren't working at 100% capacity around the clock?

Those ideas are and probably always will be in deep conflict. Nobody said it has to be easy.

>Here, we're exposed to a company that does that and there's contempt about how the organisation expresses itself.

HackerNews hates banks. SV's capitalism is good, Wall Street's is not.

>Here, we're exposed to a company that does that and there's contempt about how the organisation expresses itself.

No, there's contempt about what the organization does. We like that they're honest about being vampire-squids on the face of humanity.

Of course they don't have "people". Every large organisation has a human resources department. The clue is in the name "human resources"; they are just resources.

I recently had to lay off a couple of people in my department (part of a larger cut overall) and it is honestly the hardest thing I've ever been through in my professional career.

The only saving grace is that, as developers, they could (and did) go right out and get another job immediately. Such is the way of the software industry.

Getting fired is objectively worse than firing. Getting fired is objectively worse than firing multiple people.

Laid off isn't the same as fired. I've had to lay off people a number of times. Sometimes it's fine, sometimes it's really not. Depends on the person and circumstances. Just because it's usually worse for the person being laid off doesn't mean that it's not unpleasant for the rest of the people involved.

BTW I have also been laid off. Worked out really, really well for me as I was given a chunk of cash, paid leave and walked into another job. I obviously realise I was in a very privileged position but I just wanted to point out these things are rarely black and white.

I've done them all, so I can state with confidence you are objectively wrong about the subjectivity of the situation.

So the person who gets told to simply find another job in a few weeks is better off than the supervisor that has to develop a plan to systematically fire their best employees over the course of months all while also not being sure when their boss will do the same to them?

It sucks all around. No one enjoys having to downsize.

Heaven forbid some trader (probably under management direction) have a bad quarter and threaten the partners' profit payouts.

I guess you don't have to worry about morale in a place like GS, where 5% of the workforce is laid off every year. Everyone there has bought into the dog-eat-dog workplace before starting.

That's not how the recruiters made it out to be, though they do provide good food at university promotions.

Goldman Sachs paid 37 and 38 percent of its revenues to employees in 2013 and 2012, respectively [1]. That is on par with America's recent 44 percent wage share of GDP [2].

[1] http://www.bloomberg.com/news/articles/2014-01-16/goldman-sa...

[2] https://fred.stlouisfed.org/graph/?g=2Xa

.44 * .85 is 37.4.

15% below average is not on par imo.

For many people on HN or at GS, that is basically the tco for their a car every year (at a minimum).

It depends on what the variance of the distribution is and how skeweded it is.

5% is a low number these days.

Not sure might be they stack rank and fire the 'bottom' 5%

That's exactly what they do. It's heavily based on performance evals. I remember the first year I was there, we were told it'd be around an 8% cut. Our team lost exactly that 8% in headcount.

Reduction is different than the annual culling.

It depends. Each company makes the rules here explicit and visible, as it is the most important thing for any trader.

E.g. at BlueCrest, each trader used to start a year with clean track record and some allocated capital. If you lose 2%, your allocation is halved. If you lose another 2%, you are out. However, if you won 5%, you can risk it, only the initial allocation matters.

For me, this policy is strange, as it clearly incentivizes people to take more risks at the end of the year (and risks are the currency here, you don't want to be predictable), so I assume the policy is different now. But it is always explicit.

sorry just curious why you say this policy incentivizes more risk at the end of the year?

is there an upside? explicit bonus/P&L part of it?

Because at the beginning of the year, you have to be extra careful and take more cautious trades to not step outside your 2% loss limit, but at the end of the year, assuming you are successful, you can afford e.g. 5% loss limit, as you have already made 10% in profit, so you are able to engage in more risky trades.

As this policy were made public at some point, and you usually don't disclose your working risk management profile to the outside world (as it can and will be analyzed and exploited), I can assume that BlueCrest now uses a different approach internally.

Got it. Thanks. The assuming successful by end of the year is an important part.

At the same time, some traders hit a profit number during the year they are happy with and then try to lock it in, choose to go risk off and just coast till the end of the year.

Especially if a trader feels they don't get paid for risk towards year end - this option is even more attractive.

Assuming the goal is to make profit and not just don't get kicked out. Traders who got lucky mid year not taking enough Q4 risk happens. Some firms step in if they see too little risk from a desk.

Very few funds are able to keep risk management info private for very long. People move. People talk. Some trading rules can be reverse engineered in data but this is easily spoofed.

BlueCrest closed last year and returned outside capital, so I agree things probably look very different there now.

You could have different end-of-year dates for each trader...

If you lost 2% last year and you're down 2.01% on 12/1, you are out. At that point everything is roulette and you have no incentive to make conservative trades. You're out anyway so it's go big or go home, because you're probably going home.

But if you are down only 1.99% you get to stay and get a totally clean slate in a couple weeks. That is one incentive.

Also there is no go big or go home as you approach these thresholds, VaR scales back and trades are stop lossed to prevent exactly what you describe.

Some traders would just bet it all the first day and go home in January if they lost. Why wait till the end of the year? Do it now! Coin flips are coin flips. The finance industry has attracted people with gambling issues.

Risk Management rules are in place to prevent that kind of risk taking. But obviously some traders slip through risk procedures and lose huge amounts of money on bad trades, they also go to jail for it.

That's also how taxes work. If you are profitable, you can risk your taxes in addition to your profits after taxes in a business venture.

I hated prop trading desks like this. All that leverage and no tolerance for it!

The partners used to just recycle underperforming minions into cafeteria slurry. What you're seeing is them going soft.

('sa joke.)

After reading the comments here before the article I expected something inhumane about GS's treatment of their employees, but I couldn't find it, I'm mystified.

Is it about the fact that they didn't announce it company wide that they are going to lay off 443 employees over the course of year? I mean they have 38,400 employees according to Wikipedia.

Layoffs are capitalism and efficiency and all that so nothing to hold against GS but I find it strange how difficult it is to disloge the upper echelons even after unethical, reputation damaging and near criminal activities.

The banks then pay billions of dollars in fines. And this time the smug ones do not weigh in with their usual acerbic insights about shareholder interests, other wise used to justify such shareholder interest saving measures as firing workers on christmas.

The executives lose nothing, do not get prosecuted and walk away with hundreds of millions of dollars and no one is in any particular hurry to fix this persistent agency problem in capitalism.

A certain segment of the population always appears to be immune to the rules that apply to the rest, whatever the dispensation. They rules don't apply or there is always just enough leeway designed in to let them through.

>Layoffs are capitalism and efficiency and all that so nothing to hold against GS but I find it strange how difficult it is to disloge the upper echelons even after unethical, reputation damaging and near criminal activities.

I think capitalism is best understood as a system that first, last and always enshrines that upper echelon. Associating capitalism primarily with efficiency or even commerce is the precise error producing any "strangeness". Nothing is strange about it doing what it's there to do first: produce wealth for the upper echelon, such wealth legally taken from the producers.

Another NY state corp, IBM, have done this for years. I'm surprised GS didn't call them 'resource actions'.

I'm embarrassed to say can't find the legend on the graph [1]. What do the other colors mean?

[1]: http://www.bloomberg.com/news/articles/2016-10-26/the-goldma...

Don't feel too bad. I just commented the exact same thing. Sloppy charting...

They are just the individual notices of layoffs.

If the whole damn place would go under we might get a little bit of our Republic back! Unrestrained, unrepentant, regulatory capture. The nucleus of corruption in the United States.

I don't see the point here... GS lays people off. And? Why is this news?

I am sure people who do not turn the volume down in time while in the office on sites that have shitty auto-playing videos at full volume, or pause them, have a higher probability of making the list.

What's up with the chart in the middle of the article? It's a color coded, stacked, bar chart but it has no labeling of what the colored stacks represent.

Seems like the safest place to work at Goldman Sachs is in their HR department

Bounced out as soon as the video auto-played.

Ruthless and inhuman

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