Goldman Sachs’ New Performance Review System May Harbinger For New Job Cuts Next Year

U.S. investment banking giant Goldman Sachs Group (GS) will adopt a performance review system that could potentially lead to more job cuts next year.

Reuters reported Monday that according to an internal memo, up to 10% of its 39,000 employees will be graded as “underperformers” this year.

In the new system, 25% of staff will be graded as "exceeds expectations," 65% will receive the comment "fully meets expectations," and 10% will be designated as "partially meets expectations" in their annual reviews scheduled for December.

Workers will also have more frequent performance updates from their managers -- at least three times annually beginning in 2021.

Goldman Sachs' new chief of human resources, Bentley de Beyer, is fine-tuning the bank’s performance review process to make it more transparent, said bank spokeswoman Leslie Shribman.

"The dynamics of today’s challenges underscore the need for more transparency in feedback and even stronger communication between our people and their managers," Goldman Sachs Chief Executive David Solomon wrote in the memo.

The principal objective of the new system is to let workers know where they stand in terms of performance – some 90% of staff are currently working from home due to the COVID-19 pandemic.

Historically, Goldman Sachs has imposed rigorous annual reviews which typically lead to the firing of 5% of the workforce, usually for failing to reach performance targets.

Reuters noted that the pandemic is changing how some big companies are revising their human resources systems.

While some major banks, including HSBC (HSBC) have cut thousands of jobs since the pandemic, Goldman Sachs has not had a major job cull this year.

As of June 30, Goldman Sachs had 10% more workers than last June.