Goldman Sachs (GS) -) is one of the biggest investment banks in the world. It helps corporations, governments, and institutions raise money and engages in trading and market-making activities across stocks, bonds, and commodities. It also provides advisory services to high-net-worth families.
The company's leadership in these markets has made it one of the best-known banks on the planet. However, it has also faced controversy surrounding its culture of long hours and high-pressure levels, and it settled a class action lawsuit regarding gender discrimination for $39 million in 2010.
On August 22, Goldman Sachs doubled down on another arguably controversial decision, which many workers won't like.
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Goldman Sachs takes aim at work-from-home
Goldman Sachs employs 40,000 people, including highly trained investment bankers and traders.
However, Goldman Sachs's demand for key services has declined over the past year due to inflation, rising interest rates, and economic worries. As a result, the company has been issuing workers pink slips to cut costs.
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For instance, last September, it let go between 1% to 5% of mid-level bankers in the U.S., London, and China. In December, it fired thousands of its staff, including 400 workers in its retail banking division. More recently, it announced it was eliminating 250 positions, including 125 managing directors.
CEO David Solomon's layoffs have reduced its workforce by about 9,000 people. That's likely made many of its remaining workers nervous, but it's helped keep the company in the black.
In Q2, Goldman Sachs's revenue rose 74% year-over-year to $26 billion. Its earnings tumbled 60%, but it still reported a profit of $3.08 per share.
The reduced headcount could strain the bank, making it more challenging to capitalize on opportunities once the demand for its solutions improves.
Perhaps that's why Goldman Sachs is aiming at workers again. On August 22, the company doubled down in its battle against work-from-home and hybrid work, urging employees to comply with its mandate to work from the office five days weekly.
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The push to get staff back into offices comes even as commercial property owners face declining property values due to high vacancy rates and higher interest expenses due to needing to refinance commercial loans at higher rates.
In New York City, home to Wall Street, office vacancy rates were 16.1% in the first quarter of 2023 -- a record high, according to JLL. In Q2, it rose again to 16.7%.
The risk of commercial property default and delinquency has captured the attention of Moody's and S&P Global, two leading agencies that have cut ratings on various banks this month.
The decision to make employees return to workplaces full-time could draw the ire of many hired during the COVID pandemic when work-from-home and hybrid work arrangements became a common hiring incentive.
Goldman Sachs isn't the only financial institution taking a harder line with its employees over work-from-home policies. Competitors Citigroup (C) -) and JP Morgan Chase (JPM) -) require workers to report to offices at least three times weekly. In June, Citigroup told employees that attendance could impact performance reviews and pay.
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