Goldman slashes pay as revenue plunges
According to this article, Goldman Sachs has slashed employee compensation following a reduction in the revenue generated by the company. While the estimated returns by financial analysts was $2.43 per share and a higher revenue, the actual share price rose to $2.88 per share while the total revenue dropped by 20%. In response, the company set aside 35% of its revenue as employee compensation rather than the usual 43% of its revenue.
While this move reduces the costs and thus makes sense financially, it however punishes the employees for mistakes they are never responsible for. Therefore, it is unethical for the company to cut the employee payment following only a one-time drop in the revenue. Furthermore, the drop in revenue occurred across the whole industry as rival firms like Bank of America, JP Morgan Chase & Co. as well as City Group also reported similar losses. The pay cut may also result to reduced motivation for work which may harm the productiveness of the firm and possibly lead to further drops in output.