Purpose of Project Voyage

According to a report by Bloomberg, the project is designed to help develop talent in growing regions while capitalizing on the contributions of junior employees. This shifting of managerial roles is intended to not only reduce real estate costs but also aid in cultivating a skilled workforce in less expensive markets.

Cost Implications

The financial advantages of relocating managers are profound. Goldman’s operational costs for office space in Manhattan, which averages around $80 per square foot, starkly contrast with the $26 per square foot in Salt Lake City and Dallas. This significant difference underscores the potential savings from the initiative.

Investment in Dallas

As part of the expansion, Goldman Sachs is investing $500 million in a new campus in Dallas, scheduled to open in 2028. This development is projected to increase the bank’s workforce in the area significantly, bringing the total employee count to approximately 5,000.

Cost of Living Considerations

Employees moving away from New York City can expect improved disposable income due to lower living costs. New York City’s cost of living is approximately 130% above the national average, with median rents around $7,749 per month. In contrast, Salt Lake City’s living costs are just 10% higher than the national average, with median rent at $1,944 per month, while Dallas is merely 2% above average, with median rents of $1,497.

Impact on Workforce

Project Voyage is set to affect about 3% to 5% of Goldman Sachs’ total workforce of 46,500 employees within the coming months. The Wall Street Journal reported that layoffs are expected to occur earlier than usual, specifically this spring rather than the traditional timing in September.

The decision regarding which employees will be laid off or relocated is currently being made by divisional heads, with an emphasis on reducing the number of vice presidents (VPs). This group has been identified as a significant cost center within the organization.

Financial Context of Layoffs

As reported by Business Insider, the focus of these layoffs will primarily be on vice presidents, considering their intermediary position between associates and managing directors. Data from Glassdoor indicates that VPs at Goldman Sachs can earn upwards of $325,000 annually, with third-year VPs potentially exceeding $1 million in total compensation including bonuses.

The Road Ahead

Launched in the fourth quarter of 2024, Project Voyage will continue to evolve as a multi-year effort aimed at reducing costs through strategic relocations and workforce adjustments. This approach aligns with Goldman Sachs’ long-term strategy presented during the 2020 Investor Day.