Morgan Stanley, a leading U. S. Investment Bank, was attempting to transform its work environment to one that fosters teamwork but promotes innovation as well. This vision was developed under the leadership of the new president John Mack and his executive team. President Mack was looking for people to “shake up the culture. ” With heavy resistance, he recruited Paul Nasr to be the Senior Managing Director in Capital Market Services. Paul was a highly regarded banker with over twenty years of experience.
He knew that one of Morgan Stanley’s weak areas was Capital Market Services, an area where he had been successful in the past. Paul also knew that it would take more than a traditional corporate banker to penetrate this market. The Capital Markets Services(CMS) division, which has established as an interdisciplinary concern to address the issues of focused client attention and cross-divisional collaboration, required professionals who not only had domain specific industry knowledge but were also skilled at responding to client needs by designing products in collaboration with product specialists within Morgan Stanley.
Market coverage professional to be compatible with the staff of other departments, but can’t rely entirely on product designers, because they do not understand markets and customers, do not know the customer’s needs. It is important to fully understand the market, product, and customer information in three areas and needs. That person must be energetic, aggressive and innovative. It was these requirements that led to the appointment of Rob Parson, a managing director at a smaller firm with connections to some of the players in banking and insurance industries, as market coverage professional.
That’s why he recruited Rob Parson. Rob developed relationships with the important players in the banking and insurance industries and a strong reputation. Rob is not easily discouraged or intimidated and knows what it takes to get the job done. His drive and ambition allows him to connect with his clients but sometimes distances him from his co-workers. “Difference in a work culture and environment see only what employee know1”. Employees weigh what they put into a job situation against what they get from it. Then they compare their input-outcome ratio with the input-outcome ratio of relevant others.
Here important management issues associated with performance appraisal and performance management in the Capital Market Services of Morgan Stanley. The nature of Rob Parson’s responsibilities, though challenging, involved resurrecting Morgan Stanley’s capital market business and had witnessed high turnover rate. This position within the CMS division not only requires a conceptual understanding of investment banking procedure, but also mandates an ability to create business persuasion and negotiation, in addition to sensitivity to client objective.
Rob Parson, despite his unconventional education, has been acknowledged for his ability to interface with clients and sell products, but at the cost of the company culture and the vision of its senior management of an environment that promotes teamwork and emphasis respect and dignity of its employees. Parson’s success at generating business was offset by performance reviews from internal co-workers that painted him as a poor fit in the firm’s collaborative culture.
Parson’s performance issues had been making his two immediate supervisors, Paul Nasr, the senior managing director in early 1996 and Gary Stuart, the just promoted managing director in early 1997 faced the dilemma whether to promote Rob Parson as managing director. Moreover, Stuart felt certain that Parson would leave the firm if he was not promoted. This would mean losing a valuable employee and a star producer and creating an empty seat in an area important for the firm’s business. Morgan Stanley needed Parson to attain the firm’s strategic business objectives and even Stuart felt strongly that Parson would be impossible to replace.
Finally, to assess performance among its employees, Morgan Stanley created a 360-degree performance evaluation system that allows an employee to be evaluated by superiors, subordinates and peers. The purpose of 3600 evaluation is to emphasize teamwork, cooperation, and cross selling. However, there was little consensus on what the 3600 evaluation actually meant in practice since its implementation in 1993. With his 3600 performance evaluation indicating dissatisfaction over the level of professionalism he displays and concerns over the nature of his volatile personality, a decision regarding his promotion needs to be taken. Four dimensions of 3600 performance evaluation: marketing/professional skills, Management/leadership skills, Business-driven, Team work) Nasr is in a dilemma as to how he felt the situation was further exacerbated by the fact that Parson had been the only person that he had hired through prior personal connections. He hired only one individual in Morgan Stanley from his previous life, Rob Parson. He is thinking that group felt that he was his protector or his godfather. On other hand, Parson has over ten years of work experience, and has a good relationship.
Rob said: I’m not the typical Morgan who, I’m not quite used to the culture. I will always be a conflict, and I never really stayed in school. I don’t really love the work, but Nasr was personally, I think you can follow a very good Executive, so I came to Morgan Stanley. Nasr also mentioned that Rob doesn’t have time to wait for the consensus of the team, he is ahead of people, and customers want to know the answer-the first time, instead of waiting for us to establish there is unanimous consensus. Every time customers visited New York, they would hope to have dinner with Rob.
Nasr said: Rob was promoted to top management as early as last year, but I have a harsh for him than for anyone, because he used to be with me. I don’t want anybody to question my impartiality. Rob Parson and Paul Nasr engaged in a Psychological Contract during recruitment. Paul needed someone to take on a challenging job and Parson wanted the opportunity to be creative as well as the chance to achieve a promotion to managing director. Parson is a Type “C” manager because he’s interested in his own opinion rather than those of others. The majority of the time he was right.
When he was, it made his co-workers feel undermined which created animosity. Role conflict originated with the President, John Mack. First, Mack developed a culture that fosters teamwork, then he actively sought people to shake things up. Paul Nasr in turn, hired Rob Parson, an aggressive individual who’s not necessarily a team player, to fill a position that required his unique personality characteristics. Paul then appeared to be concerned about a performance evaluation that describes those characteristics and how they don’t fit the Morgan Stanley culture.
Rob seemed to be exactly what they needed and wanted but now he isn’t…the culture didn’t change nor did Rob’s personality. How can they expect employees to modify their behavior to fit the environment when the company’s hiring practices don’t support it? One theory in effect is the expectancy theory. Parson was only interested in producing results which he expected would result in his promotion to managing director. Herzberg’s Two-Factor theory of motivation is also present.
Parson’s dissatisfaction (extrinsic) factor was company procedure and his satisfaction (intrinsic) factor was responsibility, possibility of growth, and advancement. In order to fix this problem, Morgan Stanley did a great job in describing the work environment in their vision and in articulating how each position must contribute to that vision in the job descriptions. However, I’m not sure if Paul did a good job in stressing this to Rob during recruitment. I would keep the 360 degree evaluation system because it provides a more detailed analysis of each employee’s performance.
However, everyone shouldn’t be evaluated on the same criteria and the evaluation shouldn’t be the only factor in determining promotions. A principal shouldn’t be evaluated using the same criteria of a managing director or an associate. Also, a principal in the capital market services division shouldn’t be compared to a principal in another division. In both cases, the job requirements are different. Next, I would couple the performance evaluation, client satisfaction and significant results to determine promotion.
One downfall of using only the 360 degree evaluation is that animosities can sometime cloud a fair and impartial judgment by co-workers. I would articulate what type of work environment I expect in the Capital Market Services Division to everyone within the division and how this supports the firm’s vision. I would articulate what type of management characteristics I would expect to see within the division. Rob appeared to have the expertise of a managing director which would explain why his peers might have difficulty working with him. But there’s more to being a managing director than just expertise.
It also entails the articulation of departmental vision and leading by example which Parson has difficulty doing. The decision to defer the recommendation for Rob Parson’s promotion and the reasons for the same need to be conveyed personally, a necessity considering his efforts and contributor to business at Morgan Stanley. It should also be conveyed that the company would be reluctant to lose a performer like Parson and management was willing to explore the possibility of a mentorship program or professional counseling to assist Parson’s interpersonal development.
There is no doubt that Rob is eligible to be promoted to a managing director considering his performances about the excellent achievements of developing finance institution client’s relationship, praiseworthy contributions of raising Morgan Stanley’s market share from 2% to 12. 2% and ranking from the tenth up to the third, and the comprehensive knowledge of capital markets business. However, in my opinion, Rob is not suitable to be promoted to senior managing position up to next inside performance evaluations come out. Two reasons make up, first, the situations which the organizations faced, nd, second, the situations which Rob faced. First, according to cases, we can see that the capital markets division encounters some severe straits for a long time, including a dramatic turnover rate and serious understaffed.
Those issues won’t be ignored and be even exacerbates if Nasr promoted Rob to managing position since Rob is bad as a team player and always works as a individual, not a community. We can expect that those problems will be worse. Secondly, following the case, Rob is with his self-evaluations with some needs which he should improve such as acquiring some patience and moderate attitude when he works internally.
The goal should be to clear up any ambiguity regarding company culture. Organizations can increase economic performance by investing in employees. However, this is done through high involvement management. The Academy of Management Executive journal published an article called Putting People First for Organizational Success which identified seven key management practices: “Employment security, Selective hiring, Effective self-managed teams, Comparatively high compensation which is based on organizational performance, Extensive training, Reduction of status differences (between management levels), and Sharing information with employees. They also discussed several reasons why this is difficult which I think relate very well to this case study.
First, long-term goals are difficult to attain because of the short-term pressures placed on managers such as immediate financial results. Secondly, organizations tend to destroy competence by forcing experts to resort to novice decision making processes. Third, managers don’t delegate enough and finally, there are misconceptions about what constitutes good management. Organizations must realize that the key to managing people lies with the manager’s perspective and that implementing and seeing results takes time.
Courtney from Study Moose
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