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Morgan Stanley: The 360 Performance Evaluation Process

Categories: Performance

▪ 1993: Morgan Stanley (MS) implements firmwide 360-degree evaluation process for over 2,000 professional employees at cost of over $1.5M.

▪ MS’s HR department is called Office of Development; Chief Development Officer is Tom DeLong

The New System:
▪ Guiding Principle: 360-degree feedback solicited from:
o Superiors
o Peers
o Subordinates o “Internal Clients”

▪ The Process:
▪ Professional Employees identify folks in Firm with whom they regularly interact. ▪ List of Prospective Evaluators (Evaluation Request Form or ERF) is reviewed by evaluatee’s manager. ▪ ERF submitted to Office of Development ▪ Office of Development distributes eval forms to the people on the ERF, collects complete evaluations and processes them into Year-end Packet for each evaluatee.

▪ Concurrently, each professional completes a self-evaluation

▪ Evaluation Criteria:
▪ A big challenge was deciding on criteria. 4 broad categories won out:
• Market/Professional Skills (analytical skills, market knowledge)
• Management and Leadership

• Commercial Orientation (client relationship management)
• Teamwork/One Firm Contribution

▪ Generally, an open –ended form asking for specific info on strengths and weaknesses across all four areas was used.

▪ Investment Banking Division also used a 5 point scale (1=unsat, 5=outstanding) ▪ Performance Criteria were increasingly rigorous as one progressed up the organizational ladder (Managing Directors held to higher standard than analysts) ▪ Subordinates typically only answered questions about their superiors’ management and leadership abilities

▪ Evaluation Director Manages the Process ▪ Office of Development consolidated data into a 10-20 pp book for each person evaluated (“Year –end Data Packet” or “The Book”) ▪ Raw Data is then synthesized by Evaluation Director (senior operating manager) ▪ Evaluatee never sees actual comments made but did see the Evaluation and Development Survey form compiled by the Evaluation Director.

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▪ Evaluation and Development Survey served as agenda for the Performance Review Discussion held between the Evaluation Director and the Evaluatee. ▪ Some divisions based promotion and compensation decisions on the Evaluation and Development Surveys. ▪ Managers rated these discussions as some the more difficult tasks of their jobs

▪ Assessing the New System’s Effectiveness:
o Pro’s:
▪ Consensus that new system was improvement over old ▪ In old system, people had not generally received individual Feedback
▪ New system’s volume of data and written format contributed to perceptions of fairness and objectivity

▪ “System advantages those who may not be as good at promoting themselves”—MS Managing Director

o Con’s/Issues to be Addressed:
▪ Too much heft given to numerical data in comparing individuals even though the numbers were just as subjective as the comments. ▪ Perception of grade Inflation; people did not want to be “too honest” in these evaluations ▪ System Architects had intended this new system to be focused on personnel development and not compensation and Promotion decisions. However, some divisions used the data from the performance evaluation process as basis for compensation and promotion decisions. ▪ Some complaints that the “system captures soft qualities that don’t really matter”

▪ In the End…
o Issues Remained.
o Firm tweaked the system year to year.
o In general, there was growing commitment to the system:

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Morgan Stanley: The 360 Performance Evaluation Process. (2016, Nov 01). Retrieved from

Morgan Stanley: The 360 Performance Evaluation Process
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