Case Analysis: Firmwide 360 Performance evaluation Process at Morgan Stanley

Group 6, Section C

IIM INDORE Case AnalysisThe Firmwide 360 Performance Evaluation Process at Morgan Stanley

Human Resource Management

Professor: Patturaja Selvaraj Submitted By: Group 6, Section C

Name
ALOK BHARTI ANIRBAN GHOSH GAUTAM SETHI KASHYAP SURUCHI BRHAMPRAKASH MARANDI SANJAY KUMAR SHIFAZ SALIM SUDEEP TRIPATHY

Roll Number
2011PGP529 2011PGP545 2011PGP633 2011PGP686 2011PGP717 2011PGP873 2011PGP951

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Case Analysis: Firmwide 360 Performance evaluation Process at Morgan Stanley

Group 6, Section C

INTRODUCTION
Morgan Stanley (MS) is a leading U.S. investment bank. It was founded in New York on the 5th September 1935 by Henry S. Morgan, and Harold Stanley. Since its inception it has been transforming itself into a One-firm company under the leadership of John Mack (President of MS since 1993). MS changed its presentation towards its clients in a more unified way. Employees have become the main source that helps Morgan Stanley to achieve it. Organizations are changing fast - diversity is valued as a critical component of a business environment that encourages new and innovative approaches to accomplishing organizations mission. Morgan Stanley targets to be the top investment bank worldwide and to be a company of choice for clients, people and shareholders. The company gives a big importance on offering the best products and professional services but due to daily global changes it was necessary for MS to identify the strengths, weaknesses, and areas needing professional development. One important area of change is in how an individual and a team performance is evaluated. To achieve this, MS implemented a 360 Performance Evaluation Process for over 2000 employees at a cost of $1.5 MM. This process came into being by the efforts of Tom DeLong, the Chief Development Officer at the MS Office of Development.

KEY ELEMENTS OF THE NEW EVALUATION PROCESS

Traditionally, managers alone were responsible for evaluating employees. In most cases evaluations took place once a year and were viewed more as an awkward and unwelcome paperwork task rather than a tool to improve individual and organizational performance. Today, organizations are increasingly moving toward systems which involve more people in providing feedback, provide more detailed information, and have the flexibility to report on the performance of both individuals and teams. One common approach is the 360 Feedback. It typically collects performance data from the people who work most closely with an individual. An evaluation team might be comprised of managers, fellow team members, direct reports and even clients. Reports are then prepared and delivered to the person being evaluated. The 360 Feedback usually includes numerical ratings on specific performance criteria as well as space for evaluators to provide comments and descriptive information. There were four key elements of the new system as described below:

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Case Analysis: Firmwide 360 Performance evaluation Process at Morgan Stanley

Group 6, Section C

I. y y

THE 360 FEEDBACK Principle: Feedback solicited from superiors, peers, subordinates and internal clients A four step process: 1. Employees submitted the ERF (Evaluation Request Form) which listed prospective evaluators identified by the evaluatee who they had regularly interacted with and who would be in a position to give substantive feedback on their performance 2. ERF was discussed with the Evaluation Director (hereafter referred to as the ED), who typically was the evaluatees manager/supervisor 3. ERF submitted to the Office of Development which submitted to the evaluators listed 4. After being evaluated they were processed into a Year-End Data Packet for each evaluatee

II. y y III. y

SELF ASSESSMENT Consequently, each evaluatee also completed their self-evaluation process. This was viewed as an important developmental tool for employees to reflect on their performance and incorporate their perspective into the final result of the process EXPLICIT EVALUATION CRITERIA Deciding upon the evaluation criteria for assessment was a particularly tough task, given the complexity and versatile nature of the businesses

After much debate, four categories were identified:     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.

y y

Investment Banking Division also used a 5 point scale (1=Unsatisfactory, 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

IV. y

EVALUATION DIRECTOR MANAGING THE PROCESS Office of Development consolidated data into a 10-20 pp book for each person evaluated (Year end Data Packet or The Book)
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Case Analysis: Firmwide 360 Performance evaluation Process at Morgan Stanley

Group 6, Section C

y y

Raw Data is then synthesized by Evaluation Director (senior operating manager) Evaluatee never sees actual comments made but does see the Evaluation and Development Survey form compiled by the Evaluation Director.

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

NEW SYSTEMS EFFECTIVENESS y PROS

    Consensus that new system was improvement over old In old system, people had not generally received individual feedback New systems volume of data and written format contributed to perceptions of fairness and objectivity System advantages those who may not be as good at promoting themselvesMS Managing Director

y CONS
   Too much importance 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 New system was intended to focus on personnel development and not compensation and promotion decisions. However, some divisions used the data from the process for making decisions pertaining to the latter  Some complained that the system captures soft qualities that dont really matter

PROBLEMS IDENTIFIED AND THEIR SOLUTIONS Problem No. 1: Evaluation criteria Solution: Evaluation criteria should be divided into categories and should be more specific
to the jobs. Each category should have its own rating - numeric evaluation that ranked

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Case Analysis: Firmwide 360 Performance evaluation Process at Morgan Stanley

Group 6, Section C

individuals on a 10- point scale ranging from Unsatisfactory (1) to Outstanding (10) as this will be more specific than 5-pt scale. We came up with the following criteria: a) Personal skills  Interpersonal relations and communication skills  Flexibility, creativity, initiative and commitment  Ethical and moral behaviour b) Professional skills  job experience, knowledge and skills  Training and transferring new knowledge and skills c) Teamwork skills  Work participation (mentoring, coaching, job enlargement, job rotation, transfers, promotions)  Evaluating others (word usage, negative traits) d) Organizational skills  Sense of belonging to the organization (learning job procedures, being familiar with its objectives) e) Negative  Absenteeism  Investment returns on person/team

Problem No. 2: To achieve correctness of the questionnaires Solution: The following can be done to achieve the correctness of the questionnaires:
y Design a questionnaire which will include simple and pointed questions with specific answers Y/N to prevent inaccuracy Or prepare another test for the evaluated employees which will examine their abilities to carry out duties. Comparing questionnaire with this type of test should help us to reveal the correctness of the survey y Try to persuade employees about the assets of professional attitude which can help in companys progress and achieve greater outcomes in addition to reach higher profit y The whole idea of a feedback is to chip off a few rough corners and then help employees do what they do best. It should be put into attention, that the feedback provided is only informative and that there will be no consequences (i.e. dismissal) resulting from negative feedback

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Case Analysis: Firmwide 360 Performance evaluation Process at Morgan Stanley

Group 6, Section C

Also it should be put to their attention that based on this feedback, there will be positive changes done in the company (e.g. if an evaluator writes something about a colleague not having a particular skill needed on the job, then the evaluatee gets training in that skill). This will lead to them answering truthfully

Individuals who provide feedback must get training about providing constructive feedback. Also, the supervisor must be capable of understanding the feedback so that clarification can be given and right choices are made in the process

Problem No. 3: Fighting for points Solution:

y Individuals will not be told the number just get word evaluation; evaluator will keep the numbers to himself y Based on numbers, evaluator will divide the individuals into several groups (i.e. excellent, good, satisfactory, unsatisfactory, etc.) and the person being evaluated will be told to which group he/she belongs y Talking about evaluation should be prohibited as it may lead to comparison, demotivation and (in some cases) depression in the employees
y

Supervisors, HR staff, and other critical managers must assist the employee to understand and develop action plans based upon the feedback and help him to perform better the next time around

CONCLUSION
When setting up the team, the role of an evaluation analyst will be vital. The evaluation process will also be influenced by whether or not the team is working in collaboration with or concerned with planning at the higher level or at a lower level. In either case the evaluation will be influenced by the local or strategic contribution. The evaluation criteria that will support choice should be defined at the beginning of agreement with the planning team, so that they can be incorporated by the team into their design criteria. Also, the entire process should be transparent and fair, to foster the employees belief and trust in the system of evaluation.

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