Situation analysis:
The Capital Markets Services(CMS) division, which was 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. 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 important players in the banking and insurance industries, as a market coverage professional
The financial services industry is characterized by firms where individual professionals attract business and the ability of the firm to retain clients is solely dependent on the entrepreneurial skills of professionals. Thus, in a market typified by clients demanding immediate solutions, Morgan Stanley’s attempt at creating a consensus-based interface can be seen as a process projecting the firm – and not the individual – as the business facilitator; this necessitates the appointment of skilled executives who not only possess the ability to market and sell but also display the willingness to obtain approval through franchise and collaboration.
The nature of Rob Parson’s responsibilities, though challenging, involved resurrecting Morgan Stanley’s capital markets’ business and had witnessed a high turnover rate in the past. This position within the CMS division not only requires a conceptual understanding of investment banking procedures, but also mandates an ability to create business opportunities through persuasion and negotiation, in addition to sensitivity to client objectives.
Rob Parson, despite his unconventional education, has been acknowledged for his ability to interface with clients and sell products, but at the cost of company culture and the vision of its senior management of an environment that promotes teamwork and emphasizes respect and dignity of its employees.
With his 360 degree performance evaluation indicating dissatisfaction over the level of professionalism he displays and concerns over the nature of his volatile personality, a decision regarding this promotion needs to be taken
Problem Statement:
To address the issue of Rob Parson’s recommendation for promotion to Managing Director at Morgan Stanley within the framework established by the repercussions of his nonconformity to company culture and the constraints imposed by the requirements of his position.
OPTIONS:
1. Recommend Rob Parson for promotion: This option entails a decision recommending Rob Parson for promotion based on the discretion of the promotions committee 2. Defer the recommendation for promotion: This option entails withholding the recommendation for Rob Parson’s promotion at this stage.
EVALUATION CRITERIA 1. Promotion decision: This criteria evaluates the possibility of Rob Parson’s promotion and the repercussions that will accompany the verdict, given a particular course of action is pursued. 2. Revenue repercussions: This criteria evaluates the impact of a particular course of action and its outcomes on company revenues and market share. 3. Customer relationship repercussions: This criteria evaluates the impact of a particular course of action on Morgan Stanley’s customers and their interaction with the CMS division. 4. Cultural repercussions: This criteria evaluates the impact of a particular course of action on the other employees of Morgan Stanley and analyzes the precedent that the action sets in the organization.
EVALUATION:
RECOMMEND ROB PARSON FOR PROMOTION 1. Recommending Rob Parson for promotion involves the completion of the evaluation and development summary, which would eventually be reviewed by a promotions committee. The committee, a group of senior managing directors from across the firm, is likely to reject the recommendation based on the assessment contained in the summary and Parson’s increasingly negative 360 degree performance appraisal reports; and in event of a rejection, Parson is unlikely to continue as Principal, given his personal managerial ambitions. 2. If Rob Parson is recommended for promotion and the promotion is rejected the possibility that he may exit the company gains momentum. In such a case, and given the individualistic nature of business in the financial sector, Parson’s exit may trigger an immediate fall in revenues and market share from its existing 12.2%. In the unlikely scenario where Parson’s recommendation for promotion is accepted, it can be assumed that possible revenues and market share may – at the very least – remain constant. 3. In an industry characterized by the presence of firms where the ability to attract and retain business is solely dependent on individual entrepreneurial skills of professionals, and marked by demanding and competitive clients often engaging in aggressive price negotiations, the possibility that large-scale migration of the first-time customers that Parson attracted might take place in the event of his departure from Morgan Stanley exists. 4. Such an action however might set a precedent that attracting business at the cost of company culture was acceptable and would therefore be detrimental to the efforts of the senior management at creating an environment that fosters teamwork, collaboration, and respect.
DEFER THE RECOMMENDATION FOR PROMOTION: 1. Deferring the recommendation for promotion would still require the completion of the evaluation and development summary, which would then form the basis of Parson’s annual performance review. Such a course of action will not only provide Parson with an opportunity to improve his interpersonal skills over another year as Principal, but will also enable effective integration into the cultural norms at Morgan Stanley, thus creating a base for likely acceptance of any future promotion recommendation by the senior management committee. 2. The possibility that Parson may not continue as Principal if the recommendation for Promotion is deferred or the promotion itself is denied is extant; and thus an exit staged by Parson could lead to a decline in the 12.2% market share that Morgan Stanley currently commands. 3. Transacting business with firms in the financial services sector as has been highlighted in this report, requires skills that range from an intuitive ability to analyze and comprehend the market to an aggressive interface in meeting client expectations of price-points and possible returns. Thus, in the event that the recommendation for promotion is withheld, Rob Parson may decide to exit Morgan Stanley which will possibly translate into a reduced client base for the firm. 4. It is the belief of this report that any organization is a greater whole than the sum of its individual entities, and it to that effect that a sentiment of belonging is echoed by these entities. Such a course of action will therefore set a precedent that the company does not reward business at the cost of teamwork and partnerships, and will foster a strong spirit of cooperation and collaboration.
RECOMMENDATION:
It is the recommendation of this report that the proposal for Rob Parson’s promotion be deferred for another year, thus setting a precedent for company culture over business.
ACTION PLAN:
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 contribution to business at Morgan Stanley. It should also be conveyed that the company would be reluctant to lose a performer like Parson and that the management was willing to explore the possibility of a mentorship program or professional counseling to assist Parson’s interpersonal development.