Rob Parson at Morgan Stanley

Rob Parson was a market coverage professional in the Capital Markets division. He had been hired by Paul Nasr and had generated substantial revenues since joining the firm. Unfortunately, Parson's reviews from the 360º feedback said that he was having difficulty adapting to the firm's culture. So Nasr faces the difficult decision to promote Parson to Managing Director. Nasr must complete Parson's performance evaluation summary and conduct Parson's performance review.

Question 1
What are the advantages and disadvantages of the 360º feedback system at Morgan Stanley?

When John Mack became President of Morgan Stanley in 1993, he brought a new vision to the bank named “One-Firm Firm”. That vision focused on performance which can be translated in creating value for the clients, the employees and the shareholders. Mack thought that could only be achieved through a culture that promoted teamwork and innovation and never sacrificed the firm’s integrity.

The 360º performance evaluation process was brought by Mack to Morgan Stanley with the intention to “encourage employees to conform to a new way of doing business that emphasized team-work, cooperation, and cross-selling”. It also intended to “provide comprehensive development feedback so that employees could continue to improve their skills in four areas: Market/Professional skills, Management and Leadership effectiveness; commercial Orientation; and Teamwork/One Firm Contribution”.

These systems had its strengths but also its weak points. Regarding the first group, the most obvious aspect is that the fact that it uses feedback from superiors, subordinates and colleagues, gives an overview of how and employee interacts with those around him and not only with its superiors, for example. By doing this, one can have access to different points of view that come with different work relations. For example, it is more common to have bullying relations between colleagues or between an employee and its subordinate, but not between an employee and its superior. Attached is also the fact that, the more feedback you have the easier is to reduce subjectivity. Of course one does not behave the same way with everyone else, but the fact that you have several reports can help you to notice a pattern of conduct or behaviour.

A second positive aspect it’s the anonymity. If we think in the bulling example again we can understand why feedback provided under anonymity is an advantage. This way, we can also reduce the odds of having deteriorated relations because of it. Thirdly, and was stated in the case, the evaluation process was design to provide “detailed” information that could help a superior to better access the overall performance and that could also help the employees to know where they were exceeding but also what needed to be improved. In short, the aim of the evaluation process was to promote self-development.

On the other side, the evaluation process could also be regarded as complex and unclear of to get the best of it. This is well described by a managing director that complained about how one could not really use to evaluation process to meet some of objectives proposed like being a “team player”.

Another disadvantage has also been highlighted above, the fact that no matter how detailed it could be, it will always have a certain degree of subjectivity which could undermine a superior’s judgment.

The 360º evaluation process can also arise some contractions, which actually happen in Parson’s case. If we look at the Annual Performance Evaluation Data Packet, Exhibit 1, we can see that one colleague outside IBD comments that Parson “has no qualms about asking them questions when I want to know something particular about their needs or interests”, while other comments that “sometimes, it is difficult to get a response (…)”.
The periodicity has also raised some doubts. Although it is suggested that the system is described as complex and time consuming, which are other two disadvantages, in Rob Parson case one could be led to think that Morgan Stanley could be some kind of mid-term evaluation. Paul Nasr is facing a difficult question as he did not “appreciate the extent of his (Rob Parson’s) interpersonal problems in working with people inside of the firm”. With the data packed he received, Nasr did not know whether he should or should not promote Parson’s. This means that Nasr did not have a full picture of Parson’s difficulties in fitting in and was not completely aware of the negative extent of his actions. This led us to think that it could make sense to implement a less time-consuming, more concrete and simple evaluation process that could be done in the middle of every year.

Finally, we also noticed another disadvantage in the 360º evaluation process: the system is not much of a help for situations like Parson. To be more concrete, Morgan Stanley wants team players, cross-firm interaction and has several norms stating how one should proceed. On the other side, Parson was a key member of the Capital Market Services a new division “created as part of an effort to make the firm more responsive to client needs” and Parson exceed in that as he was able to connect with clients, and generate business, by creating value to them, which is what bring revenue to Morgan Stanley and enables it to create value for the shareholders. In short, what should Morgan Stanley put first? The company’s vision or performance? If one thinks this is an easy answer, should reconsider because without a good performance, there will be no vision.

Question 2
What is your assessment of Rob Parson’s performance? Should he be promoted?

Firstly in order to analyse the performance of Rob Parson, we must take into account which is the focus of The Capital Market Services (CMS) division at Morgan Stanley, where Rob is included. The CMS division only wanted professionals who had a great knowledge of the industry they covered but also “a great relationship skills, great understanding of (a) client’s business, an ability to work with product specialists, as well as great market judgment and understanding of the market”. This is because the main goal of CMS was to provide clients with solutions created interdisciplinary between the Investment Banking Division (IBD) and the sales and Equity and Fixed Income divisions, the trading arms of the firm.

Paul Nasr who already worked with Rob Parson from a previous job, thought he would be the ideal candidate to integrate his team as a “Principal”. Given that Parson had a great knowledge in savings and loan business due to its passage by three major investments houses, Nasr hired him as a market coverage professional in the Capital Markets division focusing on financial institutions. The position for which Parson was hired was a real challenge and was regarded as not only difficult to perform but also able to generate a tremendous amount of turnover. It required a great teamwork – “we work as a community, not individually”.

Parson was very different from the typical Morgan Stanley employee, as he did not study in the best universities or the usual career by dropping out of college, start working, getting back to college and finally started a career in the financial sector. Once in Morgan Stanley, he quickly began to create conflicts within the CMS division. Parson is described as not caring much about his colleague’s inputs and opinions and for thinking that he always had the right answer.

Parson performance was in fact outstanding. Before Parson’s arrival to Morgan Stanley’s financial services sector, the company had a market share of 2% that increase to 12.2%. Although we cannot know how much of that percentage could be attributed to Parson’s, we know that he was “instrumental in securing first-time business with more than ten clients, (…) major deals with existing clients, and has generated substantial revenues for his desk“. Due to the great knowledge of the market and clients relationship skills, clients were very fond of him and enjoyed to do business with him.

However, and according to Nasr’s words “we would like to maximize our business, but we would not like to maximize it at the expense of our culture, teamwork and the integrity of the process”, and this was a main issue since Parson was accused of not accomplish these things. The culture of Morgan Stanley was based on a teamwork; and the Parson’s personality and work practices did not fit in this culture, despite its performance and great client relationship skills. He had “lack of team player skills” and his colleagues complained about it. One described him as having a “volatile personality, at times, that causes problems. Needs to resist the temptation to react too quickly to an emerging problem. Must learn how to treat colleagues with a little more respect."

Taking into account these negative aspects of Parson and given that he does not fit in the company's culture, we can conclude that he should not be promoted yet. Despite his performance, before being promoted Parson should improve his personal relationships, especially with colleagues. To be promoted to Managing Director one needs to respect those what he works with others and being able to listen to more opinions in order to reach a consensus. Due to his previous link with Nasr and if promoted, Parson could be frowned by his colleagues if they thought that the promotion was not based merit.

In spite of the arguments mentioned above, the 360° feedback could not only help Parson to improve and adapt to the company’s culture but also to acquire skills that will help him to become Managing Director. Whit feedback provided by the 360º, Parson can better understand where there is room for improvement. Most of the feedback provided mentions Parson’s qualities, like having "good marketing skills and is always willing to ask for the order no matter how difficult a situation". Another encouraging remark states that Parson "made the most progress in communicating with the MS Team. However, it is still the area que he should focus on going forward. Good effort noted but more work to do".

With these feedback we concluded that he needed to improve some key aspects before being promoted: (1) Ability to persuade his colleagues at higher levels; (2) Ability to lead in a respectful way, by setting an example to his colleagues and working in teams; (3) Share his vision and strategies, but be receptive to hear and accept other opinions.

If these aspects can be achieved, we think that there is no reason not to promote Parson. If he manages to conjugate the outstanding performance that he already has with the ability of working in a team, treat others with respect and even lead them in providing innovative solutions to the clients, he will become a successful Managing Director.

Question 3
If you were Paul Nasr, how would you plan to conduct the performance appraisal conversation? What would your goals be? What issues would you raise and why, and how would you raise them?

The performance appraisal conversation is key element of effective performance management as it is a very important way of ensuring that the company and its employees are working together to achieve of the company’s, the team, and the employee’s goals.

Regarding Parson’s case, this performance evaluation would be important to help him to overcome his weaknesses as it will serve to show the employee what is expected in this specific position and provide him with the tools needed to excel. Taking into account that Parson was not promoted, Nasr must not only tell him what the expected results are, but also help him to establish future goals within the Morgan Stanley. Parson should be able to have access to the feedback provided by Nasr and his colleagues within and outside the IBD. So Nasr should prepare himself for the interview, tell Parson that they will have a conversation and what it is about.

Nasr should start the conversation by highlighting Parson’s strengths, especially, the great impact that Parson's performance had in major business deals, the revenues he generates and the reputation he has with its clients. After that Nasr should ask Parson to make a self-assessment and give him the opportunity to reflect about his position at work and in relation to his colleagues, and which points may improve.
Showing translation for Nesse sentido, o 360º feedback pode ajudar Parson a melhorar e adaptar-se à cultura da empresa e obter mais aptidões para se tornar um Managing Director. E este feedback poderá ser visto por Parson como um apoio dos seus colegas à sua mudança e adaptação, uma vez que eles mencionam também as qualidades de Parson como “Rob has good marketing skills ans is always willing to ask for the order no matter how difficult at a situation” e partilham conselhos “Rob made the most progresso in communicating with the MS Team. However, it is still the area that he should focus on going forward. Good effort noted but more work to do”.
Translate instead Neste sentido, o 360º feedback poderia ajudar Parson a melhorar e adaptar-se à cultura da empresa e obter mais aptidões para se tornar um Managing Director. E este feedback poderá ser visto por Parson como um apoio dos seus colegas à sua mudança e adaptação, uma vez que eles mencionam também as qualidades de Parson como “Rob has good marketing skills ans is always willing to ask for the order no matter how difficult at a situation” e partilham conselhos “Rob made the most progresso in communicating with the MS Team. However, it is still the area that he should focus on going forward. Good effort noted but more work to do”.
Based on Parson’s reflection, Nasr should comment his performance, explaining that his posture is not tolerated within Morgan Stanley and that a Managing Director cannot behave like that. In this discussion, Nasr should give space to Parson’s comments and instigate him to present alternatives and what he intends to do to reverse the current situation.

With this comprehensive feedback, Parson will know that his contribution to Morgan Stanley is highly appreciated but there is room for improvement in other aspects. In the end, Nasr could summarize by motivated Rob Parson to improve his interpersonal skills with clients and encouraging him to develop certain management and leadership skills in order to be promoted to Managing Director.

Morgan Stanley wanted employees to "distinguish (themselves) by creating an environment that fosters teamwork and innovation, by developing and utilizing (their) abilities to the fullest, and by treating each other with dignity and respect". In short, Parson just needs to make and extra effort to develop good interpersonal relationships and to treat other with respect. If he is able to improve and align with the company’s objectives he will be in line to be promoted to Managing Director.