Professional Documents
Culture Documents
Syndicate B4: Hanna 29111020 Hilda 29111304 Firra 29111306 Reski 29111326 Alfan 29111356 Ridzki 29111358
Background
Morgan Stanley Capital Market Service Paul Near Rob Parson The Performance Evaluation Process at Morgan Stanley
Industry Profile
The financial services industry is a vital component of the US and world economies. It provides the fuel that promotes job creation and sustains economic growth and innovation. A robust finance industry provides businesses with new ways to lower the cost of capital, stimulates global investment and trade, and presents investors with a broad array of products and services to increase return and manage risk. Importantly, these financial services and products help facilitate and finance the export of manufactured goods and agricultural products, while helping the US become the worlds number one exporter of services. The long-term health and vigor of this sector, and its ability to service customer needs, depends on its ability to remain competitive both at home and abroad. A vibrant US financial services sector requires having access to clients not only in the US, but in markets around the world. And why are these non-US markets essential for future US economic growth and job creation? The answer lies in the growing market share of non-US markets more than three-quarters of the worlds GDP, about two-thirds of the worlds equity market capitalization, approximately two-thirds of the worlds debt markets, and 95 percent of the worlds consumers, are now found outside the United States. As the table below shows, these trends are especially strong in the rapidly growing BRIC countries (Brazil, Russian, India, and China). Underscoring growth in the BRICS current estimates indicate that the BRICs will account for 50% of global GDP by 2050.1 Not surprisingly, many of the best future growth opportunities for the global companies lie in non-US markets.
Company Profile
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley operates in 42 countries, and has more than 1300 offices and 60,000 employees.[2] The company reports US$287 billion in assets under management or supervision.[3] It is headquartered in the Morgan Stanley Building, in Midtown Manhattan, New York City.[4] The corporation, formed by J.P. Morgan & Co. partners Henry S. Morgan (grandson of J.P. Morgan), Harold Stanley and others, came into existence on September 16, 1935, in response to the Glass-Steagall Act that required the splitting of commercial and investment banking businesses. In its first year the company operated with a 24% market share (US$1.1 billion) in public offerings and private placements. The main areas of business for the firm today are Global Wealth Management, Institutional Securities, and Investment Management. The company found itself in the midst of a management crisis starting in March 2005[5] that resulted in a loss of a number of the firm's staff[6] and ultimately saw the firing of its then CEO Philip Purcell three months later.
Problem Identification
Rob Parson had been a super performer at Morgan Stanley. He had single handedly made significant gains in building Morgan Stanleys reputation and revenues in a very short period of time. However in doing so he had violated many of Morgan Stanleys norms and culture and had built a hostile environment around him. Gary Stuart has to now decide whether to promote him or not. To promote Parson, Gary would have to mobilize a lot of support internally in the firm. To not promote Parson would mean that he would lose a valuable employee and star producer and would create an empty position in a very critical area within the firm.
Analysis
The environment within Morgan Stanley was that of teamwork and innovation, building consensus and treating employees with dignity and respect. Parson was thrown into this environment for the sole purpose of improving the Capital Markets division. Paul Nasr had implicitly promised Parson a promotion and had relaxed cultural selection criteria by selecting him on the basis of his knowledge, abilities and skills. Although Nasr was able to adapt to the culture at Morgan Stanley, Parson was unable to do so. Parson acknowledged that he was not the Morgan Stanley kind, but he had never been presented with an opportunity within Morgan Stanley to formally get trained and fitted into the organization culture. He had therefore broken several rules and processes within the organization and had built an environment around him where people perceived him as volatile, abrasive, cocky, overbearing, and insincere and not a team player. In spite of which, Parson produced results. He had built Morgan Stanleys reputation (rankings of 10 to 3) and revenues. (Market share of 2% had increased to 12.5%) His superiors knew that Parson would be impossible to replace. They were aware that Parson had generated millions of dollars in a sector that historically had been break-even. Parson had the ability to generate innovative products and was most definitely extremely valuable to the firm.
Recommendation
PROMOTE!!
Morgan Stanleys mission statement is to be the worlds best investment bank, provide exceptional service and add maximum value to the needs of their clients. They plan to achieve their mission by creating an environment that fosters teamwork and innovation and dignity and respect. Particularly in the case of the Capital Markets division where Morgan Stanley had traditionally been behind, it is important to realize that the strategy of the company should dictate the culture in the division and not vice versa. In that essence it is necessary for Morgan Stanley to realize that not all job functions in the organization can be filled perfectly by adhering to the job culture that has been developed. While individual goals should also be set, it is important that Morgan Stanley also set team goals that each individual team player should be responsible towards. It is also necessary for Morgan Stanley to hire the right individuals should culture be necessary so that the new hire is not only job fit but also organization fit. A formal boot-camp should be made mandatory for all new hires to orient themselves to the cultures, expectations and performance evaluation process within Morgan Stanley. Lastly Morgan Stanley needs to invest in training camps to assessors of performance. The performance evaluation form needs to be redone consistent with the organization culture with specific questions as opposed to generalized objective questions. They also need to set up the appropriate appeals committee and encourage employees dissatisfied with their evaluation to approach the committee. This will give employees a sense of belonging and a buy-in to the evaluation process.
Thank You