Executive Summary: Morgan Stanley, a leading investment banking firm, implemented a new firm-wide 360 degree performance evaluation

system for its worldwide employees with an estimated total cost of $1.5 million. The 360 degree feedback system was the heart of the new system. The feedback from superiors, peers, subordinates and internal clients was solicited. In the past, the performance assessments were done verbally in a large group by all the seniors of an employee under assessment. Junior employees were evaluated collectively and no individual feedback was given to them. But with the new system, a sense of fairness and objectivity has prevailed in the firm. But like every other system, this new system also had some issues and complexities associated with it. Even after numerous attempts, the designers couldnt separate compensation rise from developmental discussions. The firm was determined to continue making improvements into the new system year after year and there was also a growing commitment and acceptance from everyone in the organization.

Critical Review: 360 Degree Feedback System At first, all employees of the firm need to identify the people with whom they interacted regularly and who would be in a position to give a fair feedback on their performances. This list of prospective evaluators was called the Evaluation Request Form (ERF). This ERF form was reviewed and discussed with the assigned evaluator (mostly evaluators reporting manager). After this, the ERF was submitted to the Office of Development which then distributed performance evaluation forms to the people listed in the form. Employees also had to complete their own self-assessment which was viewed by the firm as an important tool for the development of an employee. The subordinates, peers, colleagues and superiors had to evaluate professional on four broad categories Market/Professional Skills, Management & Leadership, Commercial Orientation and Teamwork/One Firm Contribution. The evaluation forms were generally open-ended and asked for specific strengths and weakness across all four areas for a professional. The individuals were ranked on a 5 point scale (1- unsatisfactory to 5outstanding) for their performances. The completed evaluation forms were then collected back from all the evaluators by the Office of Development. All the data was consolidated and a document called the Year-End Data Packet was generated for each individual. This document was then interpreted and synthesized by the evaluation director. The director then produced an Evaluation and Development Summary (EDS). The managers were done able to draw detailed and specific information about an employee. EDS served as the template for the Performance Review Discussion between the director and the employee.

Issues with the new system The use of numeric scales was insufficient in capturing the critical differences between two close numeric scores of two overall summaries. Problem of grade inflation with numeric scores and the written comments. Developmental discussions often turned out to be a compensation discussion. It was proving difficult for the designers how to assign weight to different criteria and inputs from different evaluators.

We will analyze the case with respect to the article When Workers Rate the Boss by Robert McGarvery and Scott Smith and see how effective the newly 360 degree performance evaluation process at Morgan Stanley was. The upward-feedback programs are gaining common day by day. Its a system where subordinates give a feedback on the performance of their supervisors. Fear of Frying Appraisals may tend to be biased by the relationships a manager has with his subordinates. Employees may not fully comprehend the pressures a manager operates under. There should be objectivity in such programs and it should be implemented effectively at the top. In this case, we can see that the managers had a discretion of choosing their performance evaluators which was reviewed by the evaluation director. Evaluations were generally open ended and had stringent performance criteria. Comparison Anxiety Most of the managers like a normal person dont like being compared with their peers. Instead, an ideal should be the one where a managers performance appraisals are compared against his own. Self-evaluation was an important part of the new system which gave managers a way to reflect on their own performances. So, it somewhat reduced the anxiety levels. The managers had no idea about who gave what all comments or feedbacks. The feedback from subordinates was kept secret, only feedback from peers and superiors was visible to the Evaluation Director.

Shock Treatment After hearing their performance results, a lot of managers go into a state of denial and generally have reactions of shock, anger, rejection, acceptance and help. The organizations should make sure that the managers should get interpreted feedback and not raw feedback and it should be followed by constructive talks. The Evaluation Director took all the raw feedbacks of a manager and prepared a document which was then interpreted and synthesize by him. The result was EDS which had summary of the whole performance appraisal.

Picking Products Only the system having sufficient validity, reliability and support should be chosen for critical tasks like performance appraisals. Morgan Stanley has kept the system evolving to meet any changes. The system has a perception to be fair and objective. Encore The system needs to continue growing and adapt to changes as and when required. A manager needs to spend sometime in the system before the system can have validity and they need to be trained on such systems. The system has started gaining firm wide acceptance.