Morgan Stanley, a leading U.S. Investment Bank, was attempting to transform it's work environment to one that fosters teamwork but promotes innovation as well. This vision was developed under the leadership of the new president John Mack and his executive team. President Mack was looking for people to "shake up the culture." With heavy resistance, he recruited Paul Nasr to be the Senior Managing Director in Capital Market Services. Paul was a highly regarded banker with over twenty (20) years of experience. He knew that one of Morgan Stanley's weak areas was Capital Market Services, an area where he had been successful in the past. Paul also knew that it would take more than a traditional corporate banker to penetrate this market. That person must be energetic, aggressive and innovative. That's why he recruited Rob Parson. Rob developed relationships with the important players in the banking and insurance industries and a strong reputation. Rob is not easily discouraged or intimidated and knows what it takes to get the job done. His drive and ambition allows him to connect with his clients but sometimes distances him from his co-workers.
Sequence of Events
The position that Paul needed to fill was difficult to perform and had a very high turnover rate. He thought that Rob was the perfect person to fill that billet. Rob accepted the position with the understanding that there was a potential for growth because the effort was in need of repair and that the Morgan Stanley had done very little business in Capital Markets. Paul implicitly promised Rob a promotion to managing director during recruitment. Rob never thought that he would have to tip-toe on egg shells when dealing with co-workers. The new president wanted people who could shake things up and Rob had been successful in bringing Morgan Stanley into this Market. However, it seemed that he has created some animosity among his peers. Morgan Stanley instituted a 360 degree performance evaluation system that allows an employee to be evaluated by superiors, subordinates, and peers. After Rob's last performance evaluation, it seemed that he might be having trouble adjusting to the Morgan Stanley Culture. The evaluation was negative and indicated that Rob had significant problems working with people inside the firm.
The internal environment at Morgan Stanley was one of teamwork, employee development, dignity and respect. Morgan Stanley had developed a way of building consensus rather that individualism. They have developed a process of conducting business where everyone is included in the decision making. Anyone who fails to follow procedures or questions the process is considered a nonconformist. The external environment demanded immediate results. This arose from the nature of the Capital Markets Services and clients that demanded quick answers and while threatening to take their business elsewhere.
Organizational Behavior Theories
Initially, Rob Parson and Paul Nasr engaged in a Psychological Contract during recruitment. Paul needed someone to take on a challenging job and Parson wanted the opportunity to be creative as well as the chance to achieve a promotion to managing director. Parson was concerned about the cultural diversity that he would experience at Morgan Stanley due to his management style and personality characteristics. Parson is a Type "C" manager because he's interested in his own opinion rather than those of others. The majority of the time he was right. When he was, it made his co-workers feel undermined which created animosity. Role conflict originated with the President, John Mack. First, Mack developed a culture that fosters teamwork, then he actively sought people to shake things up. Paul Nasr in turn, hired Rob Parson, an aggressive individual who's not necessarily a team player, to fill a position that required his unique personality characteristics. Paul then appeared to be concerned about a performance evaluation that describes those characteristics and how they don't fit the Morgan Stanley culture. Rob seemed to be exactly what they needed and wanted but now he isn't...the culture didn't change nor did Rob's personality. How can they expect employees to modify their behavior to fit the environment when the company's hiring practices don't support it.
One theory in effect is the expectancy theory. Parson was only interested in producing results which he expected would result in his promotion to managing director. There is evidence of McClelland's Learned Needs theory in that Parson likes to take responsibility for solving problems; he set moderate goals by going to the smaller firm; and he wanted continued feedback from Paul regarding his performance. Herzberg's Two-Factor theory of motivation is also present. Parson's dissatisfaction (extrinsic) factor was company procedures and his satisfaction (intrinsic) factor was responsibility, possibility of growth, and advancement.
Morgan Stanley did a great job in describing the work environment in their vision and in articulating how each position must contribute to that vision in the job descriptions. However, I'm not sure if Paul did a good job in stressing this to Rob during recruitment. I would keep the 360 degree evaluation system because it provides a more detailed analysis of each employee's performance. However, everyone shouldn't be evaluated on the same criteria and the evaluation shouldn't be the only factor in determining promotions. A Principal shouldn't be evaluated using the same criteria of a managing director or an associate. Also, a principal in the capital market services division shouldn't be compared to a principal in another division. In both cases, the job requirements are different. Next, I would couple the performance evaluation, client satisfaction and significant results to determine promotion. One downfall of using only the 360 degree evaluation is that animosity can sometime cloud a fair and impartial judgement by co-workers.
I would articulate what type of work environment I expect in the Capital Market Services Division to everyone within the division and how this supports the firm's vision. I would articulate what type of management characteristics I would expect to see within the division. Rob appeared to have the expertise of a managing director which would explain why his peers might have difficulty working with him. But there's more to being a managing director than just expertise. It also entails the articulation of departmental vision and leading by example which Parson has difficulty doing. I would recommend Rob for promotion but in the evaluation and development summary I would clearly state Rob's shortcomings and how he could improve. Finally, I would meet with Rob to let him know what is expected of him.
The goal should be to clear up any ambiguity regarding company culture. Organizations can increase economic performance by investing in employees. However, this is done through high involvement management. The Academy of Management Executive journal published an article by Pfeffer & Veiga called Putting People First for Organizational Success (1999) which identified seven key management practices: "1) Employment security, 2) Selective hiring, 3) Effective self-managed teams, 4) Comparatively high compensation which is based on organizational performance, 5) Extensive training, 6) Reduction of status differences (between management levels), and 7) Sharing information with employees." They also discussed several reasons why this is difficult which I think relate very well to this case study. First, long-term goals are difficult to attain because of the short-term pressures placed on managers such as immediate financial results. Secondly, organizations tend to destroy competence by forcing experts to resort to novice decision making processes. Third, managers don't delegate enough and finally, there are misconceptions about what constitutes good management. Organizations must realize that the key to managing people lies with the manager's perspective and that implementing and seeing results takes time.
Pfeffer, J.; Veiga, J.F. (1999). Putting people first for organizational success. Academy of Management Executive Journal Vol. 13, pp.37-48.