Putting People First for Organizational Success: The Case Study of Rob Parson at Morgan Stanley

key players. main players

Morgan Stanley, one of the leading investment banks in the US, was trying to transform its work environment into one that fosters teamwork but also promotes innovation. This vision was developed under the leadership of new President John Mack and his executive team. President Mack was looking for people to “shake up the culture.” With strong resistance, he recruited Paul Nasr to be the Senior Managing Director at Capital Markets 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 markets services, an area in which he had been successful in the past. Paul also knew that he would need more than a traditional corporate banker to break into this market. That person must be energetic, aggressive and innovative. That’s why he recruited Rob Parson. Rob developed relationships with major 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 allow him to connect with his clients, but sometimes distances him from his co-workers.

sequence of events

The position Paul needed to fill was difficult to fill and had a very high turnover rate. He thought that Rob was the perfect person to fill that ticket. Rob accepted the position with the understanding that there was growth potential because the effort needed repair and that 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 tiptoe around when it comes to 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 seems that he has created some animosity among his classmates. Morgan Stanley instituted a 360-degree performance appraisal system that allows an employee to be evaluated by superiors, subordinates, and peers. After Rob’s last performance review, it seemed like he might be having trouble adjusting to Morgan Stanley’s culture. The evaluation was negative and indicated that Rob had significant problems working with people within the company.

Ambient

The internal environment at Morgan Stanley was one of teamwork, employee development, dignity and respect. Morgan Stanley had developed a way to build consensus instead of individualism. They have developed a business conduct process where everyone is included in decision making. Anyone who does not follow procedures or questions the process is considered a non-conformist. The external environment demanded immediate results. This arose from the nature of Capital Markets Services and clients demanding quick responses and threatening to take their business elsewhere.

Organizational Behavior Theories

Rob Parson and Paul Nasr initially entered into 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 opportunity to earn a promotion to managing director. Parson was concerned about the cultural diversity he would experience at Morgan Stanley due to his management style and personality traits. Parson is a Type “C” manager because he is interested in his own opinion more than that of others. Most of the time he was right. When he was, he made his co-workers feel undermined, which created animosity. The role conflict originated with the president, John Mack. First, Mack developed a culture that fosters teamwork, then he actively sought out people to turn things around. Paul Nasr, in turn, hired Rob Parson, an aggressive person who is not necessarily a team player, to fill a position that required his unique personality traits. Paul then appeared to be concerned about a performance review describing those characteristics and how they don’t fit with Morgan Stanley’s 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 that he hoped would result in his promotion to CEO. There is evidence from McClelland’s learned needs theory that Parson likes to take responsibility for solving problems; he set moderate goals going to the smallest firm; and he wanted continued feedback from Paul regarding his performance. Herzberg’s two-factor theory of motivation is also present. Parson’s (extrinsic) dissatisfying factor was the company’s procedures and his (intrinsic) satisfying factor was responsibility, the possibility of growth and promotion.

Resolution

Morgan Stanley did a great job of outlining the work environment in their vision and articulating how each position should contribute to that vision in the job descriptions. However, I’m not sure if Paul did a good job of emphasizing this to Rob during recruiting. I would keep the 360-degree appraisal system because it provides a more detailed analysis of each employee’s performance. However, not everyone should be evaluated using the same criteria, and evaluation should not be the only factor in determining promotions. A Principal should not be evaluated on the same criteria as a General Manager or Associate. In addition, a director of the capital market services division should not be compared to a director of another division. In both cases, the job requirements are different. Next, you would tie together performance appraisal, customer satisfaction, and significant results to determine promotion. One downside to using only 360-degree feedback is that animosity can sometime cloud a fair and impartial judgment of co-workers.

I would express what kind of work environment I expect in the Capital Markets Services Division for everyone within the division and how this supports the vision of the company. Would you express what kind of management characteristics you would expect to see within the division. Rob seemed to have the experience 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 experience. It also involves articulating the departmental vision and leading by example, something Parson has a hard time doing. I would recommend Rob for promotion, but in the evaluation and development summary I would clearly indicate Rob’s shortcomings and how he could improve. Finally, I would meet with Rob to let him know what is expected of him.

Summary

The goal should be to clear up any ambiguity regarding the company culture. Organizations can increase financial performance by investing in employees. However, this is done through high stake management. The Academy of Management Executive magazine published an article by Pfeffer & Veiga called Putting People First for Organizational Success (1999) which identified seven key management practices: “1) Job Security, 2) Selective Hiring, 3) Effective Self-Managed Teams, 4) Compensation comparatively high based on organizational performance, 5) Extensive training, 6) Reducing status differences (between management levels), and 7) Sharing information with employees”. They also discussed various reasons why this is difficult, which I think relates very well to this case study. First, long-term goals are difficult to achieve because of short-term pressures on managers, such as immediate financial results. Second, organizations tend to destroy competition 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 need to realize that the key to managing people lies in the manager’s perspective and that implementing and seeing results takes time.

References

Pfeffer, J.; Veiga, JF (1999). Put people first for organizational success. Academy of Management Executive Journal Vol. 13, pp. 37-48.