The Firmwide 360 degree

Performance Evaluation
Process at Morgan Stanley

Introduction Morgan
Stanley
Founded in 1935
230 employees in 1970 and went global
Reorganized into divisional structure in
1975
1980s quadrupled in size with more than
1/3 sales from abroad
Known as Bank for the fortune 500 hundred
company
Sixth largest in 1983 after years of being the
leader

Before the Change

Haphazard

performance reviews
Assessments done verbally in a large
group by evaluatees seniors
No individual feedback
Employees were dissatisfied with
promotion and compensation decisions
Non-existence of developmental
feedback
Widespread neglect of indirect and
lateral relationships within the firm

The Change
Tom

DeLoung, Chief
Development Officer and his
team developed
Firm-wide 360 feedback system
Purpose: To establish a system of
soliciting feedback from a broad
cross-section of employees to arrive
at a performance evaluation for each
employee

360-Degree Feedback

Evaluation Process

Evaluation Request Form [ERF] Identifying

prospective evaluators
Review and discussion with Evaluation Director
ERF submitted to Office of Development
Distribution of evaluation forms to people on ERF
Individuals complete evaluation forms
Processing and compilation into Year-End Data Packet

Evaluation Request Form

Details

of evaluators provided by an
individual employee (evaluatee)

Downward

evaluators

Professionals the individual has worked for

Max 3
Colleague

evaluators

Colleague Long. Max 4

Colleague Short. Max 3
Upward

evaluators

Professionals who have worked for you

Unlimited number

Self-assessment
Performed

by individuals about
themselves
Incorporated into the final
evaluation
Components:
1. Business Goal and
Accomplishments
2. Contribution to MS, division, and
external/industry-related

Explicit Evaluation
Criteria
Criterion

Example

Market/ product knowledge, problemMarket/Profes

solving skills, creativity, decision-making
sional Skills
skills, communication
Management
and
Leadership

People management, global business

orientation, development and coaching
skills, adaptability to diverse work force

Commercial
Orientation

Client relationship, cross-selling abilities.

revenue contribution, deal execution,
project management

Ability to build/lead a business team,

Teamwork/On
recruitment participation, internal task
e Firm
forces, cross-divisional projects,
Contribution
internal/external community activities

Application of Criteria
Through

open-ended questions
Assessments of strengths and
weakness
Additionally, for IBD division:
Numeric evaluation: 5-point scale
ranking

The Book
Office

of Development

Collates evaluation forms

Consolidates data into 10-20 page
report for each person
Evaluation

Director

Processes data- important for

preserving system integrity and
working relationships
Produces Evaluation and
Development Summary used for

Paradoxes of 360
Feedback
Name
Paradox of Roles

Paradox of Group
Performance
Paradox of
Measurement
Paradox of Rewards

Explanation
Conflict being a peer and a
judge
Individuals focus effects
entire group
Easier feedback is to gather,
harder it is to apply
Less effective when
compensation is involved

Analysis of the Evaluation

Process

+
+
+
+
+

Clear and concise

summary
Specific
info from
broad cross section of
employees
More data points and
Direct quotes
Proxy for individuals
performance

without them having

to actively convey it
Widespread
consensus positive

Took a great deal of time

and effort
Helpful for manager in
performance appraisals
Precise
and
unambiguous
Good for people who
arent good at promoting
themselves;
Can see through selfpromotion
Significant improvement
over predecessor

Analysis of the Evaluation Process

-/
+
-

Disconnect
between selfperception and
others feedback
Numeric scales
assigned to
individuals

Exception rather
than norm

Grade inflation

Responses are
inflated, not actual

Need to read
between lines to
unearth negative
comments
Performance

Elaborate
sentences used by
evaluators to hide
negative feedback
Evaluation an

Fractional
differences
insignificant

Measu
remen
t
parad
ox
Parado
x
of
roles
Parado
x
of
roles
Parado

The question

Commercialit
y vs.
importance of
leadership
and
management

Do individual
assessments matter
when the team as a
whole is still delivering
business results?

Parad
ox of
group
perfor
manc
e

Conclusion
The

360 degree evaluation

process has more merits than
demerits
Issues pertaining to peer
evaluation exist
Can be managed by making
purpose and scope of evaluation
clear to all employees
Evaluation forms could include
prompt questions rather than