Rev. October 29, 1998
The Firmwide 360° Performance Evaluation Process at Morgan Stanley The objective of the annual Performance Evaluation Process is to provide every employee with quality performance feedback. We continue to believe strongly that candid feedback serves as the foundation for creating development plans for each individual that help the firm meet one of its most important goals: the continuous professional development of its employees. This development remains one of the critical success elements of the firm. —Richard Fisher (Chairman) and John Mack (President)
The New Performance Evaluation Process
During 1993 Morgan Stanley implemented a new firmwide 360° performance evaluation system for over 2,000 professional employees worldwide at a total cost of over $1.5 million. The revamped evaluation process was the result of a multi-year effort initiated by a task-force and implemented under the direction of Tom DeLong, the recently appointed chief development officer for the firm and the human resource management department, known at Morgan Stanley as the Office of Development. The key elements of the system are described below:
The guiding principle of the new system was a "360-degree" feedback system in which feedback was solicited from superiors, peers, subordinates, and "internal clients." The first step was that all of the professional employees identified those people within the firm with whom they regularly interacted and would be in a position to provide substantive feedback on their performance. This list of prospective evaluators, called the Evaluation Request Form (ERF) (see Exhibit 1), was reviewed and discussed with the assigned evaluation director, typically the evaluatee's manager or supervisor. The ERF was then submitted to the Office of Development, which then distributed evaluation forms to the people listed on the ERF, collected the completed evaluations, and processed them into a Year-End Data Packet for each evaluatee.
Professor M. Diane Burton prepared this case with the assistance of Senior Lecturer Thomas J. DeLong as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1998 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
The Firmwide 360° Performance Evaluation Process at Morgan Stanley
As subordinates, peers, colleagues and superiors completed their evaluations, each professional also completed their own self-evaluation (see Exhibit 2). The self-evaluation was viewed as an important developmental tool offering employees an opportunity to reflect on their own performance and also to incorporate their perspective into the final evaluation.
Explicit Evaluation Criteria
One of the key challenges faced by the system's designers was deciding on the evaluation criteria. Given the multifaceted nature and complexity of the various businesses that comprised Morgan Stanley, identifying broad categories of performance that could sensibly be applied throughout the firm proved difficult. After much debate, four broad categories that could be tailored to particular jobs, tasks, and divisions were identified: 1. Market/Professional Skills: Including market and product knowledge; analytical, quantitative and problem solving skills; creativity; initiative and commitment; judgment and decision making skills; versatility; oral and written communication skills and...