MBA 600 Morgan Stanley Case

8/12/2019 MBA 600 Morgan Stanley Case

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Zoe Atlas,Helena Adams,Amanda LaSala,Daniel Aguirre

Morgan Stanley: Becoming a One-Firm Firm

Bottom Line evaluation

John Mack overcame great obstacles in changing the culture of the company by

holding sessions for each division to allow them to understand their effect on other

divisions,holding training sessions for all his employees,and changing the values and

mission statement of the company to create a One-Firm Firm.

Evaluation Criteria

In order to efficiently evaluate John Mack,the effect of his policies on operations

and performance,adaptability and company values will be examined.

Proof of evaluation

Mack changed the operations and performance of the company successfully in

three distinct ways.First,Mack changed the reward system.Before,it was a performance-

based system that focused solely on an employees quantitative work.However,Mack

changed it to a hierarchy-based system that focused on both qualitative and quantitative

performance.As Kerr and Sullivan state,this type of system fosters cooperative behavior

and typically is a more successful system for companies.The change to the hierarchy-

based system fostered a better environment as non-quantifiable aspects of the

subordinates role were sometimes considered to be more important than quantifiable

ones.(100) Second,Mack was determined to intermix the partisan directors of the

different divisions.(10).In order to do this he fostered cross-divisional relationships by

explaining each divisions role tothe entire company and how each division affected the

others.Miles and Snow comment on the limitations of keeping divisions separate: By

dividing activities along functional lines,such organizations fostered specialists rather


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than generalists.(39) Therefore,by making the divisions less strict and allowing all

divisions to understand each other,Mack fostered the ability for everyone to evaluate the

system as a whole and not just within their own specific division.Third,to further the

firm-wide cooperation and understanding,Mack created a formal training department,

which was unprecedented for Morgan Stanley.He initiated a series of cross-divisional,

worldwide training meetings.Following these meetings,he offered training to all

employees in four skill areas: technical,professional,product and management.(11)

Mack effectively changed the company values in three important aspects.First,

Mack created a clan culture atmosphere through the relationship between individual and

the organization,the relationship among organization members and the process of

acculturation.(102) The creation of the clan culture is intricately connected with the

change to the hierarchy-based system.By changing the focus of the company,he created

a place that acts as a fraternal group where everyone recognizes an obligation that goes

beyond the simple exchange of labor for salary. (101) This extension of obligation and

responsibility helped to foster a better environment for Morgan Stanley as a whole.

Second,during, Macks time at Morgan Stanley,he unveiled the firms new mission

statement: our goal is to be the worlds best investment bank and the Firm of choice for

our clients,our people,and our shareholders. (9) In order to achieve these goals,the

company would distinguish themselves by creating an environment that fosters

teamwork and innovation,by developing and utilizing our employees abilities to the

fullest.(9) The creation and implementation of this mission statement was an integral

part of the creation of the One-Firm Firm. Third,Mack created specific values for the

company.Mack believed that changing the firms values would help to attract and retain


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top quality employees. In regards to the values,Mack stated,to get the right people,

youve got to have the right valuesI believe that the people who come to Morgan

Stanley dont want money,they want a careerand they want to be part of a team. (8-9)

These new values were an essential aspect of the changeover to the improved company.

Mack increased the adaptability of the company.Historically,each unit of a

business placed massive emphasis on managing their individual profits and losses.This

emphasis on individuality within a division led tobitter resource allocation battles.(3)

In addition,within the divisions,there was pressure to focus on activities that generated

divisional revenues without consideration for the impact of the firm. (3) This separation

created an inability to make decisions effectively.Mack changed this emphasis on

individuality by creating an operating committee that met weekly.This committee

consisted of Mack, the heads of the largest divisions,as well as the heads of the London

and Tokyo offices.This change created an environment that fostered cooperation and

understanding between all divisions of Morgan Stanley.

Qualifications

In order for all of these changes to work effectively ,the employees have to be

willing to compromise,be open-minded and accept these new values.

Action plan

The next step would be to establish an evaluation for the employees because if

they want to have a developmental plan implemented,they will need to have an

evaluation to know who is ready.In addition,the performance appraisal system should be

used for both compensation and developmental purposes.Finally,the company should

focus on both teamwork and maximizing profit,instead of previously focusing on one .

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MBA 600 Morgan Stanley Case