By Michael J. de la Merced
For years, Morgan Stanley employees were graded in part on a numerical scale that rated them from 1 to 5. Now, the Wall Street firm plans to change those evaluations — by taking away the numbers.
Morgan Stanley told its staff on Thursday that it was overhauling how employees are assessed in several ways, including by discarding the number scale in favour of lists of up to five adjectives.
The changes are the latest effort by a stalwart of corporate America to change how it evaluates employees. Some companies, like Microsoft and Morgan Stanley’s long-time rival Goldman Sachs, have made their own changes, which have also included getting rid of numerical ratings.
Others, like the consulting firm Accenture, have decided to do away with the annual performance review altogether. To these companies, the ritual had proved wasteful and ineffective.
For Morgan Stanley, annual reviews are still helpful in determining how well employees do their jobs. But the current system — in which staff members were asked roughly eight questions and ranked, in addition to being questioned about ‘areas for development’ — was in need of a change.
Evaluators will now be asked to list up to five adjectives that describe the employees. The aim is to give more direct feedback and better steer staff members toward areas of improvement.
‘It’s about giving people more information and something they can do more with,’ Peg Sullivan, Morgan Stanley’s global head of talent management, said. ‘It’s more candid and memorable.’
Morgan Stanley will also put in place a dashboard that compiles all the information needed by supervisors to evaluate employees — like metrics measuring their behaviour and data from risk and control functions — in one place.
Other aspects of the performance evaluation process will remain unchanged, including providing ‘360-degree’ reviews, drawn both from supervisors and colleagues.
But the timeline for reviews will change. This month, Morgan Stanley employees will meet with their supervisors for face-to-face midyear performance reviews, rather than receive written ones. In November, managers will meet with and discuss the full 360-degree reviews with their staff members before submitting them and deciding on promotions and compensation.
Employees will be evaluated not just on how much money they bring into the firm, Ms Sullivan said, but also on a broad array of factors meant to measure their overall contributions to the firm.
‘We don’t just think about what they’ve contributed commercially,’ she said. ‘We think more holistically: their risk management, their leadership skills and what they’ve contributed to our culture.’
The move away from numerical scales toward adjectives was rooted in the practices of James P Gorman, the firm’s chief executive, who has sought in recent years more effective ways of evaluating prospective and current employees.
His experiment started several years ago, when he began asking job candidates to name five of their positive attributes. Last year, he expanded his test by asking his operating committee to try the new system.
Despite suggestions that similar changes at other companies were prompted in part by an effort to appeal to younger workers, Morgan Stanley executives said that was not behind their decision. After all, they noted, Mr Gorman’s circle of lieutenants is made up of parents of those kinds of workers.
‘While I think the millennials will like it, it wasn’t targeted at them,’ Ms Sullivan said.
This article first appeared in the New York Times 2 June 2016.
