MBA 600 Morgan Stanley Case

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 to the 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
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
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 to bitter 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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Zoe Atlas, Helena Adams, Amanda LaSala, Daniel Aguirre

Morgan Stanley: Becoming a One-Firm Firm

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