In a recent article, a former Morgan Stanley employee alleges that recent human resource policies result in continued racial discrimination. Title VII of the Civil Rights Act of 1964 safeguards individuals against employment discrimination based on race, color, national origin, sex, or religion. It is unlawful to discriminate against any employee or employment applicant due to race or color as it related to hiring, termination, promotion, compensation, job training, or any other term, condition, or privilege of employment. Title VII also safeguards against employment decisions based on stereotypes and assumptions about abilities, traits, or the performance of individuals of certain racial groups. Morgan Stanley can avoid the perception associated with racial discrimination by promoting positive racial relationships.

According to the article, a former Morgan Stanley African American financial advisor, Kathy Frazier, alleged that her former company has discriminated against her due to her race. Frazier has implied that Morgan Stanley institutes an alleged racially charged policy that inhibits employees from seeking relief to their racism claims outside the company. In particular, the lawsuit claims that Morgan Stanley has expanded its internal arbitration program, Convent Access to Resolutions for Employees (CARE) to ensure that employees “quietly institute mandatory arbitration and continue its rampant discrimination in private and challenge or accountability in the Court of notice by the investing public”, according to Frazier.

The primary goal for a human resource department is to maintain a supply of skilled and satisfied workforce. In response to this goal, Morgan Stanley human resources department advised it’s 16,000 employees that they are mandated to settle any employment disputes through their CARE program which would include accusations of racial discrimination. It appears that Morgan Stanley has made a critical error in keeping employees satisfied with their employment through a power over leadership style that has proven detrimental for many other companies and organizations.

What are the characteristics associated with the power over leadership that Morgan Stanley human resources has utilized?

Power over leadership is a associated with Theory X leadership characteristics. When individuals find little satisfaction in their work, management will normally utilize a Theory X leadership style. A Theory X leadership style results in micromanaging employees for which the Morgan Stanley human resource department has attempted to enforce when allegations of racism become prominent.

Theory X managers believe that employees:

  • Dislike work and attempt to avoid it
  • Lack ambition
  • Want no responsibility
  • Would rather follow than lead
  • Are self-centered
  • Do not care about organizational goals
  • Resists change
  • Act irresponsibly

Apparently, the Morgan Staley human resource department has a need to place organizational goals above the satisfaction of the employees.

What process should the Stanley Morgan human resource department used instead of implementing policies that are consistent with Theory X leadership?

Stanley Morgan human resource department must understand that the best way to solve racial problems is to empower their employees to solve the racial problems. Empowering employees enhances job satisfaction because for many employees, it’s frustrating to know what’s right, but feel powerless to do anything.  Giving employees some decision-making ability will decrease frustration and improve employee retention. Empowering employees raises expectations because when an employee is empowered, that employee has higher expectations. When employee expectations are raised, they will rise to extraordinary levels and can become the catalyst for growth. Empowering employees’ increases quality of work because in organizations that provide employees with the freedom and flexibility to make a difference, employees feel empowered to deliver high quality work. Companies that provide employees with the freedom and flexibility to be empowered will deliver higher levels of quality work.

Morgan Stanley should have recruited the correct connectors to pilot a project that will eliminate the perception of racism. The next step is for the recruited team to develop a shared vision and strategic plan that will promote positive racial relationships at Morgan Stanley.

Related Articles

Morgan Stanley hit with racial discrimination suit

Morgan Stanley Faces a Class-Action Suit for Racial Bias

Former Morgan Stanley Broker Sues Over Arbitration Policy


Dr. Derrick L. Campbell, Ed.D. PO Box 1668 Blackwood, NJ 08012


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Author of Promoting Positive Racial Teacher Student Classroom Relationships and Promoting Positive Racial Teacher Student Classroom Relationships: Methodology

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