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¶ … characteristics MFS anti-star system? What type person MFS system attract? Explain. 2) Does MFS system a strong weak performance -- pay relationship? What type behavior MFS system motivate? 3) What potential problems major challenges created MFS performance evaluation system? What suggestions managing problems challenges? 4.
MFS Case study
The anti-star system attracted risk-adverse, conservative, relatively non-competitive employees. The stress of the organization was on rewarding overall team performance, rather than on individual excellence. The performance review process drew extensive input from co-workers and linked the forging of effective relationships with colleagues with bonuses and compensation. Workers saw little correlation between pay and hours logged at work and overall output. People made stock 'picks' similar to other employees and the stress was upon not making mistakes and not under-performing, rather than exceeding performance expectations (Hall & Lim 2004: 3).
Q2. Initially, the MFS performance-to-pay relationship was virtually nonexistent and compensation policy was based on vague, subjective evaluations and stressed team-oriented management. Leaving at 5pm -- unheard of at other financial firms -- was...
Risk-avoidance, rather than taking calculated risks was stressed. However, one 'positive' of the anti-star system was its strong emphasis on teamwork. Additionally, a commonly-expressed idea at MFS was that if an employee was lured to the company through a large bonus, he or she could be quickly lured away by a larger bonus. MFS stressed recruiting recent business school graduates, and grooming them to move slowly up through the company hierarchy. With the introduction of hedge funds and some pay-for-performance factors being introduced into the bonus allocation process, the new rewards system was designed to 'shake up' the company and introduce greater competition into the process of awarding bonuses, while still retaining the company's ethos of collegiality and togetherness.
Q3. Portfolio managers are rewarded for outperforming a benchmark. Hedge fund managers, when hedge funds were introduced into MFS, received a salary, bonus, and equity in the company. There was a slight deviation from the traditional format in that performance of the portfolio and contribution to MFS and the investment process were considered in the awarding of bonuses. One problem with this combined strategy, however, was the fact that it was unclear as to how these more…
Reference
Hall, Brian J. & Jonathan P. Lim. (2004). Massachusetts Financial Systems. Harvard Business
School Case Study. Cambridge: Harvard Press.
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