Characteristics Mfs Anti-Star System? What Type Person

¶ … 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 not uncommon. 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 subjective contributions would be evaluated. However, this was thought to mitigate the effects of seasonal ebbs and flows of industry performance, which could potentially make an individual seem like a lower or higher performer than he or she really was, overall.

The subjective component of the process was said to make the variances of bonuses from year-to-year- and between bonuses of employees less acute than other firms, creating a more cohesive sense of teamwork. Approximately sixty fellow traders and peers provided written comments about "how helpful the portfolio manager was" as well as made "suggestions for improvement" (Hall & Lim 2004: 8). Yet, the 'portfolio performance factor' despite these subjective components, still meant that some managers received eight times more compensation than other employees. Subjective reviews still required a sense of trust, fairness and equity. The uncomfortable balance between pay-for-performance and employee input meant that someone who received less compensation last year than someone of equivalent compensation and experience would be reviewing that colleague. Some employees felt under-compensated, others felt there were insufficient rebukes for bad behavior. The best people were also given managerial positions to nurture developing talent, which frustrated the individuality some hedge fund managers craved and added to the managerial responsibility of some employees. Many fled to other companies in the 1990s, lured by higher bonuses (Hall & Lim 2004: 10-11).