Mfs Anti Star Employee Performance System Case Study Case Study

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Case Study: Massachusetts Financial Services (MFS) Anti-Star System


The majority of financial service sector industry players embrace a highly competitive, compensation-driven culture in which there is an atmosphere of every person fighting for what is seen as a finite pie. However, the Massachusetts Financial Services (MFS) anti-star system, according to the case study “Massachusetts Financial Services” (Hall & Lim, 2004), was nothing like this traditional system. MFS prided itself on inventing the mutual fund. However, since creating what is now an industry standard financial product, the company was struggling to maintain motivation in its employees while using a very unique evaluation system to maintain a congenial team-based culture, rather than a competitive one.

Employee Characteristics


In the 1987, when Jeffrey Shames took the company’s helm, a critical problem was that compensation was virtually level across the board, with only lower compensation for bottom-level performers. By not incentivizing top-level performers with higher compensation, MFS inevitably attracted less ambitious financial service sector employees. Although this did possibly contribute to a more collegial and team-oriented culture, it also may have discouraged more ambitious employees from joining MFS. On the other hand, some highly talented and competent people were attracted to MFS and its unique approach within in the industry.
One of the main reasons pay-driven employees leave the firm quickly is the fact they are in search of higher bonuses, while employees that want to work in a more pleasant atmosphere are more likely to stay at MFS. MFS, in other words, offers more intrinsic rewards than the typical firm in this industry sector. The firm rationalized that while it might be able to draw certain high-performers with a large paycheck, it would be just as easy to draw them away with a high paycheck.

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Although compensation was still largely based upon performance, the amount of the end-of-the-year pie and performance assessment for portfolio managers was based upon subjective criteria to a significant degree, particularly upon willingness to collaborate with and mentor others, versus compete with others. Fund performance determined only 60% of competitive bonuses, versus subjective measurements like…

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…Likert scale, for example, can force those contributing to the assessment process to quantify their perceptions in a more meaningful fashion. Assessors could also be asked to back up their assessments with specific examples for every positive and negative characteristic they cited.

Transporting the MFS System


Part of the success of MFS is also due to the unique culture of the firm. A high level of trust was required in the assessment, and those doing the assessment. Without this, it is unlikely to be viewed with the same degree of acceptance. This is why requiring a more data-driven, formalized assessment of intrinsic characteristics of employees is likely demanded if the system will continue in the future.
Hedge fund management will be particularly difficult to assess, given that it is dependent upon risk-taking behavior and competitiveness not seen in mutual fund management, although it seems equally critical that the firm seize upon this growing opportunity to expand its revenue. Embracing a two-tiered assessment for hedge and mutual fund managers an maintaining the culture of the firm may….....

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