HB case - MFS

1085 Words Nov 22nd, 2013 5 Pages
-MFS-

1. Does the MFS system have weak or strong pay-to-performance? What type of behavior does the MFS system motivate?

Basically, culture of MFS is focused on teamwork and community so that MFS manages their employees very fair and its compensation system also reflects this characteristic. For sustaining this team –based culture of MFS, which don’t prefer star(anti star culture), MFS assesses their employees to the ways that not only fund-performance(performance factor) but also contribution to the investment, and contribution to MFS overall(community factor). The portion of performance factor is 60% but community factors are 40%. It is not easy to ignore such a huge portion. In this system, as a result, it cannot be possible
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And time and effort are also more required. As a result, supervisors are in trouble because of the reduced time for their own tasks so they couldn’t put their best efforts on the task. (Supervisors feel tired after assessment process) it is kind of waste to the MFS.

Suggestion> To exchange the balance of assessment system is one of the way to enhance efficiency of MFS. Setting the portion of performance factor 60% to 70% and reduce the portion of community factor 40% to 30%. 30% is not ignorable score to the employees so they would still do community friendly behavior for 30% but they more focus on performance factor to achieve high assessment score. In addition, they diversify their subjective assessment tool ‘Free-writing’ to ‘check-list ‘. When making check-list, we can extract some important and valuable issues on the previous Free-writings from their employees, then including the issues on the check-list. It can make supervisor less tired because supervisor don’t need to consider very specific information about employees.

3. Do you think that MFS will be successful in using their system for their hedge fund managers? If not, why not? If so, upon what will their success depend?

The system based on performance is needed. High risk-high return is feature of hedge fund so MFS should control the risk. For that, loyalty of employee is most important factor and thy way to increase employee’s loyalty is giving them certain satisfactory compensation

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