Running Head: Massachusetts Financial Service Harvard Case Solution & Analysis

Question 01: Why do MFS managers characterize the labor market for portfolio managers as a star system?

Massachusetts Financial Service (MFS) basically looks to characterize the labor market for portfolio managers as a star system because the system has looked to offer portfolio managers ample compensation. The system has been a profit generating one where the high performing portfolio managers can receive reasonable profits out of it.

The system has been providing those terms and conditions that retain the most talented portfolio managers. Therefore, the system can be considered as a star because it talented individuals.

Question 02: What are the characteristics of the MFS anti-star system?

The characteristics of the MFS anti star system werethat the program basically encouraged team performance rather than individual ones. The system has looked to focus on growing talent and look to attract top or the star performers from other firms in the industry.

As the case states, star system is a necessity in investment industry because of the fact that fund performance has to go public; therefore the star system is anathema at MFS. MFS has looked to promote star performers and not the star egos. Therefore, it can be said that MFS anti star system is to offer great atmosphere which ultimately leads to improved performance and better results.

Question 03: What type of workers does the MFS anti-star system attract?

The MFS anti star system basically attracts workers who might not change the job for a better or higher pay. Along with this, those workers who can mingle in the company culture instantly are also attracted at MFS. The company does not look to attract those workers with higher pay from competing firms. The reason is simple; MFS attracts people, and work upon them and eventually make them stars.

An individual star is not welcomed at the MFS anti star. Workers who can deliver their best as a team and does not look to outperform other team members are the people who are actually trusted at themes anti star system. As per the system, it attracts all workers who are team players.

Question 04: What are the problems created by the MFS performance evaluation system?

            The major problems that has been created by the MFS performance evaluation system, is that basically it fails to attract and also retain the hedge fund managers because of the already developed current reward system.

Hedge funds in a general consensus look to generate higher profits than the mutual funds along with the higher risk. Therefore, they actually need much higher incentive payments which are based on the fund performance to compensate for the risk.

Running Head Massachusetts Financial Service Case Solution

The MFS reward system looks to advocate the anti-star system which has ended the low variance paid to the portfolio managers. This obviously satisfies the requirements of the hedge fund managers.

The managers who have been working hard as team players look to take higher risk which helps in investing because of the market is bearish, therefore, they still complain about the  lower payment in which the market bounces in the upward direction. This type of system does not actually fit in with the hedge fund managers.

Question 05: How would you manage these problems?

In order to overcome the issues that are being faced at MFS, the recommended solution for the problem for MFS is to keep MFS payment system differentiated and separated from the business of hedge funds.

The reason for this solution is simple, by doing so; managers can keep strong willingness which will help them in maintaining the team playing and the anti-star philosophy which will obviously exclude the objectives of hedge funds. Keeping the two together is a risky and not a smart move for MFS.

Another recommendation for the company is to create a subsidiary business; the investment can even look to purchase hedge fund Company as a subsidiary where it can focus on hedge funds compensation system. By doing so the new company might attract more customers with the limited resources.......................

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