Massachusetts Financial Services (MFS) may characterize their labor market for portfolio managers as a “star system”, their labor market certainly does not have a star mentality. Rather than recruit stars, they mentor portfolio mangers into becoming stars. MFS promotes a culture of teamwork and collaboration in which talent grows from within. MFS often recruits employees right out of business school as analysts. Analysts are then brought up through the MFS system and trained to become great portfolio managers; no employee comes in at a great or “star” portfolio manager. Therefore, this ant-star mentality begins first and foremost at recruiting. From the very beginning management is open and clear with candidates about the compensation
However, if you are looking at qualitative measures, MFS has very strong pay-for-performance linkages. Another implementation at MFS that insured longevity at the company was equity compensation that could only be redeemed at current value if an employee retired or changed careers. Anyone leaving for another firm or who was fired only received the values of the shares at grant date. Another important compensation point worth mentioning is that employees did not take a hit on their compensation due to the market. During the financial crisis for example, compensation for portfolio managers did not change much. One employee even noted that while a lot of portfolio managers were cleaning out their desk, he still had a job and was compensated fairly. This sort of compensation and backing through tough times also helps to breed firm loyalty. Since the firm stuck with the employee through tough times, the employee will remember this when they receive offers from other firms.
Subjective evaluations make up two of the three parts of everyone’s determination of year-end bonuses. The three objectives are fund performance, contribution to the investment process, and contribution to MFS overall. The last two were subjective and based on written evaluations from peers and senior management. It is because employees know their co-workers and managers will review them, that teamwork is an essential part of the atmosphere.