Case | HBS Case Collection | January 2002 (Revised August 2004)

Massachusetts Financial Services

by Brian J. Hall and Jonathan Lim

Abstract

This case describes the compensation and performance evaluations at an investment management company. The senior management team of Massachusetts Financial Services (MFS) Investment Management was contemplating an introduction of hedge funds at the firm, but many believed that typical hedge fund manager pay (20% of the upside) would harm the MFS culture, which glorified "star performance but not star egos." The case presents the MFS compensation philosophy and plan (including the plan's emphasis on subjective compensation), the types of people it attracted, the resulting culture, and how the senior management team approached the hedge funds question. It includes side discussion on firm-specific human capital.

Keywords: Motivation and Incentives; Organizational Culture; Performance Evaluation; Management Teams; Compensation and Benefits; Financial Services Industry; Massachusetts;

Citation:

Hall, Brian J., and Jonathan Lim. "Massachusetts Financial Services." Harvard Business School Case 902-132, January 2002. (Revised August 2004.)