SOFMAX is a software development company founded 20 years ago by Tom Peterson. It is the third largest software company in its home country and employs around 500 people. The employees are expected to work long hours and take part in social activities. The company faces difficulties in recruiting and retaining staff. One-third of all employees leave within the first year of joining. Also, only 20% employees are female working mostly in marketing and HR.

Although Tom Peterson retired five years ago, many of the software developers hired by him are still working in the company. Some of them have become operational managers just because the company offers very limited payments to software developers.

Many operational managers are thought to be technically years out of date. The software developers become demotivated when they see their managers having lesser knowledge but earning more than them.

SOFMAX seeks consultation from you on the following;

1. What SOFMAX should do to retain its staff who usually leave the company within 1 year of joining it? (4 marks)
2. How can the company motivate its employees using effective compensation system? (4 marks)