I heard a fun statistic today: the average software development turnover rate is 20% annually. The Bureau of Labor Statistics says 33% for all departures in IT, and 15% for quits. Let's say it's 20%- that's a whole new company every 5 years (not really, of course, but it's still a significant chunk of your company gone in that period). How can any company achieve consistent results when more than half their company is swapped out every 3 years? Predictable budgets and schedules become hella-difficult, not even to mention the cost of training new employees and the lost production while that's happening.
Of course, we all know that holding on to quality developers means keeping them challenged, paying them highly, throwing them cool technology, etc. That said, we're not all made of money, so here's a few cheap tricks that buy a lot of developer love for not much money.
Give your employees a free dinner once every month or two. Somewhere nice and a little highly-priced, but not someplace they have to dress up. High-quality barbecue joints or steakhouses are decent choices. A lot of the common-folk consider a meal around $50 a head to be too pricy to treat themselves, so it's pretty great when it's gifted from management. Remember, you paid them 100 times that amount this month alone (assuming 60k a year). It's a gift you don't even have to do on company time, and gets a lot of bang for a tiny cost.
A number of sites and studies espouse the productivity virtues of multiple monitors- they easily make up for a $100 investment on that alone. Further, though, developers enjoy using them. Again, you're paying them $60,000 a year- you can afford to give them a tool they love that's been shown to increase productivity up to 44%, lasts 3+ years, and costs 0.16% of a developer's annual pay.
It may seem like a small thing, but one nicety I've heard programmers and IT workers complain about endlessly is the lack of free coffee. It's a little weird, considering how cheap home coffee-makers are (got mine for $12 at a thrift store), and how cheap making one's self a cup is. That said, developers seem to love having it on hand in the office, and I can hardly fault them- they get up early, come in, and sit without much movement for the next 4 hours. Anyway, you can get a high-end office-oriented single-cup maker for $500, or $17 a head in a 30-person office. Hell, even a cheap home-oriented brewer (<$50) kept well supplied will do the job (though the wasted time for high-paid developers to set up and brew pots may not be worth the savings).
A rower notices the rowboat. A pilot notices his cockpit. When I tour a potential job, I notice the chair I'm going to spend 40 hours a week in. Yes, good chairs are stupidly expensive ($750 for the famous Aeron chair), but quality chairs stand out. There's talk about improved back health, productivity, etc, but the biggest advantage is their attractiveness to new and old developers. They signal that the people in management care about the day-to-day physical needs of developers (even though we all know you just want more work out of us). At a dollar a week (assuming a 10 year lifespan), that Aeron chair is a solid investment- cheaper than (as Joel Spolsky points out) your average toilet paper expenditure.
There, that wasn't so bad, was it? I didn't suggest that everyone get private offices, litter the place with beanbags, or have catered sushi every day. These are simple things, and you can do them without really high-level approval. They'll reduce turnover, increase productivity, and attract brighter minds- in short, they'll pay for themselves.