One way... to set yourself apart from your competitors is to offer a generous time-off package to new hires.

...a situation wherein the existing employee may feel that they must leave to retain any self-respect. I prefer to work for companies that are not afraid to grow leaders internally and show a strong bias for internal transfers and promotions.

One of the things that really gets my goat (substitute other metaphor as appropriate) is when employers treat new hires much better than their existing employees. It's one thing if a new hire is an experienced person coming from another company and negotiates some extraordinary benefits for himself. But when the company institutes an across-the-board hiring incentive program that gives the new folks better computers, better offices, more time off, etc. than what the old folks are getting, that's a real morale killer.