Finding:

• I think that a company must demonstrate that it is a fun, dynamic workplace to attract the best talent. One of the best ways I know to communicate this is to add humor to job postings and ensure that interviewers don't take themselves too seriously. Many qualified developers will think long and hard before joining an organization that is stuffy, caught up in office politics, or otherwise unable to laugh at itself. If I can't find a way to laugh and have fun at work, I'll find another job pretty quickly.
• Employee referrals continue to be a very good way to find qualified candidates. I've been using LinkedIn to keep track of people with whom I have worked ... much of the time the best people you will find are already known to the good people who work for you (if you have any). I recently attended a 'free' luncheon where the price of the lunch was to bring at least one contact for the recruiter who bought the lunch -- I think she received 48 contacts among the 15 or so attendees. Not bad for the price of a few pizzas.

Hiring:

• I'm not a big fan of the "new hires must be better than half our current employees" philosophy. I once worked for a major software company where this philosophy was pursued ... I was part of more than 40 interview loops in which only two people were hired. Many candidates were passed over because no one felt 'passionate' about hiring them, yet there was work to be done and many of the applicants could have done the work. Additionally, many man-hours were wasted in this fruitless quest. I think a company needs to make it possible to hire a qualified candidate and not get too self-congratulatory about how smart its people are compared to the 'peasants' in the rest of the world.
• Any interview loop needs to have at least one person toward the end of the day whose primary focus is to 'sell' the job to the applicant, rather than judging the applicant's fitness for the job. I think many applicants are turned off by a gruelling interview that does not sufficiently respect that employment is a two-way street.
• One way (at least in the US) to set yourself apart from your competitors is to offer a generous time-off package to new hires. I have seen many companies who were flexible in terms of salary become intransigent with respect to time off. I recently took a job with a company that offers 24 days off (combined vacation, sick, personal) per year plus 8 holidays for a new hire, accruing immediately. This is about 11 days more per year than my former employer, and was a major factor in my acceptance of their offer.

Retaining

• One of the stupidest things I have seen is companies who hire external candidates and promote them over existing qualified employees. This will often create 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.