Seth Godin asked and answered two questions that are key to customer satisfaction / loyalty and employee satisfaction /loyalty.   "Cutting your prices doesn’t build customer loyalty, and paying a bonus doesn’t build employee loyalty"; I agree.

I like the idea of giving employees free license to develop projects on their own for a certain percentage of their time, as Google does:

If I had money to spend on a bonus, Mr. question writer, I would invest it in allowing each of my employees to try a small project (Google style) with no strings attached. Giving fairly-paid people your trust and the freedom to grow is worth a lot more than $50.

Anyone listening?