Challenging and interesting work that helps expand my skill set with minimal politics. or just minimal politics.

Generous vacation time. Really.

If you get six or seven weeks of paid vacation a year, switching jobs even for another 10-20% pay is a very hard sell. And frankly, it isn't like vacation time really negatively affects productivity; most developers don't sit down and code for 8 hours a day; they code as ideas flow, and usually ideas kind of "queue up" on when one takes a break anyway.

Competent business leadership that empowers rather than hinders innovation.

I'm in a slightly different scenario (Civil Engineering rather than Software), but I think there's similar tendencies.

I think increasing work variety is one of the things that would encourage people to stay, but kind of doesn't keep in line with what employers want. Employers generally want specialised people that are really good at the individual thing that they do. Employees on the other hand want to be able to try new things and work on different types of projects.

The other thing is giving people more autonomy (I think that's the right word...) to work on projects that they're really interested in. Google are a prime example of this with 'Google time' if you want to look into it, where essentially employees can work on whatever they want for 20% of their time (and sometimes they just choose to keep working on whatever they were doing before), but giving people more flexibility to work on their own side-projects can keep them much happier.

Wow. Interesting question with many, many possible answers. Here are my top things:

• Find out what motivates each individual, everyone is different.
• Make sure to mark small successes. One thing that motivates many is creating something that has value. Show the folks that what they have done has value.
• Celebrate failure. Trust that the folks will try to do well, and applaud effort. Note: This doesn't mean you should tolerate lack of effort; see next.
• Weed out those who are not capable or do not put in the effort. The best way to do this is to have significant contact with the teams. Get to know them, and know what they are doing day-to-day.
• Read up on the Agile Manifesto and Agile Principles. I'm not going to say, "Do agile." However, knowing something about the history and reasons behind the Manifesto and Principles will give significant insight into what developers have seen as problematic and as potential solutions.

As a London Based developer who is quite new to developing I might be biased but ..

• Pay me what is fair, I'm not greedy but I want to feel valued by the company and money is one way.

• Unified business, I want to work at a place where business and development are on the same side.

• Free stuff, It sound's silly but if work gave me free breakfast everyday I would be happier, more loyal and more productive.

• Excellent Peers, I want to work with people who I can learn from and I can teach too. Teaching other people is great fun!

• Flexible hours, being able to work flexible hours is great for my work / home / family balance.

Some recognition. Developing is hard work and nobody seems to value the time/effort put into making something function/look nice.