Number two is the opportunity to attain marketable skills, number three is exposure to decision makers, and number four is the ability to put your name on tangible results. Too often this discussion doesn't take place until the employee already has a better offer. A lesson learned by the government is that people will work for less and stay longer if they have a mission in mind - the ability to make a difference in the community. The ability to perform a life mission is a good draw, but it doesn't result in increased retention. The four incentives above, partnered with the manager's interest in an employees' career life, result in a sense of community within the workplace.
Management is the single most important factor in retention.
Managers are in their position because they are really good at something - often the technical aspects of the work, not managing people. We need to define the management skills, teach them, ensure managers develop and practice them, and then hold them accountable. We need to proliferate coaching skills, set goals, and reward high performers. Not all jobs are conducive to flexible hours or telecommuting, but if you evaluate the specific tasks to be done you can find lots of opportunities. The HR role is becoming more strategic - we need to be in partnership to help staff the work, not just the positions.