If you measure that and find your people are happy, you'll probably keep them. If those things are missing, you are at huge risk of losing talent. For example, I've heard of one company that leased sporty cars for its staff members who reached some level of tenure and performance. You are right on. Be certain that you are paying fairly and equitably, but look beyond pay.
People stay with a company for the reasons listed in the previous answer.
In addition, retention strategies include flexibility of work and hours, fun on the job and the feeling of being respected. If they aren't, find out why and fix it. Some just want to be able to take a break and surf the Internet. Support and encourage a fun environment at work, but be sure to tailor it to your employees' wants and needs. If you're worried about too much fun and a potential drop in productivity, remember to manage by objectives.