>"If someone is unhappy enough to start job hunting rather than talking to me then it's a clear sign that they'll leave soon regardless of any pay rise."

Long time ago when I was employed I liked my job but felt that I am being paid less than what I could get. So I went searching and after a while got a really nice offer. With that offer I came to the company owner and ask him to give me a reason why should not I take the offer. He did give me a reason - matched the offer and put bonus on top. The end result - I stayed. Well until I went on my own and never looked back.