What would you rather have given to you as an incentive: a raise, more free time or a weekly barbecue with the blokes from the office?
Imagine being a regular joe employee: no equity, maybe a little bit of stock options, whose seen the price of things go up over the last 4 years little by little. Some things (health care, college savings, potentially rent/housing) costing a lot more than they did... while you see your department friends chipped away because of layoffs.
Maybe even getting your benefits cut little by little: the health insurance plan you had last year covered a little bit more, and was less expensive, than the one you have this year.
Money isn't everything, sure, but more office happy hours is a lot different from "Here's $50 more in your paycheck", or "Here's $5K lump sum as a quarterly bonus, thank you for your hard work"
With that said - give me a stretch goal, and a huge bonus if I make it and I'm really happy. Most employers miss that bonus part.
Reading the article reminded me of my past life... I heard "treating one another with dignity and respect" several times a day.
In the middle of recession style "your raise this year is the fact that you still have a job", a 5% raise would earn you a lot of loyalty... and a 10% raise is stuff of legend.
A 10% raise for a department is cheap: say the business laid off 10 people in the department over the last 4 years, and 3 people remain to run a formerly (about) dozen person department. So you're spending 1/3rd of an average salary to keep those people on. Compared to the 20% a headhunter would take + the productivity loss of replacing workers... sounds like a deal to me.