I plan to bootstrap and keep my company private with no plans on selling. What's an alternative to equity based compensation that recruits, motivates and retains employees? Should we increase benefits?
Great people want to
1) work on something they find worthwhile
2) work with great people
3) work in a management system that lets them do those things without lots of hassle (bad management systems - see Dilbert for lots of examples).
Money and benefits matter but especially for retaining people providing an environment where they can take pride in their work matters more. For recruiting it matters but is often difficult for potential employees to appreciate.
Post on building a great team
As far as motivation, if you hire and manage right this isn't something you need to do. You need to eliminate de-motivation not motivate