IMHO, a key reason this works well for them is that their compensation package is really nice and well rounded: http://www.joelonsoftware.com/articles/fog0000000038.html

In short: they pay market rates based on a transparent internal system of scale, they have a generous profit sharing plan (thus motivating everyone to increase profits regardless of role) and excellent benefits (health and non-health related).

It's hard to argue against a system like that.