Other people have already made great comments here. I just wanted to point out that side projects are how people learn new things and new technologies. Most side projects are never finished, nor do they make it to market. However, the process of working on the project was in itself beneficial as a learning tool. New technologies and new techniques get explored and tested, all during off hours. And guess who benefits from that?
Employers could consider these options ... - hire people that find the day time work to be interesting enough (i.e. don't hire superstars thinking they will bring sparkle to boring work) - provide good incentives to keep people focused on their day job - openly support side projects, people will respect that and give back to you (don't make people stress about working on a side project) - get involved with side projects and offer whatever you can to help - partner with people in their ventures, their idea may be better than yours - directly sponsor internal side projects that people can work on and vent their need to create/explore etc.