Yup this is known as the Dead Sea Effect [0]. Your best people leave and you're left with the worst performers. Do this a few times and you end up with a barely functioning organisation.
More than losing the people who have the best prospects, you lose the ones that feels the least connected to the company. Even if you have many other prospects, if you still feel strongly for the company you work, you'll probably stay. The ones that leaves if you ask them to, wouldn't have stayed for very long anyway.
