Do you seriously find it “offensive” that someone would leave for a better offer? If the employee produced work you thought was worthwhile it is in your best interest to make him or her the better offer.
You can pretend all you want that an employee is in it because of his passion for the craft as his primary motivation, but if he can fulfil that passion and make more money, why wouldn’t he?
Your attitude is almost if the employee owes you his time. No, he owes you what you paid for. That’s it. You want to keep him around more, pay him to stick around. This is capitalism, everyone IS in it for the money. Passions and loyalties will always come secondary.