I usually stick with this approach:
* Two sit-downs anually with each team member to figure out long term and short term goals.
* Fridays are for fun, almost as mini-hackathons, if the calendar allows for it; use it to get rid of technical debt, try something new etc.
* 3-4 hackathons, each 3 days long, each year.
* Conference budget per team member of their choice. Should allow for at least one conference anywhere in the world per year.
* Don't micro-manage; engineers are best when they are allowed a lot of freedom.
* Work from anywhere, anytime, but try to keep a core schedule from 9 to 15.