While I have had good and bad luck with this idea, more often than not, you create more problems for yourself if your company has a practice of hiring quitters back.
I have found that if it gets known within your company that you take quitters back, you will have even more people quit. Most will leave for legitimate reasons. But some will quit for greener pastures--just to see if the other company is better, if they'll like their boss better, or some other flimsy reason.
If they know you will hire them back, it is awfully tempting to leave, if only to test their value. I prefer to let it be known that if they quit, we will not hire them back under any circumstances.
If they leave your team now, for any reason but to join the Army Reserves or the Peace Corps, I would not hire them back. Your company should not be a safety net.
What has your experience been?
G. L. Hoffman is a serial entrepreneur and venture investor/operator/incubator/mentor. Two of his companies have traveled the entire success path from the garage to IPO. Currently, he is chairman of JobDig, which operates LinkUp, one of the fastest-growing job search engines. His blog can be found at WhatWouldDadSay.com.