The way most companies set up sick-day policies, there's an incentive for people to take the days, regardless of whether they need them. But Stan Torstenson, founder and CEO of Stan's Lumber Inc., a $20-million building-supply company in Twin Lakes, Wis., rewards his 85 employees for coming to work, provided they can. How? By paying them cash for any of the three paid sick days they don't use.

With lower absenteeism, Torstenson's three stores run more smoothly, he says. "When you have to shift someone from one area of the business to another," he notes, "you don't get the same job done."