In an interview with the Washington Post, Valve CEO and co-founder Gabe Newell explains this philosophy by examining how the company handles employee sick days. Specifically, Valve doesn't handle them, and employees are trusted to be responsible with their time.
"[W]e don't track vacation time or sick time - we just tell people we trust you to make all of these other decisions, of course we are going to trust you to manage your own time," Newell said. "It's actually a pretty minor issue in terms of how much time people actually spend on vacation or sick leave."
"But it's a really important issue for someone who is say, coming out of Hollywood," he added. "When you tell them that - and it's really true - it seems to be useful in getting them to start to realize that there is a rationale behind how the company works. There's sort of the flashy public things like desks on wheels, but it really is intended to create a better environment for a highly technical set of tasks that vary fairly quickly over time."
While other companies have different tactics in dealing with the inevitability of employee illness, it's hard to argue against the games Valve has produced. Half-Life and Half-Life 2 regularly feature on "best games of all time" lists, and Team Fortress 2 is heading into its seventh year of operation with no indication that it will lose popularity any time soon.