Happy People Spark Serious Productivity

If you are looking for a great corned beef sandwich 600 miles west of New York City, your best bet is Zingerman’s Deli in Ann Arbor, Mich. Since Zingerman’s was founded in 1982 by Ari Weinzweig and Paul Saginaw, a pair of iconoclastic foodies who met while working at an Ann Arbor restaurant and kibitzed about making the perfect corned beef sandwich, the business has grown into far more than a popular local eatery.

Today Zingerman’s Community of Businesses is a $50 million group of nine food-related businesses with 650 employees, all in Ann Arbor and still run by Weinzweig and Saginaw. And while its gustatory accomplishments are a major draw, Zingerman’s business model has become the stuff of legend, B-school case studies and consulting firm dreams.

Over Its 32 years of operation, Zingerman’s has become revered for its happy, dedicated and highly productive workers whose positive attitudes are celebrated by their bosses as well as Zingerman’s customers. In 2003, Inc. Magazine labeled it “the coolest small company in America,” and its reputation has spread far beyond Ann Arbor.

Weinzweig, a Russian history major at Michigan who refers to himself as a “lapsed anarchist,” has published three business books, all based on Zingerman’s formula for success. Though he acknowledges that his employees are happy, he says that was not the goal.

“It’s not like we focus on keeping the employees happy,” Weinzweig said. “It’s our belief that when people feel good about themselves and about their work, the quality of everything will go up. It’s iterative. It’s more of a commitment to help everybody in the organization get to greatness. And when they feel better, they have higher odds of getting to greatness.”

Zingerman’s management philosophy is built upon a holistic approach to life and business. Weinzweig calls it “the natural laws of business,” and it is about more than putting foosball games and M&M’s in the break room. For example, Zingerman’s implemented an open-book management process for all employees to track financial results, keep score and understand the economics of the business. Along with that, employees track food quality measures and customer satisfaction. Workers compete in “fun” activities, including games designed to improve customer service. Employees are taught self-management and how to negotiate as equals in a caring manner. Every meeting ends with “appreciations” in which attending employees have a chance to relate some positive news or action they’ve witnessed. So successful were Zingerman’s concepts that the company opened its own consulting business called ZingTrain in 1994. Over the past 20 years, thousands of wisdom-seekers from all kinds of businesses have flocked to Ann Arbor to hear Weinzweig and Saginaw and a trained staff share Zingerman’s “vision of greatness.”

Employees have also taken advantage of ZingTrain’s curriculum, and according to Inc., it has had a huge effect. “Employees who took the courses were challenged to wrestle with management philosophy in all its complexity,” Inc. said. “As people were baking bread, selling cheese or making gelato, they were also studying business, not to mention history and sociology of food. The result was a culture both intellectually stimulating and unifying.”

By putting such emphasis on its employees, Zingerman’s accomplished an enviable level of productivity, far more than just serving customers and generating profits. According to Gretchen Spreitzer, a professor of management and organizations at the University of Michigan, the two founders decided from the outset to stay in Ann Arbor, not create a chain or franchise, and allow the business to grow locally and organically.

Among the factors that keep employees happy is the entrepreneurial atmosphere that encourages workers to think big.

“By empowering employees to come up with what the new businesses should be, they started with a deli and then created a bakery, a creamery, a candy maker, a coffee roaster, a roadhouse restaurant and a highly successful mail-order business,” Spreitzer said. “They have nine different businesses, and each is run by a different partner who was an employee with an idea. Not every idea is a success, but they’ve really empowered the employees to figure out what the future of the organization is.”

That, by any name, is serious productivity. And in the burgeoning world of positive psychology, a field in which the study of happiness has matured from a New Age, crunchy-granola conversation into a serious economic and organizational discipline, the evidence of the payback has become overwhelming.

Ask Shawn Achor, a former Harvard professor who helped develop and teach a course on happiness that became the most popular class on campus. Achor, founder and CEO of GoodThink Inc., a consulting firm in Cambridge, Mass., has no doubt that happiness is a business driver.

“Happier employees are 31 percent more productive, have 37 percent higher sales, and based on my own research, have a 40 percent higher likelihood of getting promoted,” Achor said. “Happiness fuels success.”

Achor is aware that the term “happiness” is controversial in the field of positive psychology. Martin Seligman, the University of Pennsylvania psychology professor who is credited with the creation of the academic discipline, has been outspoken in his disdain for the word, claiming it is an overused term that “under explains” the concept. The modern ear, he says, “immediately hears the word ‘happy’ to mean buoyant mood, merriment, good cheer and smiling.” Seligman prefers the term “flourishing” to serve as a more illustrative sobriquet, one that incorporates well-being and meaning in a more definitive and useful manner.

But Achor, the author of The Happiness Advantage, believes that “happiness” is a “loaded word, which is why I use it.”

“The goal of my work is to help companies redefine happiness,” he says. “Happiness is not mere pleasure but rather the joy we feel striving toward our potential. Happiness should be sustainable even if things are unpleasant, and it should be linked with growth, because stagnation prevents us from sustaining happiness.”

Achor consults with large corporations on changing behavior and increasing productivity through positive initiatives. At UBS, for example, Achor, along with two Yale researchers, focused on changing the way employees perceived stress, from a negative to a positive. According to Achor, when workers viewed stress as “enhancing” instead of “debilitating,” there was a 23 percent drop in stress-related symptoms such as fatigue, headaches and backaches, and a significant increase in productivity and self-reported happiness.

Achor also led a team that brought positive psychology training to Nationwide, the insurance giant. Working with Insurance Intermediaries Inc. (III), a wholly owned subsidiary of Nationwide, Achor and his team initiated a training program he calls the Orange Frog. “The Orange Frog” is a parable about embracing happiness and offers lessons for organizations about the adaptive and contagious nature of being positive. At III, workers participated in “huddles” in the call center each day to assess productivity and mood. As part of the process, the call center instituted “emotion barometers” to help the leaders know how the team was feeling. They painted the walls orange and put up pictures around the building of the team wearing orange shirts and volunteering together. And over the past three years, this unit has grown by a whopping 237 percent and become one of the most profitable and productive divisions of Nationwide.

At Google, where employee perks such as onsite day care, dry cleaning, oil changes and free meals have made the Silicon Valley campus a highly sought-after employer, happy employees have driven the company’s market value into the stratosphere. Google is now the world’s second-most-valuable company with a market capitalization of $391 billion, second only to Exxon-Mobil.

“If you infuse fun into the work environment, you will have more- engaged employees, greater job satisfaction, increased productivity and a brighter place to be,” Stacy Sullivan, Google’s chief culture officer told Forbes magazine. The long list of perquisites is designed to save Google employees time and add to a healthy work-life balance.

Achor echoes one of the key counterintuitive tenets of positive psychology: that conventional wisdom errs in suggesting that if we work harder, we will become more successful, and if we are more successful, we will be happy. In fact, Achor says, the cause and effect are reversed: It is a positive outlook, an embrace of a happy life, which fuels success, not the other way around.

Happiness Runs

Though well-being and happiness in individuals have been the subjects of vast numbers of academic studies and thousands of self-help books, organizational happiness is relatively neglected in research, according to Ruut Veenhoven. An emeritus professor at Erasmus University in Rotterdam, the Netherlands, Veenhoven spent the past four decades studying the conditions of happiness. He initiated the World Database of Happiness to measure how nations rank in terms of subjective feelings of happiness.

According to Veenhoven, traditional thinking deems that work typically adds to the enjoyment of life, or at least it should. In the past, Veenhoven pointed out, the general belief was that employees worked in order to be happy when they were done working. During work time, they would suffer. “That was in the bad old days,” Veenhoven said. “In present-day society, the quality of work is typically high, and people are happier when they have work than when they do not.”

That isn’t to say that all kinds of work are equally rewarding. Obviously, higher-paying, challenging jobs are likely to produce a different psychological result than boring, repetitive, low-paid drudgery. Most of the research, Veenhoven said, has focused on job satisfaction rather than happiness or life satisfaction. What this means, he said, is that whether life satisfaction contributes to greater productivity is dependent on the type of job.

“Typically, professions where people have some control over their own lives, which are often, but not always well-paid, lead to more happiness,” Veenhoven said. “But there is a selection effect here. Some jobs select happy people — and happy people typically function well, are sociable, and for that reason, they get better jobs.”

But how does all this impact productivity? At the 12-year-old Center for Positive Organizations at the University of Michigan’s Ross School of Business, Professor Spreitzer and her colleagues examine how positive psychology affects corporations and other institutions, and what leaders can do to play a role in collective happiness. Writing in the Harvard Business Review, Spreitzer and her colleague Christine Porath were clear:

“When the economy’s in terrible shape, when any of us is lucky to have a job — let alone one that’s financially and intellectually rewarding — worrying about whether or not your employees are happy might seem a little over the top. But in our research into what makes for a consistently high-performing workforce, we’ve found good reason to care: Over the long term, happy employees produce more than unhappy ones. They routinely show up at work, they’re less likely to quit, they go above and beyond the call of duty, and they attract people who are just as committed to the job.”

The center’s mission is to help companies change their culture, rethink their practices and develop their leaders in a way that creates positive organizations.

Spreitzer’s work is based on her version of organizational happiness, for which she uses the term “thriving.” A thriving work force goes beyond well-being or happiness; it is one in which employees are not just satisfied and productive but engaged in creating the future — the company’s and their own.

Spreitzer lists four key drivers for a thriving work force: providing decision-making discretion; sharing information; minimizing incivility; and offering performance feedback.

Though these may seem mundane, organizations that make a concerted effort to provide autonomy, that are transparent with crucial information, that reduce rude and demeaning behavior and provide clear and consistent feedback are far more likely to foster a positive work environment.

In studies conducted by the center, employees who report higher levels of thriving have better job performance. “We’ve seen that in samples of blue-collar workers, white-collar workers, managers and in a variety of industries: in high tech, service work, utility work,” Spreitzer said. “And we’re now doing a study with knowledge workers, and we’re finding the same results in terms of performance. What explains that is that when people feel alive and energized at work, it reduces the potential for burnout. They are coming to work, and work is not a place that is depleting their psychological resources.”

A multi-industry study of six companies found on average that a thriving workplace increased performance by 16 percent. In the current study of knowledge workers, Spreitzer focuses on high-profile consultants with the goal of finding out how thriving impacts productivity in high-pressure jobs.

“We’re seeing that thriving helps buffer these consultants from the inevitable de-energizing relationships that often come in that kind of high-pressure workplace, whether it’s from co-workers or from a boss who just doesn’t get it,” she explained. “We’re finding that thriving moderates those de-energizing relationships at work to increase performance. It kind of immunizes people from the negative effects.”

The center has also looked at the airline industry, where employees must often cope with chaotic and stressful circumstances. Southwest Airlines and Alaska Airlines enjoy reputations as highly regarded workplaces. Both are companies in which employees are empowered to do the right thing for customers and where fun is a key component of the work environment. Spreitzer pointed out that public companies, especially airlines, often face pressure to imitate the competition.

“Everybody is copying everything that everybody else is doing,” she said. “And there are organizations like Southwest and Alaska that we call ‘positive deviants.’ They are saying, ‘Here’s what common sense is in the airline industry; here’s the way this industry tends to manage,’ and then year after year, they deviate from that. Both are unionized companies, but they are able to get their employees to be much more flexible over how they do their work. They can turn those planes around in 30 minutes. Employees help clean the planes and jump in wherever they are needed, even the pilots.

“What we’re trying to do is encourage companies to find their own path, what will work for them, for the kind of employees they have, for the kind of values they aspire to as an organization. Don’t just try to fit in; have some confidence to find your own path.”

At Alaska Airlines, the emphasis on employee engagement has paid off with seven straight annual JD Power awards for the best customer satisfaction for a North American airline. Given where the company was a decade ago, the airline’s turnaround is noteworthy.

Like other carriers after 9/11, Alaska Airlines was bleeding money and had to consider declaring bankruptcy. Instead, the company decided in 2003 to focus on implementing a strategy — known as the 2010 Plan — to become an industry leader in safety and compliance, ramp up customer service, become one of the best places to work, and get profitable. The most effective part of the plan empowered employees to suggest and implement ideas for improvement.

“We’ve worked very hard to have a real clear, crisp strategy to have employees fully understand and aligned around the strategy, engaged in their roles and in the broader purpose of their jobs day in and day out,” said Tammy Young, vice president of human resources for Alaska Air Group. “The idea was to put more decision-making power in the hands of our frontline employees.”

By fostering these levels of engagement, Alaska avoided bankruptcy and spent the decade improving all the crucial metrics of its business. Along the way, employee engagement became a key indicator of the health and happiness of the staff roster, according to Young. “We believe that engagement is a robust indicator of a happy work force,” she said. “Engaged employees have been shown to promote the organization and its services to others, take initiative in the work role, have low turnover, and to extend themselves above and beyond on work assignments, as well as on self-development and workplace innovation.”

Given that 83 percent of Alaska Airlines employees are members of a union, one of the most important aspects of its rush to happiness was to team directly with its labor leaders as a corporate strategy. Alaska Airlines’ union leaders are treated like executives of the company, not adversaries. There are regular and consistent communications, meetings and strategic alignments and a genuine sense of partnership.

“A lot of keeping our employees happy and aligned comes from that relationship of mutual respect between our executives and the union leaders,” Young said. In addition, Alaska Airlines is heavily focused on productivity benchmarks, and its strategic planning is based on hitting key targets in all of its operations. But instead of using productivity numbers to punish underachievers, Alaska uses them as rallying points and for positive feedback. It requires walking a fine line and creating an environment where employees take pride in reaching their objectives but aren’t driven to cut corners to make the numbers. All of this engagement has paid off.

The airline annually surveys its employees about their feelings of engagement. In 2013, engagement at Alaska Air Group reached 79 percent, a 13 percent increase since 2011, and pride in the organization jumped 10 percent to 89 percent in 2013.

Getting to Happy

Professor Cary Cooper hasn’t lived in the U.S. since 1964. But the occupational health psychologist at Lancaster University in the U.K. has kept a close eye on the workplace issues in his former home country, and what he has seen has worried him. Starting in the go-go 1980s, workplace stress went through the roof as Americans started working longer hours, job security dissipated and the concept of work-life balance became a front-burner topic of conversation in human resources departments.

Focusing on workplace factors that affect employee health, Cooper concluded that working long hours increased the risk of illness. He worried as employers in Western Europe began to emulate the hard-driving American work model. “I became interested in this because I could see Europe moving further and further toward New York.”

Cooper, who co-authored Well-Being: Productivity and Happiness at Work in 2011, is convinced that companies that focus on employees’ well-being and health get a strong return on their investment.

In 2008, he said, PricewaterhouseCoopers in the U.K. did a survey of 55 companies and produced case studies on the impact of wellness programs in these firms. What they found was stark: Absence due to sickness declined by 45 percent; staff turnover was reduced 18 percent; productivity improved 8 percent; and employee satisfaction increased 14 percent. Accident rates dropped 16 percent.

Cooper acknowledges that it is difficult to measure the impact on productivity, particularly in service-based companies where the most profitable work is often produced by managers and senior executives. “You can measure it more easily if there’s an output,” he said. “But even if you said to these companies, ‘I’m sorry but I can’t measure productivity in your organization,’ they would still do the wellness programs. The reason: They are really worried about losing good people.”

Well-being, Cooper said, is not just about corporate health clubs and apples on desks. “Well-being should be a part of the DNA of a business,” he said. “It should be the way they treat their employees, how much they value them, trust them, provide them with flexible working arrangements, engage them, communicate with them... it’s all about that. If you give people flexibility, tell them when they’ve done a good job, avoid micromanaging them, give them autonomy, their health is inevitably going to improve — and if your health improves, your productivity is going to improve.”

Not every company is going to emulate the Silicon Valley model of catering to employee contentment. As Zingerman’s Weinzweig pointed out, organizations that fail to embrace new concepts in employee well-being “just don’t know there is any other way.” But the door is rapidly closing for organizations hoping to attract the best talent if they fail to confront the need for happy and content employees.

Employees thrive in a Zingerman’s kind of environment “because it’s respectful of who they are as human beings and encourages them to dream big and to push for greatness in all parts of their life,” Weinzweig said. The virtuous cycle, as he refers to it, is about a life in which the barriers between work and home life are permeable — if people are miserable at work, they are more likely to be miserable at home and in their personal life. If they feel respected, nurtured and supported at work, they go home “and recreate a lot of that at home, and then if they are happy at home, when they come to work they are going to do better. If energy in the environment is a limited resource, human energy is not. It is endlessly sustainable if we just create healthy settings.”

Happy Yet: There’s An App For That

Happiness is not usually the first emotion Nataly Kogan feels each morning when she gets out of bed. “I’m a Russian Jew,” she said. “In my family, without suffering, nothing is worthwhile.”

Indeed, Kogan’s family left Soviet Russia in 1989 with six suitcases and barely enough money to survive. After living in European refugee camps, the family arrived in Michigan, where they settled in the projects, subsisting on welfare and food stamps while her parents searched for jobs. They didn’t speak English, and for a 14-year-old girl, it was a traumatic experience. “It was absolutely horrible, just the darkest time,” Kogan recalled. “I came out of that with a very strong desire to be happy.”

Now 38, Kogan has turned her desire for happiness into a business venture, a software startup aimed at helping users find silver linings in otherwise distressing circumstances. In  fact, the company is called Happier, and its first product was a free mobile app that downloads to a smartphone and acts as a daily guide to experiencing gratitude for something positive in life, regardless of how small and insignificant it might be. Recently, Happier started offering online courses in gratitude, meditation and yoga.

“When people use Happier, what it really does is help them look for the positives in their life even while their brains naturally tend to look for the negative, for danger, for difficult things,” Kogan explained. “You can actually retrain your brain and make it focus on positive experiences, and that leads to more positive experiences.”

For now, most of the app’s users are individuals pursuing their own happiness, but Kogan is looking for larger clients, such as corporations. She has spoken at companies like Gillette and Gap and has been approached by dozens of other organizations hoping to incorporate the Happier concept into a workplace environment.

“When you read the science, you find that if employees have a more positive mindset, they are anywhere from 10 to 15 percent more productive at work,” she said. “A lot of that has to do with the reduction of stress. When you are less stressed, you are able to get more done.”

Kogan doesn’t pitch Happier as a magic bullet. Given that it is impossible to separate work and personal life when it comes to psychological well-being, Kogan sees Happier as a natural bridge between the two environments. “There is no place in life that is stress-free. It doesn’t exist,” she said. “I think Happier can be a positivity buffer, a reminder that when you encounter frustration and stress, you can process it in a productive way.”

For Kogan, Happier is personal. After her difficult childhood, she became a superachiever, working for Microsoft before finding success as an entrepreneur. She worked hard, made lots of money and bought her parents fancy cars, but ultimately, she was miserable. She began to read all the research on happiness and the genetic disposition toward negativity and realized she could make some changes in her life. “It didn’t change who I am, but it gave me the emotional control to not go into that negative spin cycle,” she said.