Employee Happiness: Zappos vs. HCL

Should employees be happy?

I've pondered this question at length, and I'm hardly the only business leader to have done so. In fact, Zappos.com Chief Executive Tony Hsieh wrote Delivering Happiness: A Path to Profits, Passion and Purpose (Business Plus, 2010) to emphasize the importance of employee happiness as a driver of business results. Tony holds that employee passion is a key to employee happiness. Conversely, I have publicly stated that I'm not terribly concerned with employee happiness, but with employee passion.

In my own book, Employees First, Customers Second (Harvard Business Press, 2010), I argue that management must do everything possible to empower and support workers who create the most value for the company. Do we disagree, or are we saying the same thing in different ways? Allow me to answer that question, with Tony's generous help.

Before delving into the debate, I'd like to explain that, while our two organizations differ greatly, some notable similarities exist. Zappos and HCL Technologies are both successful in terms of revenue growth and have consistently high customer and employee satisfaction scores.

How do our attitudes toward happiness play out at Zappos and HCL? Let's review the journeys taken by our respective companies.

Enthusiastic Customer Service

For Tony, the focus on happiness began in 1998 and was very personal in nature. He had just sold his startup company, LinkExchange, after realizing he no longer felt happy. After the sale, he became CEO of Zappos.com and vowed he would make work fun and meaningful, both for himself and for everyone at the company.

Tony didn't view Zappos as a shoe company or as an e-commerce player but as a provider of superior customer service. "We wanted to be known as a service company that just happens to sell shoes," Tony told me. To achieve that goal, Zappos developed a service offering like no other. The online retailer provides a huge selection and delivers every pair of shoes for free. Customers can return shoes, as long as they're in good condition, for up to a year after purchase. Zappos customer service reps often fulfil requests completely unrelated to the product they actually sell. One story has it that, after helping a customer find a pair of shoes, one salesperson also provided the number for the nearest pizza delivery place.

Tony says that Zappos can consistently deliver such exceptional customer service because the company makes culture its highest business priority. It conducts an intensive hiring process designed to identify people who will be happy, enthusiastic, and committed to the "Zappos Way." The e-tailer feels so strongly about the importance of matching employees to the culture that it offers new hires $2,000 to quit during the training period if they feel they can't maintain the expected level of zeal and commitment. Very few take the money. Once hired, many employees stay with the company for 10 years or more, a rarity today.

That, more or less, is how I understand Tony's views on employee happiness.

Upside-Down Pyramid

At HCL Technologies, our focus on employee passion stems from my personal experience. I was founder and CEO of Comnet, a small entrepreneurial unit of HCL. Comnet was an early, and very successful, player in the provision of remote IT management services. At Comnet we were a tight-knit group that related in the most basic of ways: To communicate, we simply yelled to each other across the room. We freely expressed ideas. There was very little hierarchy, and a great sense of working together for a common cause.

In 2005, HCL named me president. It was not only a much larger organization but also a very different kind of operation. When I joined, HCL offered IT services to major companies worldwide—blue-chip organizations such as Boeing (BA), Merck (MRK), and Dr Pepper Snapple (DPS). The business was service intensive and focused on short-term engagements in specific disciplines and business areas. Unlike Zappos workers, HCL employees did not serve the general public. But they did work directly with customers.

HCL's business and culture differed greatly from Comnet's. HCL was more hierarchical and the employees who worked directly with customers had the least power or influence. I quickly discovered that these very employees created the most value for customers and had a huge effect on the company's success. Early in my tenure, we decided to create a much broader service offering—end-to-end mission-critical IT services—which required developing long-term client partnerships. To accomplish that, we had to "turn the corporate pyramid upside down." We had to make management just as accountable to the employees who created value as those employees were accountable to the managers who created strategy. We named the initiative "Employees First, Customers Second" (EFCS).

Engagement, Not Satisfaction

EFCS is a process of change, pursued through numerous activities and tools designed to increase transparency, build trust, empower frontline employees, and shift responsibility for change away from senior management and toward the workforce. One example is "The Smart Service Desk" (SSD), an online portal that allows frontline employees to seek solutions or access information from managers and determine when issues have been satisfactorily resolved. Another, the "Open 360 Review," lets employees evaluate their direct managers or any superior who influences their work.

Our EFCS initiative is not about making employees happy or comfortable. The goal is engagement, not satisfaction. Employees feel passionate because they know that management understands the importance of their role, respects them, and makes it easier for them to accomplish their work.

So are happiness and passion just two sides of the same coin? Are both about doing meaningful work and getting recognition for it? Being part of a winning team and feeling you contributed to its success? Connecting with other people who feel similarly engaged?

Different Types of Businesses

The answer: The goal of both approaches is essentially the same, but the means to that end are not, because the businesses, roles, and employees differ. Zappos is a retail business, and its people deal with the general public. Their interactions are fairly brief in duration, very focused on a specific and relatively uncomplicated task (buying shoes), and do not involve huge quantities of money. A positive attitude, friendliness, enthusiasm, willingness to engage with and help strangers—these attributes are vital. Customers can tell when the employees they deal with seem essentially happy doing their jobs and when they don't. Many Zappos employees feel genuinely passionate about shoes, but their feelings about the product itself are less important than their belief in the quality of the service they provide.

While HCL is not in the retail business, our frontline people work with customers very closely for long periods of time. They engage in complex, business-critical projects that can have a major impact on thousands of people and cost millions of dollars. The quality of the day-to-day interactions between employee and customer matter, but not as much as the end result. Our customers are less influenced by the short-term attitude and contentedness of the employee and much more affected by how deeply engaged with and committed to the work the employee is. It is essential that HCL employees feel passionate about the IT solutions themselves, but less important that they always feel happy at work.

So a distinction exists between happiness and passion. But the goal remains similar: to create a vibrant, successful company whose employees are absolutely critical, not tangential. Whether or not that means they must be happy or passionate, or something else, depends on the company. Just make sure you genuinely put employees at the very center of your business. Your customers, whether buying shoes or IT solutions, will benefit.

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