Zappos.com CEO Tony Hsieh is known for his unorthodox, yet effective, approach to running a successful business. Building a positive and supportive corporate culture has been his number one priority at Zappos, and he hasn’t been shy about emphasizing the importance of employee happiness in delivering excellent customer service, maintaining employee retention and making profits.

His theory seems to be working. In 2009, Zappos made Fortune magazine’s “Best Companies to Work For” list, and the company was aquired by Amazon.com in a deal valued at $1.2 billion on the day of closing. In 2010, Hsieh published the best-selling book, Delivering Happiness: A Path to Profits, Passion, and Purpose:

But not everyone agrees with Hsieh that happiness is the key to employee retention and profits. In a recent blog post for Businessweek, CEO of HCL Technologies Vineet Nayar compared his own philosophy to that of Hsieh, stating that passion, not happiness, is what is most important.

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.

Nayar went on to explain the “Employees First, Customers Second” initiative that is the cornerstone of his company. Employees are empowered to take on more responsibility, and they use 360-degree feedback to evaluate managers who influence 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.

Nayar noted that Zappos and HCL are different types of businesses, and though they have different philosophies and approaches, they are both working toward the same goal.

What do you think? Is employee happiness more important than employee passion in creating an effective corporate culture, or vice versa? Or is there a more essential component that both Hsieh and Nayar are missing? Add your thoughts to the comments.

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