Canadian employee ownership

Does Happiness Create Success in Business?

In a meta analysis of 225 academic studies by Sonja Lyubomirsky, Laura King and Ed Diener (as reported in the 2012 Harvard Business Review) it was shown that happy employees have a higher productivity rate by 31%, increased sales by 37% and are 3 times more innovative and creative.

Happy employees are engaged employees.

happiness creates successful business - an ESOP business

The most successful companies in the world have highly engaged cultures. defines company culture as “a blend of the values, beliefs, taboos, symbols, rituals and myths all companies develop over time.”

But is a highly engaged culture a result of happiness? Or is it a precursor? Consider these quotations:

  • “To win in the marketplace, you must first win in the workplace.” –Doug Conant, Campbell Soup
  • “To make customers happy, we have to make sure our employees are happy first.” –Zappos
  • “Engagement is a renewable daily decision that is voluntarily given when the company has proven worthy of it.” –Jason Lauritsen, Talent Anarchy
  • “Engaging the hearts, minds, and hands of talent is the most sustainable source of competitive advantage.” –Greg Harris, Quantum Workplace
  • “If you are lucky enough to be someone’s employer, then you have a moral obligation to make sure people look forward to coming to work in the morning.” –John Mackey, Whole Foods Market

It seems that happiness creates successful business.

In our work with over 160 privately held companies in Canada it has been our experience that the answer lies in quantum physics. Culture and happiness exist together, both as attribute and as precursor. They occupy the same space. However for these two to exist and grow it is important to have a strong foundation of self-worth both from a corporate identity standpoint and from an individual perspective.

We have found that the best foundation is an Employee Share Ownership Plan (ESOP). The ESOP is the soil from which culture and happiness can grow to full bloom. Happiness creates success in business.

How can we make such a statement?

We can do this because the statistics of ESOP companies versus non-ESOP companies parallel those of highly engaged workforces. Over 40 years of studies in the US, UK, Canada and Australia have shown that participative ESOP companies outperform both non-ESOP and non-participative ESOP companies in the areas of productivity, profitability, turnover, customer loyalty, and return on investment. In addition ESOP companies rank highly as good corporate citizens giving back to the community in time, money and ideas.

You may ask, “If ESOPs are so good for company success, for communities and for the employees, why doesn’t every company have one?”

Good question.

Statistics tell us that only 1 out of 4 owners have the mindset for, and belief in an ESOP for their company. The reason 3 out of 4 owners do not believe in ESOPs vary, but all are rooted in fear:

  • Fear that disclosure of financial information will ruin the company competitively or make the employees demand more salary.
  • Fear that the owner will lose control over strategic decision making.
  • Fear created by the owners’ professional advisers who counsel against an ESOP because they do not understand the behavioral aspects of a successful business.


Franklin D. Roosevelt delivered the following quote. “So, first of all, let me assert my firm belief that the only thing we have to fear is…fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

ESOP companies have overcome this fear and in so doing have transformed their companies.  Happiness creates successful business.

So, what about happiness?

It is a freedom from fear and an ability and desire to create collective success – in how people live, work, and play in the community. You can learn all about it at the 2016 Canadian Employee Ownership Conference.

What’s holding you back?

By Perry Phillips, President of ESOP Builders Inc