Clearly, trust in leadership has been critical to the culture at Ultimate Software. Even during the worst of times at Ultimate, when the stock price plunged to $2 a share and competitors were engaged in layoffs, Scherr refused to go that route. Employee benefits remained, too, and the company looked elsewhere to cut costs and strategized new ways to make money.

Maza says that built a crucial sense of trust. "Our employees know that Scott will do the right thing for them every day. It's tough to walk the walk. If you say employees are No. 1, you cannot cut benefits in hard times or your creditability is shot."

Maza says it's clear to everyone who works at Ultimate that maintaining an employee-driven, team culture is the guiding principle, which is why Scherr gives them stock on their first day, meets new hires and sends out an email update on company financial performance to employees after every quarterly earnings call. "Our employees are our partners."

And, those "partners" are more willing to put in the extra hours. At Ultimate employees are asked and expected to make work life sacrifices � come in on weekends, stay late to help a customer, travel on a moment's notice to assist with the implementation of software, or even cancel a vacation if a customer runs into a problem. "The idea is we take care of their family and it is their job to take care of our family," Scherr explains.

Employees don't seem to mind the work-life sacrifices. Scherr says the company has only 8 percent turnover - and only 4 percent of it is voluntary. Low turnover means good employees stay and are more productive. "Turnover kills. It's impossible to build a business if you have turnover all the time," Scherr says. If an employee doesn't vibe with Ultimate's culture, they are cut loose. Of course, it's done gently with warning and severance.

At Ultimate, much like at Google, the business model pays off financially. Scherr explains: Customers want to do business with Ultimate. "They are betting on employees being passionate and our products and services always getting better." Stock analysts say Ultimate's 96 percent customer retention has surpassed the industry standard and the company has created opportunity to grab market share from competitors.

"If you talk to their customers, they have one of highest, if not the highest customer satisfaction scores I've seen," said Scott Berg, a senior analyst at Northland Capital Markets, which initiated coverage of Ultimate Software in late 2012. "It costs them more in staff and resources, but in the long term the return is higher. It is one of the more profitable companies in the space."

While every company that treats employees well doesn't outperform the S&P 500, those that do treat employees badly chronically underperform, researchers have found. And, some leadership experts assert that creating a workplace of happy employees also has costs, suggesting that these workers enjoy the status quo and might resist changes to it or refrain from taking on new challenges.

That's where leadership factors in, says Julie Gebauer, managing director for talent and rewards at Towers Watson, a global professional services company. For sustainable (longer-term) engagement, Gebauer's research found beyond being a benevolent employer, workers need the resources to meet the challenges of their jobs and they need to have workplace help with managing stress and avoiding burnout. "When leadership recognizes those two pieces, that is the differentiator."

In Ultimate's case, those elements are in place and having happy workers has trickled down to the bottom line - over the past five years the stock price is up more than 275 percent. But the future is challenging: Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind and Ultimate's team will have to stay on the forefront.

Meanwhile, Ultimate's Maza says she wants to make workers even happier. She is gunning for that No. 1 spot on the Fortune list, now occupied by Google. The company is planning to break ground later t his year on phase nine of its Weston campus, a 150,000-square-foot building that will house employees and a nail salon, barber shop, pilates studio and a slide connecting its two floors. Says Maza: "When that building opens in 2015, look out at Google."

ABOUT THE WRITER

Cindy Krischer Goodman is CEO of BalanceGal LLC, a provider of news and advice on how to balance work and life. She can be reached at balancegal@gmail.com. Read her columns and blog at http://worklifebalancingact.com/.