This paper reviews the elements of subjective well-being (i.e., emo tional, psychological, and social well-being) and describes a mea surement system for tracking high-level well-being (i.e., flourishing) in employees. Because empirical studies reveal a positive correla tion between employee well-being and an array of business out comes, this paper proposes a theoretical model of a mechanism for promoting employee well-being. Specifically, studies show that the exercise of legitimate authority with regard to subordinates pro motes a host of positive outcomes and feelings in employees. This paper proposes a theory of positive organizations in which the pro motion of legitimate leadership creates a positive cycle through which employee well-being affects positive business outcomes that feed back into sustaining employee well-being and the legitimation of leaders. This process, it is argued, helps make positive organi zations become efficient and constructive producers of profit.F or-profit organizations tend to high levels of employee well-being and approach the pursuit of success by provide leaders with legitimate authority, focusing on the alleviation of liabilities,The nature of employee well-being, inefficiencies, and sources of strain and as well as how and why organizations discontent among workers and customers, would seek to become or remain positive, However, studies (Spector, 1997; Warr, are the foci of this paper. We contend that 1999) suggest that to increase the level positive organizations are efficient and and range of success, organizations need constructive producers of profits because to cultivate a positive orientation toward a "legitimated" manager will exercise business. Focusing on for-profit business-authority in ways that promote employ es, we define a positive organization as an ees' well-being. In turn, businesses in efficient and constructive producer of which employees report higher levels of profit over time. Positive organizations well-being tend to report not only high stand apart from businesses that merely profits, they also report greater customer turn profits and increase shareholder loyalty and satisfaction, higher rates of value, because they promote and sustain employee retention and attendance, and