Business owners know that happy customers are return customers but, does the same rule apply to employees? When it comes to productivity and talent retention, happy employees don’t really effect the bottom line of a business — diverse and dynamic employees do.

We often write about Millennials in the workplace and ways that employers can ensure their young professional workforce is happy and satisfied. In reality, the evidence for happiness effecting productivity doesn’t quite stack up. For employers, it is more valuable for their teammates to feel challenged, stretched and part of a team — happiness doesn’t really have anything to do with productivity.

Why happiness is a bad thing

This seems to contravene common sense. How can unhappy employees be more effective, more productive, and deliver better results? How could that possibly be the case?

A happy workforce may actually signal that there’s too much homogeneity on a team. If everyone is getting along perfectly, and everyone is comfortable and happy, perhaps each team member shares similar ideas, outlooks and perspectives.

There is no creative tension. There is no internal discussion, or debates and arguments, over ideas. No one is being challenged. To innovate and create, you need that spark and energy that comes through competition and rivalry because without conflict there can be no progress. Clearly this can tip over dangerously into disruptive competition. But there is a balance to be struck – a dose of competition, conflict, and rivalry is healthy.

This is important because we know that diversity of approach, gender, ethnicity and backgrounds – and the creative tension this brings – is what truly delivers the best results. According to the latest research, gender-diverse teams are 15% more likely to outperform others, and the number is 35% from ethnically diverse teams.

Burn the Foosball table, agility is more powerful than happiness in office culture. 

A truly productive team of people is one which is faced with stalling growth and has the internal collective intelligence to recognize the problem and find innovative solutions to solve it. Diverse and dynamic teams have greater potential to pivot the business, change processes, create new products and find new markets.

Much like in evolution, companies need to adapt rapidly and intelligently to market changes to find product-market fit to drive a new period of growth. A productive and successful company is one that can do this process effectively. Happy companies do not necessarily survive, it’s agile companies that do. It’s the survival of the fittest – and not survival of the happiest.

Team effectiveness is a smarter measure than team happiness

There is no unified protocol yet for effectiveness measuring but many HR departments and management researchers have started to look carefully at what makes teams effective. It is complicated because it needs to capture not only how individuals in a team feel about their units, but how that unit is also perceived by other teams and customers outside of themselves.

What’s really exciting about measuring team effectiveness is the potential for organizations to lift their vision – and start to see companies as a collection of teams rather than a collection of individuals. This could transform the way we view an organization; how we judge performance and create change. If we can crack the measurement of team effectiveness, happiness may well come naturally again – at least for customers and shareholders.

Related:

The New Dream Job For Millennials Is Full-Time With Freelance Flexibility
Forget a Cover Letter and Make These 4 Resumé Edits Instead
These Are the Most Important Traits Companies Look For in Millennials
A version of this story was originally published here.

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