What's more important? Achieving targets and producing enough to meet a quota, or ensuring that your employees are happy and working in the way that suits them best? As a manager, you can influence both with what we like to call KPI management and purpose management. But which of these is the best? Let's ponder that for a moment.
What are KPI management and purpose management?
I'll admit that these two forms of leadership aren't official leadership styles like the three you often hear about when talking about leadership styles: Authoritarian leadership style, "let it rip" leadership style and democratic leadership style. There are probably smaller parts of them, and each leadership style can probably contain both KPI management and purpose management, so let's take a look at what they are.
KPI management (Key Performance Indicators) is about goal achievement and results. It is characterized by continuous measurement of employee performance. Production quotas are a prime example of a parameter that is measured.
Purpose-driven management, on the other hand, is more about how employees feel. Does their job have meaning for them? Do they share the company's values and does it feel good to work here? Here, you often ask why you're doing a job, rather than what kind of results the job produced.
Is KPI management best?
Both KPI management and purpose management have advantages and disadvantages. I'll cut to the chase and start with the advantages. Here they come!
When you work with KPI management, you always have your hand on the performance pulse of your team or company. You're keeping an eye on whether your employees are getting their tasks done and whether their jobs are yielding good results.
The great thing about constantly keeping an eye on goals, results and task achievement is that it can be a huge motivational factor for employees. The goals must be realistic - they can be ambitious, but they must not be so hard that they seem unattainable. And that brings me to the disadvantages and challenges of KPI management.
A study shows that KPI management can be very stressful and act as a monitoring system for employees and: "can create a stressful work environment where deviations can lead to disappointment, stress and demotivation for employees."
It can also seem cold and give a feeling that the results the employees create are the only thing that matters. A kind of unorthodox win or lose culture.
So KPI management can:
- Provide structure and clearly define tasks
- People know what is being measured and why
- Employees get ongoing feedback and an opportunity to monitor and influence the results
But it can also:
- Increase stress levels
- Create a sour working environment with too much focus on results
- Give a feeling that what is produced is the most important thing, not the people
So what about purpose leadership?
Like KPI management, purpose management has its advantages, disadvantages and challenges. It asks why you produce something, not how what you produced performed in the market. That's because purpose management puts employees first. Employees should work on something that matters to them, and the employer should share their values.
Putting the question of why you produce something before measuring the results can be an advantage in itself. By doing so, you may find yourself thinking more broadly than just looking at what has worked before. You open up for new creativity and innovation.
Purpose-driven management is also a good culture builder. As I said, you put your people first and are concerned that they thrive. Because when they're happy, they'll perform well and stay in the job longer.
But it's not all benefits here either. Purpose-driven management will often result in a slightly looser framework, which isn't a bad thing in itself. The vast majority of companies that give their employees more freedom work very well. The problem arises when people abuse their freedom and slack off. Freedom can also lead to uncertainty about what to do and when.
In this form of management, measuring results isn't that important either, so it can be difficult to know how things are actually going.
Purpose-driven leadership is good because:
- Builds a good and safe culture, and can open up for new thinking
- People are working on something that matters to them
- Long-term performance when the purpose is followed up with a clear framework
But then there's that:
- People can abuse the increased freedom if the framework is not clear
- Tasks can be a little vague and lack structure
- You don't really know how things are performing
So what's really best?
It may seem as if purpose leadership is the way to go? But it's really nice to know how things are going, isn't it? Let's be honest. One does not exclude the other. It seems like a good mix of the two is what makes the wheels turn. Start with purpose management as a basis, but never forget that things need to be followed up and measured. Yes, purpose management can generate creativity and innovation, but is there any point in trying new things all the time if you don't know if they work?
It's perfectly possible to give employees the freedom to manage their own working day and set goals for what they want to achieve. And it's also possible to ask yourself why you're doing something, and then ask how it went when you're done. So maybe you should do a bit of both? Yes, I think so. It's best when you have a good work culture and at the same time know what kind of results you're creating.
