Beginner level · Module 1: KPIs and Performance Measurement · Lesson 2 of 3
Leading and Lagging Indicators
Combine indicators that show results with indicators that predict them.
In this lesson you will
- Distinguish leading and lagging indicators
- Pair lagging results with leading drivers
Key concepts
lagging indicatorleading indicatorcause and effectbalanced set
The lesson
Lagging indicators show results after the fact: monthly profit, exam pass rates, patients treated. They matter most but arrive too late to change.
Leading indicators move earlier and predict results: customer visits this week, attendance this term, stock availability today. They can be acted on in time.
A good set pairs each important result with one or two drivers, so managers see both how they are doing and where to act.
Step by step
- Classify ten indicators as leading or lagging.
- Pair three results with leading drivers.
- Check that each leading indicator can be measured often.
- Discuss one weak link between driver and result.
Practice activity
Pair each of the shop's lagging KPIs with a leading indicator.
Expected result: A balanced set with a clear logic from driver to result.
Check your understanding
-
Is monthly profit leading or lagging?
Show answer
Lagging.
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Why track leading indicators?
Show answer
They can be acted on before results are final.
Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.