Business Analytics · Beginner level

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

  1. Classify ten indicators as leading or lagging.
  2. Pair three results with leading drivers.
  3. Check that each leading indicator can be measured often.
  4. 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

  1. Is monthly profit leading or lagging?

    Show answer

    Lagging.

  2. 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.