What are
lead and lag
indicators?

What are lead and lag indicators?

Lead and lag indicators are helpful in getting you to realise your vision and outcomes, keep on track and give confidence to those around you.

What is a lead indicator?

A lead indicator generally precedes an event. It’s what you “go in with”, it is an educated belief in what you want to achieve and an indicator of future success.

Immediate hard evidence might be difficult to find to back up the assumption made here, but there may be some data available around which you can build an idea.

A simple example: The incident book reveals that 40% of incidents cited a lack of awareness of correct procedures. Perhaps safety training will help us achieve our goal of zero injuries on site. Therefore, the lead indicator is the amount of people who have an up to date safety qualification

What is a lag indicator?

A lag indicator is about looking at the results of a change you’ve made, to establish the facts about what we achieved in retrospect.

Hard evidence, factual examples and reality are all crucial here.

A simple example: The number of safety incidents went down. This tells us that we achieved our goal.

Putting it together

Let’s imagine we have a retail store and have long queues. We are led to a simple hypothesis that more people on checkout will lead to greater throughput.

The lead indicator will be the number of people on checkout.

The lag indicator will be the change in throughput, basically a number that shows the proof of the hypothesis made at the start.

Conclusion

In order to make informed decisions, lagging and leading indicators should really be used in conjunction with one-another. Used without thought, or used in isolation, the decisions you make will likely be poorer and not stand up to scrutiny.


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