What is the difference between a leading performance indicator and a lagging performance indicator? Why is each type important?
Leading indicators are activities that should be trended as they predict the outcomes (i.e., lagging indicators). Quotas or goals should only be placed on lagging indicators and never on leading indicators. Placing a goal on a leading indicator will result in gaming and generate the wrong results.
Predictive in nature and allows the organization to make adjustments based on results
May prove difficult to identify and capture; often new measures with no history within the organization
Lagging Indicators are measures that focus on results at the end of a time period, normally characterizing historical performance. Also referred to as Key Results Indicator (KRI)
Normally easy to identify and capture
Historical in nature and does not reflect current activities Lacks predictive power
Give an example of a leading performance indicator in your department
• Average Speed of Answer (ASA)
• Average Handle Time (AHT)
• First Contact Resolution (FCR)
• Number of contacts
Give an example of a lagging performance indicator in your department
• Total Customer Contacts
• Total Incidents
• Total Problems
Lagging indicators are in common use and tend to consider things that have gone wrong, while the challenge is to develop meaningful leading indicators - things that give an early warning sign that all is not well. Prof. James Reason's 'Swiss cheese' model of accident causation says major accidents result when a series of failings in risk control systems occur at the same time - the holes in the Swiss cheese slices line up [see Fig 1].
The leading indicators are there to identify the failings through routine checking, to plug the holes before an accident occurs. The lagging indicators reveal...