You've probably heard about lagging and leading metrics. What's the difference between them and how are they interconnected? Let's break it down.
Leading metrics are indicators that can be measured and influenced in real-time. They provide the opportunity to adjust processes here and now to achieve better results in the future.
Example of a leading metric: Number of tardiness incidents. What makes it notable?
- can be measured in real-time;
- allows real-time process adjustments (e.g., improving office transportation accessibility or implementing flexible work schedules);
- does not directly reflect economic impact but can indicate potential issues in the team or processes.
Lagging metrics, unlike leading ones, reflect the outcomes of past actions and processes. They cannot be influenced anymore; they can only be analyzed and conclusions drawn.
Example of a lagging metric: Number of resignations. Its features:
- measured retrospectively;
- reflects the final result of actions and processes in the company;
- allows assessing the economic impact of past actions (e.g., losses due to downtime, costs of hiring and adapting new employees).
The most valuable insights for companies come from analyzing the relationship between leading and lagging metrics.
For example, by establishing a connection between the number of tardiness incidents (leading metric) and the number of resignations (lagging metric), you can take measures not only to reduce tardiness incidents but also to decrease employee turnover, ultimately improving overall efficiency and reducing costs.
Unfortunately, no leading metric guarantees success. Moreover, it's very easy to mistake correlation for causation, so be careful!
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