Lag indicator
A lag indicator is a performance measure that records an outcome after it has occurred — such as annual revenue, return on assets or year-end customer satisfaction scores — confirming whether objectives were achieved but providing no.
FrameworkBalanced scorecard
See it move
A lead indicator such as monthly customer churn can still be acted on while the period is underway. A lag indicator such as annual revenue or return on equity is only known once the period ends, confirming whether the strategy worked but offering no chance to change the outcome it already reports.
Check yourself
At year end, a hotel group publishes results showing that operating margin fell 1.8 percentage points. Internal analysis later reveals that staff turnover had been rising steadily throughout the year, but this was not included in the monthly management report. No corrective action was possible once the annual result was known. In balanced scorecard terms, how is the year-end operating margin figure best classified?