Lead indicator
A lead indicator is a performance measure that predicts a future outcome and allows managers to intervene before results are finalised — for example, staff training hours or customer complaint resolution time — contrasted with lag.
FrameworkBalanced scorecard
See it move
Lead indicators predict an outcome and are available during the period — staff utilisation rate is one example. Lag indicators, such as revenue and profit, only report the outcome once the period has closed. A sustained drop in utilisation this quarter predicts a revenue shortfall next quarter, giving management time to redirect effort before the financial damage appears in the accounts.
Check yourself
A professional services firm tracks the proportion of client engagements completed on time and within budget each month. Management uses this rate to anticipate whether client renewal rates — and therefore next year's revenue — will hold. In a balanced scorecard context, how is 'on-time, on-budget project completion rate' best classified?