Leading and lagging indicators
Leading indicators (like training hours) predict future results, while lagging indicators (like profit) confirm results already earned; the balanced scorecard pairs both to show cause and effect over time.
FrameworkBalanced scorecard
See it move
A retailer's leading indicator, training hours per employee, rises from 4 to 10 this quarter, a 150% increase. Management expects the related lagging indicator, sales per employee, to rise from €25,000 to €30,000 next quarter, a targeted 20% increase. Only next quarter's actual sales figure will confirm whether the extra training paid off.
Check yourself
A hospital's balanced scorecard reports average patient wait time falling from 45 minutes to 27 minutes this quarter. Management expects this to raise next quarter's patient satisfaction score from 72 to 84. What is the percentage reduction in wait time, and which of the two measures is the leading indicator?