Leading and Lagging Indicators

Are you driving looking through the windshield or watching the rearview mirror?

 Leading and Lagging Indicators

Leading indicators are items that project end-result performance, driving looking through the windshield.  For example, labor productivity is a leading indicator of job profitability.  Lagging indicators are where the rubber meets the road but is necessarily driving using the rearview mirror.  Leading indicators give you a chance to correct a problem before it kills the lagging indicator.   Leading indicators allow you to be proactive.   Lagging indicators, by their very nature, force you to be reactive.   Leading indicators tell you how a part of your progress is going. 

Here are some examples for each:

Lagging

  • Revenues
  • Margins
  • Net Profits
  • Support Costs
  • New Customers
  • Turnover
  • Accidents
  • Cash in bank
  • Project over budget
Leading

  • Gross Profits
  • Orders, Forecasts
  • % Revenue From Recent (Higher Margin) Releases
  • Defect in First Customer Shipments
  • New Customer Visits, Demos, Proposals
  • Customer Satisfaction
  • Wage rates
  • Safety  Meetings
  • A/R Aging

Do you know what your key indicators are?

Are you using the key indicators to improve performance?

Jeffrey A. Redmon

Founder, Redmon Law Chartered and Inner Circle of St. Croix Valley

jredmon@redmonlaw.com

www.redmonlaw.com

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