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The balance between leading and lagging KPIs

Key Performance Indicators (KPIs) play a crucial role in managing organizational success and guiding decision-making processes. In this article we dive into the difference between two types of KPIs: leading and lagging indicators. Finding the right balance between these indicators is essential for monitoring business performance on the one hand and timely decision making on the other hand.

Leading KPIs: Anticipating Future Success

Leading KPIs are forward-looking metrics that provide insights into the activities and processes that drive future performance.

What happens now, with impact on the future?

These indicators are proactive, helping organizations identify potential issues and opportunities before they impact overall performance. Examples of leading KPIs include the net promoter score, employee engagement, and innovation metrics.

By focusing on leading indicators, businesses can proactively react on changes before they negatively impact the organizational results. For instance, a high level of employee engagement might indicate a positive work environment, fostering employee retention and a balanced workforce and contributing to improved customer satisfaction.

Lagging KPIs: Reflecting Past Performance

On the flip side, lagging KPIs are retrospective and measure the results of past actions and decisions.

What has happened?

Examples are revenue and profitability metrics. While lagging indicators are critical for assessing historical performance, they may not provide sufficient insight into the factors driving success or failure.

The Balancing Act

Achieving a harmonious equilibrium between leading and lagging KPIs is essential for effective management. Relying solely on lagging indicators may lead to a reactive approach, addressing problems only after they have occurred. On the other hand, exclusively focusing on leading indicators might result in a lack of clarity about the actual impact of strategies on the bottom line.

To strike the right balance, organizations must align leading and lagging indicators with their strategic goals. For example, if the goal is to increase revenue, KPIs like Net Promoter Score (indicator for customer satisfaction) and Tender Success Rate (indicator for succesful sales) can guide decision-making, while lagging indicators like revenue and profitability will measure the actual (in this case financial) impact.


The balance between leading and lagging KPIs is crucial for managing your business. Leading indicators enable proactive decision-making (what is likely to happen), while lagging indicators provide a retrospective view of past performance (what has happened). Organizations have to recognize the symbiotic relationship between the two and use them in tandem to guide strategic decisions.

Are you striking the right balance between leading and lagging indicators in your organization?

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