Software AG Products 10.7 | Designing and Implementing Business Process Models | ARIS Method manual | Balanced Scorecard method | The Balanced Scorecard concept | Strategic management process and Balanced Scorecard | Formulation and realization of vision and strategy | Definition of leading and lagging indicators
 
Definition of leading and lagging indicators
The establishment of cause-and-effect chains also produces a temporal connection between individual objectives and KPIs. Generally, performance drivers - so-called leading indicators - are part of the learning and growth perspective and the process perspective and come before the effects of the customer perspective and financial perspective. Most KPIs in the customer and financial perspectives are result indicators that measure business success; as so-called lagging indicators they focus on the past.
Both leading and lagging indicators should be defined in every Balanced Scorecard perspective so that the interrelationships between initiatives and the achievement of objectives can be represented. The leading indicators enable you to detect deviations from given objectives at an early stage.