A lagging indicator is a metric that reports an outcome only once it has already happened - revenue for the quarter, staff turnover for the year, profit for the period. It confirms what occurred rather than predicting what will.
What it means
Lagging indicators are usually the metrics that matter most for accountability and reporting, but by the time they are known, the period they describe is over, which is why they are paired with leading indicators that can still be acted on.
Where it fits in
The financial perspective of a balanced scorecard is built on lagging indicators, while the other three perspectives lean on leading indicators - the combination is what makes the scorecard "balanced" rather than purely backward-looking.
Key rules
- A metric that confirms results after the period has already passed.
- Used for accountability and reporting, but too late to act on for that period.
- Cannot be influenced once the period it describes has closed.
- Paired with leading indicators to give a forward-looking view too.
