Leading and Lagging indicators

When companies are creating their performance management system there is often a lot of confusion regarding what are leading and lagging indicators.

I discuss this theme in my recent book, Maintenance Scorecard, in some depth as I think it is one of the areas where measurement programs are able to deliver significant value to an organization.

The difference is a simple as it is obvious. leading indicators lead while lagging indicators lag performance.

Direct performance measures (availability, MTBF, MTTR etc) are strong examples of lagging indicators. At all times the information is delivered after the event, rather than as a warning that an undesirable event is likely to occur.

Leading indicators are often measures from within a process. Indicating that something in the process is awry, which could lead to an undesirable event. For example, schedule compliance is a leading indicator. A preventive replacement task that is not completed on its due date means that there is an increased risk of failure, thus undesirable consequences. (Or the task wouldn't have been assigned in the first place)

Where possible, try to utilize leading indicators as a means for driving out high performance and a more proactive approach to ongoing asset management.

Cheers,

Daryl...