Lagging indicators

Most companies and managers love metrics. They look good and give us a sense of control, but not everything measurable should be measured.

Metrics are useful to know if we are on the right track or if we must make some changes. A metric that does not inform action is a waste of time and focus.

Not only you want metrics that let you know when changes are needed, but you also want them to let you know it before it’s too late, when most of the damage is still avoidable. For example, a safety dashboard that only tracks deaths on the workplace is useless, for it will alert you of the need to use stronger safety measures only after there has been a death. Using such a dashboard guarantees deaths.

Metrics that describe the past are called “lagging indicators.” They have some uses, such as awarding bonuses and promotions, but are not enough for decision-making. They cannot alert you of problems before it’s too late. You must always complement them with leading indicators, metrics that estimate the future. They are the topic of the next post.

You might be interested in my books, two of which are on management. Here is a review: