What is a lead indicator? What is a lag indicator? Explain using relevant examples from your...

What is a lead indicator? What is a lag indicator? Explain using relevant examples from your organisation. What are some of the challenges of using lead indicators?

Expert Solution

Leading indicator is any economic factor that changes before the rest of the economy begins to go in a particular direction. Leading indicators help market observers and policymakers predict significant changes in the economy. Leading indicators aren't always accurate. Leading and lagging indicators are two types of measurements used when assessing performance in a business or organisation. A leading indicator is a predictive measurement, for example; the percentage of people wearing hard hats on a building site is a leading safety indicator. A lagging indicator is an output measurement, for example; the number of accidents on a building site is a lagging safety indicator. The difference between the two is a leading indicator can influence change and a lagging indicator can only record what has happened. The challenge in using lead indicators is that they can be difficult to determine and measure - and there is no guarantee of a result, they simply provide information that allows you to make better decisions before the outcome is clear.

Nightingale answered 2 years ago

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