In a world of data and analytics, it’s important to know key terms and definitions — and it’s even more important to implement these ideas into your workforce management. This article will help you learn about lagging indicators and why these alone aren’t enough to help an organization thrive. You’ll also uncover the benefits of connecting leading indicators to positive employee experience and retention.

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What are leading indicators and lagging indicators?

First, let’s define our terms: what are these indicators, and how do they differ?

A leading indicator is an input measure of survey responses, real-time data, or ad hoc metrics that point to predictions about potential future outcomes and current trends.

A lagging indicator is an output measure of past occurrences, showing what has already happened or was previously reported.

Put them together, and we discover that lagging indicators can tell you what happened while leading indicators help explain why it happened.

Examples of leading indicators in HR and workforce management

Now that we have definitions, let’s apply them to metrics we might see in our day-to-day PeopleOps activities. Here are just a few examples below.

  • Employee engagement surveys. These surveys are leading indicators because they take a “pulse” on how employees are feeling now, before you encounter turnover or detractors. Based on these measures, you can take a proactive approach to improving employee experience or expanding your employee engagement strategies.
  • Promotion rates. How often are people moving on up in your organization? Having long tenures — especially for technology or remote jobs — shows a stickiness to your company.
  • Employee referrals. If people hate their jobs, they won’t tell their friends to come to work alongside them. A referral is a good leading indicator of job satisfaction and happiness.

It’s important to remember that these indicators are not “proof” or causational metrics; they are only correlations. You have to connect the input measurements to a conclusion about what may occur, but you could misinterpret the facts if you don’t follow best practices.

For instance, just because you’re getting a lot of gold stars on an employee survey doesn’t mean that all is right with the world. Some people may just be clicking “10 out of 10” on a survey not because they really believe this, but because they might believe that they’ll be retaliated against if they provide negative feedback.

This example shows why it’s important to make sure that you remove third variables and measure representative samples.

Examples of lagging indicators in HR and workforce management

Unlike leading indicators, lagging indicators can tell you exactly what an outcome is — you don’t have to guess about the output or conclusion. While this is a stable indicator of previous performance or metrics, it doesn’t exactly tell you why it happened.

Here are some examples of these after-the-fact indicators.

  • Attrition and turnover rate. Leaving a job is voting with one’s feet. You know something has caused employees to head for the door.
  • Burnout metrics. Teams can show signs of a lack of engagement or a negative employee experience in many ways. These metrics can include attendance issues, missed meetings, or late and incomplete tasks.
  • Customer satisfaction rates. Customers have been on a long journey — from the first time they saw your ad or social media post all the way to the point they’ve purchased a product or service. Therefore, a customer score summarizes the highlights of their interactions with your organization.

Differences between leading indicators and lagging indicators

Now that we’ve defined our terms and given some examples, it’ll be important to further emphasize how these indicators differ.

Leading indicators are prospective; lagging indicators are retrospective. Leading indicators allow your team to think ahead of the curve. This means that your team has an early warning to adjust course or continue driving towards upward trends. On the other hand, you won’t always know what’s causing growth. You won’t have this problem with lagging indicators if you take a historical look at where the trends ended up.

Leading indicators tell you what trends are happening now (inferential); lagging indicators tell you what’s already happened (descriptive). As with all metrics, there’s a time and a place for both inferential and descriptive statistics. To be as effective as possible, you’ll want to have the right mix of both systems in tandem.

Advantages of emphasizing leading indicators 

While lagging indicators are generally easier to measure, taking your organization and HR to the next level requires you to implement leading indicators and interpret your workforce analytics. Why is that?

Say you go to your business’s Glassdoor page and see a string of negative employee reviews — a very clear lagging indicator. Wouldn’t you want to know how to prevent a sea of turnover? That’s what leading indicators are for.

Leading indicators help you put together the whole story of your reporting. To find them, ensure you implement the right surveys and analytics to preempt negative outcomes and promote good ones. Take the lagging indicators in your workforce data and infuse them with context to develop predictive and prospective metrics.

Also, Hubstaff Insights can be one part of a leading indicator-focused employee experience strategy. Use Insights to help your team cut down on unneeded meetings, protect focus time, or uncover technology and software needs before they interrupt your team’s work.

Think of lagging indicators like the rearview mirror in your car. It’s a helpful tool for backing into a parking space or checking your surroundings. However, the main tool you’re using while driving is the giant windshield in front of you, letting you see where you’re going and what’s ahead.

Imagine how hard a road trip would be if you reversed the windshield and rearview mirror. If you only had a tiny sliver to see what’s ahead, how successful (or safe) would your traveling be?

Therefore, start with and emphasize those leading indicators to direct your resources towards what will lead to more growth or prevent problems before they become lost causes.

Category: Workforce Management