The New Thinking on KPIs, part 4 of 4

Removing the lead / lag confusion

Many management books talk about “lead and lag indicators” which I believe merely clouds the KPI debate. Using this new way of looking at KPIs we dispense with the terms lag (outcome) and lead (performance driver) indicators. I have presented to nearly two thousand people on KPIs and I always ask “is the late planes in the air KPI, a lead or lag indicator?” The vote count is always evenly split. Surely, this is enough proof that lead and lag labels are not a useful way of defining measures.

Key result indicators replace outcome measures, which typically look at activity over months or quarters. PIs, and KPIs are now characterised as either past, current or future measures. The new concept called “current measures” are those monitored 24/7 or daily. You will find the real KPIs in your organization are either “current” or “future” measures.

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About the Author

David Parmenter, author of Key Performance Indicators: Developing, Implementing, and Using Winning KPIs and Pareto’s 80/20 Rule for Corporate Accountants, is an international presenter who is known for his thought provoking and lively sessions, which have led to substantial change in many organizations. He is a leading expert in developing winning KPIs, replacing the annual planning process with quarterly rolling planning, accelerating month-end processes, and converting reporting to a decision based tool.

David’s work on KPIs has received international recognition with clients in Auckland, Wellington, Sydney, Melbourne, Brisbane, Adelaide, Canberra, Perth, Kuala Lumpur, Singapore, Tehran, Prague, Dublin, London, Birmingham, Manchester and Edinburgh. David is a fellow of the Institute of Chartered Accountants in England & Wales and has worked for Ernst & Young, BP Oil Ltd, Arthur Andersen, and Price Waterhouse Coopers.

David’s recent thinking is accessible from www.davidparmenter.com. He can be contacted at [email protected] or telephone +64 4 499 0007.

This articles is an extract from his “Implementing winning KPIs” whitepaper which can be downloaded from http://davidparmenter.com/how-to-guides)