How to manage performance with Lag and Lead measures

In a world of increased remote working and agile practices becoming more accepted, managing remote teams comes with new challenges. Setting clear objectives and goals is fundamental to success providing a more effective way to measure employee performance.

Have you heard people refer to Lag and Lead measures but not quite understood what they mean or how they might be useful? This blog explains all.

What exactly are Lag and Lead measures?

Lag measures are results that may take time to materialise, such as sales results, business growth or increased market share. These lag measures are always ‘lagging behind’, which can sometimes be frustrating. A lag measure could constitute an annual objective or specific vision for the business. In more simple terms, a lag measure could be weight loss. We all know that a poor diet and lack of exercise will unlikely lead to achieving any kind of weight loss. On the other hand, lead measures are the results of activities that signify progress towards achieving a lag measure. These are the smaller incremental measures forming part of everyday performance management.

In the book 4 Disciplines of Execution, Chris McChesney and Sean Covey explain that

Lead measures track the critical activities that drive, or lead to the lag measure.

They also go on to say,

while a lag measure tells you if you’ve achieved the goal, a lead measure tells you if you are likely to achieve the goal.

Focusing on lead measures instead of lag measures will help your team make progress and avoid overwhelm as they focus on the incremental tasks they could achieve that will lead to the bigger lag measure. They will become more effective executing their work as lead measures can be seen as smaller, more realistic performance goals.

How to differentiate between them

A simple way to understand the difference is to think about a river. The mouth of the river is the lag measure which is also the end result, e.g. your sales figures or business growth. Once you have clarified your lag measure or the lag outcome that you desire, begin to work backwards and consider what happens ‘up stream’ in advance of that achievement. At this stage you are looking for something that could help predict your lag measure, such as making a specific number of outbound sales calls or attending more networking events to generate more prospects.

A real-life example

We recently worked with an award-winning estate agent that wanted to hit the lag measure of a significant increase in property sales. So we began exploring the lead measures that could directly influence this.

Firstly, they identified that the more market appraisals/property valuations they carried out within someone’s home where they got to know the sellers, the property and make a good impression, the more chance they had of achieving sales. Then we looked further upstream and asked, what typically happens before a property valuation? The answer was basic valuation requests which come in via the website. So they then focused on how they could generate more valuation requests. For example, one way was to focus on driving more activity to a quick valuation feature on their website. They also considered incentivising valuations by offering added value or free gifts.

As they looked further, they identified that their relationships with ‘hot buyers’ could also significantly impact the number of valuation requests they received. So they began to measure the number of calls they had with ‘hot buyers’ and quickly realised there was a correlation between how much time people spent making outbound calls to their hot buyers and the number of sales that followed in around 6 months time. The result was that they correctly identified and cemented the lead measures that would impact their sales, one of which was ‘to make 60 minutes of outbound calls per day to hot buyers.’

That works well for an estate agent, but how could it work for you?

Here are some further examples of lag and lead measures that we hope will get you thinking about any that could apply to your business:

Examples of lead measures:

  • The number of prospects currently in your sales pipeline
  • The number of relationships you have with key influencers
  • The number of strategic partnerships you have set up
  • The number of downloads to a valuable piece of content
  • The number of demos or discovery calls made during a specific time period

Examples of lag measures:

  • Sales figures
  • Business growth
  • Market share
  • Weight loss

It’s important to keep an eye on your overall lag measure to maintain focus and work on the correct lead measures. During busy periods always ask yourself if the task in hand will impact your lag measures. Check out our blog Focus on business, not busyness for more guidance on this.

In summary

The main thing to consider here is not to purely focus on your lag measures. Work backwards moving upstream to find out what your lead measures would be, and increase focus in these areas. Measure what happens upstream, your Lead measure, that will help predict what happens downstream, your Lag measure.

So, as you begin your next business planning cycle, allocate some time to help your teams clarify the lead measures that will influence their lag measure. Start measuring performance against lead measures and give recognition where it’s due. This works wonders to strengthen business culture and boost team motivation. For more information on employee recognition, check out our blog Employee Recognition - a simple action with massive benefits.

If you have any questions related to anything mentioned in this blog or would like some help identifying your lag and lead measures that will help you increase performance and drive results in your business, please get in touch. Email us at hello@reclaro.com.

Posted by Pete Wilkinson

Last updated: 15 October 2021

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