There are a number of general characteristics of indicators that can help to ensure that proposed indicators will be useful and effective.
Indicators should be relevant to the organization. One way of helping to ensure the relevance is to relate the performance indicators to the strategic goals and objectives of the organization or of a specific service area. Indicators should ideally also be relevant to the people providing the data and to the users of the PI, but it may not be possible for a single indicator to be relevant to all users due to differences in perspectives and interests.
A performance indicator should have a clear and intelligible definition in order to ensure consistent collection and fair comparison. Vague descriptions can lead to misinterpretation and confusion. To tight or to broad definitions could also create problems.
Easy to understand and use
It is important that indicators are described in terms that the users of the information will understand, even if the definition itself have to use technical terminology. Indicators focused on the public should avoid management jargon, or abstract concepts.
Indicators should ideally be comparable on a consistent basis both between organizations and over time. An essential aspect of the comparability of performance indicators is the inclusion of the context within which the comparison is taking place. External and internal circumstances can differ to such a degree that comparison is invalid.
The indicator also needs to be collected and calculated in a way that enables the information and data to be verified. The indicator should be based on robust data collection systems, and it should be possible for managers to verify the accuracy of information and the consistency of the methods used.
Another important criterion is to balance the cost of collecting information with its usefulness. Where possible, an indicator should be based on information already available and linked to existing data collection activity.
Service managers should be able to influence the performance measured by the indicator. If this is not the case, the incentives for making an effort to improve performance will diminish, and the performance indicators may be regarded as unfair, and discourage staff and managers.
A performance indicator should be responsive to change.
The definition of an indicator ought not to deter organizations from developing innovative processes or coming up with alternative methods, systems or procedures to improve service delivery. PIs should ideally be constructed to allow such innovations take place.
Indicators should be statistically valid.
The PI should be based on data that are available within a reasonable time scale. This time scale will depend on the use made of the data. Some data are collected on a weekly or even a daily basis, as they are needed in the operation management of the services, whereas others are available once a year for more strategic and long term purposes.