What is always a defining characteristic of a key performance indicator?

A defining characteristic of a key performance indicator (KPI) is that it is capable of being quantified. KPIs are measurable values that demonstrate how effectively an organization is achieving key business objectives. By being quantifiable, KPIs allow for accurate tracking and assessment of performance over time, enabling businesses to make informed decisions based on solid data. This quantifiable nature is essential because it provides a clear basis for evaluating success and identifying areas for improvement.

In contrast, while it may be beneficial for KPIs to be relevant across various business functions, this is not a universal trait, as some KPIs may be specific to certain areas or departments. Additionally, KPIs do not necessarily need to be broad in scope; they can be very specific and focused on particular goals or outcomes. Furthermore, the method of calculation, whether through a computer system or not, is not a defining characteristic of KPIs. Ultimately, quantification is what allows KPIs to be effective tools for measuring performance.