Good KPIs follow 3 rules
A KPI based solely on quantity incentives pushing products out the door fast, no matter what quality they are in. It creates a culture of go, go, go, which can be reckless to your bottom line.
A KPI based solely on quality incentives not producing anything at all. You have zero defects if you make zero shipments.
A good KPI pairs quantity with quality.
If you are designing a measure and a metric, consider not only what incentives you’re driving, but also how those who are being measured could subvert the results.
It is not always possible to measure success directly. When using Proxy Measures , try to align them as closely as possible with what “success” would really mean. Throughout is one aspect of a process, but if what’s being throughput is garbage, than you have an assembly line whose very successful at making garbage.
The best KPIs are those that, when green, positively ensure that all is actually well - and not that someone is playing games.