A performance driver is a factor — financial or operational — whose changes have a direct, causal relationship with changes in a key performance outcome. Performance drivers are not simply correlated metrics; they are the upstream inputs or activities that produce performance results. Identifying the true drivers of business performance enables management to focus on the activities that will most directly affect outcomes, and enables more reliable financial modelling by linking financial projections to observable operational variables.
Why This Matters
Knowing what drives performance is the prerequisite for managing it. When management focuses only on outcome KPIs — revenue, profit, margin — they see results but cannot directly act on them. Performance driver analysis identifies the upstream factors that management can actually influence, and builds the causal chain from operational activity to financial outcome. This enables both better performance management (by focusing effort on high-leverage drivers) and better planning (by building financial models from operational assumptions rather than historical extrapolations).
Where This Fits
This term sits within the Performance Analysis area of Performance & Control.
Related Terms
- Key Performance Indicator (KPI)
- Cost Driver
- Driver-Based Planning
- Variance Analysis
- Performance Analysis
Related Knowledge
To be added when relevant Knowledge Hub articles are published