An indicator is a measure used to express the behaviour of a system or part of a system. Indicators are widely used in the public sector, and there is widespread use of indicators for performance management of public health. In this paper, we define some of the terms used in relation to indicators. We outline some of the most important issues around selection and construction of indicators, and we include criteria for developing or assessing indicators. Use of inappropriate indicators can be misleading and can result in negative consequences for public health, and we point out the potential for pitfalls. Some misinterpretation of indicators could be avoided by use of better methods of presentation than the familiar league table. We use the example of a funnel plot to show a method of summarising indicator data which avoids ranking, and allows rapid identification of areas functioning outside normal limits.