For several decades, breeding goals in dairy cattle focussed on increased milk production. However, many functional traits have negative genetic correlations with milk yield, and reductions in genetic merit for health and fitness have been observed. Herd management has been challenged to compensate for these effects and to balance fertility, udder health and metabolic diseases against increased production to maximize profit without compromising welfare. Functional traits, such as direct information on cow health, have also become more important because of growing concern about animal well-being and consumer demands for healthy and natural products. There are major concerns about the impact of drugs used in veterinary medicine on the spread of antibiotic-resistant strains of bacteria that can negatively impact human health. Sustainability and efficiency are also increasingly important because of the growing competition for high-quality, plant-based sources of energy and protein. Disruptions to global environments because of climate change may encourage yet more emphasis on these traits. To be successful, it is vital that there be a balance between the effort required for data recording and subsequent benefits. The motivation of farmers and other stakeholders involved in documentation and recording is essential to ensure good data quality. To keep labour costs reasonable, existing data sources should be used as much as possible. Examples include the use of milk composition data to provide additional information about the metabolic status or energy balance of the animals. Recent advances in the use of mid-infrared spectroscopy to measure milk have shown considerable promise, and may provide cost-effective alternative phenotypes for difficult or expensive-to-measure traits, such as feed efficiency. There are other valuable data sources in countries that have compulsory documentation of veterinary treatments and drug use. Additional sources of data outside of the farm include, for example, slaughter houses (meat composition and quality) and veterinary labs (specific pathogens, viral loads). At the farm level, many data are available from automated and semi-automated milking and management systems. Electronic devices measuring physiological status or activity parameters can be used to predict events such as oestrus, and also behavioural traits. Challenges concerning the predictive biology of indicator traits or standardization need to be solved. To develop effective selection programmes for new traits, the development of large databases is necessary so that high-reliability breeding values can be estimated. For expensive-to-record traits, extensive phenotyping in combination with genotyping of females is a possibility.