Plenty of companies naturally collect lots of data in the course of business. This is especially true in the Internet age, when it's often possible to gather detailed information about when customers do everything from open emails to access particular items on a company website. The role of statistics in business is in evaluating all of this information to determine what it says about the company's operations and strategy.
Advantages of Statistics in Performance
One role of statistics in business is informing a manager working on employee performance management. A manager collects data about employee productivity, such as the number of tasks completed or the number of units produced. He or she must analyze data to find ways in which an employee should improve to achieve maximum productivity. Many companies also collect data about employee engagement and happiness on the job, which can be tracked to not only keep workers motivated but ensure they don't leave for other positions elsewhere.
For example, if a manager finds that an employee's number of finished outputs drops by 20 percent every Friday, he or she should communicate with the employee, setting the expectation that his or her output will remain above a minimum level every day of the work week.
Many companies will also compile aggregate statistics about employee performance. If a company finds that employees overall are doing less work right before or after the weekend, its managers will want to consider ways to either motivate employees or, if it turns out to be due to external factors, provide them with alternative tasks they can do during downtimes. Companies may want to avoid collecting too much data about employee activities, however, since it may come off as creepy to workers.
Evaluating Alternative Scenarios
Beyond managing the performance of her own workers, a manager participates in joint decision making with other managers. Statistics help the managers to compare alternative scenarios and choose the best option for the company. The team must decide which software to use for automating the customer ordering process.
They consider which software products have been successfully used by competitors and choose the most popular one, or they might find how many orders that an ordering system can process on average daily. The team collects performance data from software makers and independent sources, such as trade magazines, to inform their purchasing decisions.
The Importance of Data Collection
Collecting data to use in statistics, or summarizing the data, is only an advantage in business if a manager uses a logical approach and collects and reports data in an ethical manner. For example, he might use statistics to determine if sales levels the company achieved for the last few products launched were even close to projected sales levels. He might decide that the least-performing product needs extra investment or perhaps the company should shift resources from that product to a new product.
In some cases, it might be necessary to anonymize customer data or strip out unimportant confidential parts to reduce the risk of a data breach or abuses by employees or data consultants. Privacy laws also increasingly govern how companies can use or store personal data, so it's important to make sure your business follows the rules in jurisdictions where it's active.
Statistics in Research and Development
A company also uses statistics in market research and product development, using different surveys, such as random samples of consumers, to gauge the market for a proposed product. A manager conducts surveys to determine if there is sufficient demand among target consumers.
Survey results might justify spending on developing the product. A product launch decision might also include a break-even analysis, such as finding out what percentage of consumers must try a new product for it to be successful.
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