Wednesday, June 12, 2013

Standard Deviation

When it comes to common statistical functions, Standard Deviation is perhaps the most overlooked and underused. This has always struck me as being unfortunate, since with very little imagination, it can be easily used and adopted to a wide range of everyday business purposes.

For those of us who have not been in a math class in a while, Standard Deviation is simply, (and I do mean, “Simply”), is a measure of how widely values are dispersed from the average value.

For instance, let’s say that you oversee a Call Center and you would like to use Excel to monitor a new metric regarding talk times. Suppose that you already track weekly results and know that your company’s representatives can provide your customers good service in a Mean Average of 6-8 minutes. When it comes to Standard Deviation of your Week-over-Week monitoring, you would undoubtedly prefer to see Smaller values versus Larger values (tighter grouping around the average times).

So how can you use Excel to track this useful statistic? If you are still using Excel 2003 or Excel 2007, using the old STDEVP is your Go-To function. This assumes that you are using the Entire Population of data (ergo, the “P”). If you are using just a Sample of your data, then you will want to use STDEV.

This was made more intuitive in Excel 2010 and Excel 2013, where the function for finding standard deviation for the Population is STDEV.P and the Sample is STDEV.S. (Hooray for Microsoft for continuing to make these sorts of refinements.)

Rather obviously, this type of information is Most Effectively Illustrated quite effortlessly with a Line Chart or a Bar Chart. You can then see at a glance whether talk times are under control in this regard.

This is, of course, a mere example of the virtually countless ways of using Standard Deviation in your Excel reports. Just another way that Excel can improve our business lives (which, as Martha Stewart would say, “Is a Good Thing”.)

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