Managers can make informed decisions by using Statistical methods and Statistical thinking. This calls for unraveling the power of Statistics for managers.
Modern business management is more a Science than an Art. Ever-increasing global competition mandates business managers to address uncertainty by using scientific methods and be Objective decision-makers. Forecasting, planning, organizing, and decision-making; are some of the key activities of a manager who intends a better future for the business.
The only certainty about the future is its ‘uncertainty’. Even though one cannot eliminate uncertainty, it is possible to measure uncertainty using Statistics: managers can make informed decisions by using Statistical methods and Statistical thinking. This calls for unraveling the power of Statistics for managers.
Broadly, knowledge of statistics helps a manager to describe the problem, identify and evaluate alternative courses of action, estimate error, monitor processes, and take appropriate corrective actions to achieve optimum results.
Applications of Statistics for Managers
Both Descriptive and Inferential statistical methods find an important place in business management. To quote a few of the many applications across functions,
- A Marketing manager needs to gather and analyze a large amount of data pertaining to market dynamics and target customers. Ideally, marketing strategy depends upon the outcomes of Market research, which involves statistical methods for collecting and analyzing data, application of sampling techniques, and evaluating the effect of various marketing strategies.
- A production manager would ideally use Statistical Process Control techniques to improve productivity and quality. Knowledge and application of Control Charts, Sampling techniques, and Probability Distributions ensure better processes and products. This also leads to a reduction in production costs and higher profits.
- An HR manager would be interested in identifying the best approach to training employees and evaluating the impact of training. There is a need to measure attrition and understand the underlying factors.
- For a Finance manager, crunching financial data and using financial techniques is an integral part of the day-to-day job. Knowledge of Statistics enhances the competency and proficiency of a manager as a researcher and therefore provides an edge.
In an era where Total Quality Management [TQM], Lean organization, and Six- Sigma are some of the buzzwords, it is essential for a manager to be conversant with Statistics.
Also, in today’s scenario, a graduate from B – school is expected not just to manage functional departments of a corporate house, but, to be an intrapreneur. He/she is expected to approach work with an entrepreneurial mindset. Professionally trained and skilled graduates are encouraged to establish ventures, create jobs, and create value. In order to be entrepreneurial it is important to be able to ‘think outside of the box and be ‘objective’.
In other words, one needs to nurture ‘Creative and Statistical thinking’ for success. The quantitative analysis aids in providing an objective, factual underpinning of situations and responses. Analysis, along with data, helps quantify the extent of problems and solutions in ways that other information seldom can.
Be it a simple tool like Tables, Graphs, for presentation and measures of Central Tendency, Dispersion, or Association for analysis of data, or complex techniques like Multi-variate techniques, Big Data analysis, Structural Equation Modeling, Statistical techniques have made their way into corporate broad rooms. This indicates the indispensability of Statistics for managerial decisions.
ABOUT THE AUTHOR: Dr. Veena K. N. is an associate professor at IBA specializing in quantitative methods, operations research, and entrepreneurship.