“ Now that we’ ve got their annual sales, the next logical step is to rank the salespeople,” said Harold.( See Figure 3.)
“ As Scherkenbach points out, looking at the data graphically makes it much more understandable than a table, so let’ s do that next.( See Figure 4.)
“ Clearly, salesperson # 2 has committed the unforgivable sin of coming in dead last,” Harold continued.“ As a matter of fact, salespeople # 9, # 3, # 4 and # 2 all are in the bottom half of the sales force, and probably would be removed by a tough manager. Scherkenbach points out the error of this typical evaluation:‘ We knew from the start that one of the nine employees would be in the top 11 percent and one would be in the bottom 11 percent( 1 / 9 = 11.11 percent). We knew that before we gathered any data. What we need to know is whether or not the top or bottom 11 percent are part of the system, and if they are not, and thus in need of different treatment.’
“ Here is where the math and statistics come in, but I am going to hold it to a minimum. A standard way statisticians measure how far one number of a group of numbers deviates from the average of the group is called a standard deviation. This is a very important concept, because the standard deviation lets us figure out which workers are within the system and which are special cases. A spreadsheet program like Excel™ will calculate standard deviations for you from the formula = STDEV( First Cell: Last Cell).“ In our example, the standard deviation is 67. Statistical rules tell us that any results within three standard deviations of the average are within the system rather than a special case. By that I mean you start by multiplying the standard deviation by three. In this example, three times the standard deviation is three times 67, or 201. Any result that is within 201 of the average is a part of the system, not a special case. The average in our example is 396. Subtracting 201 from 396 gives us a lower limit of 195 and adding 201 to 396 gives us an