Data, Statistics, and Decisions

According to an article published in LinkedIn, today’s business world is all about data. In fact, 81% of executives recently told EY that “data should be at the heart of all decision-making.” But author and former University of Toronto business school dean Roger Martin disagrees with this sentiment. Martin poses the question: But can management decisions really be reduced to an exercise in data analysis?

Then consider what Brad Raffensperger said during his testimony at the Congressional Hearing about January 6: “The numbers are the numbers. The numbers don’t lie.”  He was speaking of a request by the former president to “find 11,780 votes” for him.

What role should data and analysis play in decision-making? Should data be at the heart of all decision-making? As any true HR leader would say, “It depends.”

I was recently involved in a writing contest where the first-place prize went to the entry with the most votes. This is a pretty straightforward example of the numbers are the numbers. What would happen, however, if there were a tie? Then the contest arbiters would have to add a subsequent process to determine the winner.

Now consider statistical analysis. I worked with clients who needed affirmative action plans which involve a great deal of statistical analysis. Often, the results of certain analysis indicated that there might be a problem. I would discuss the need to look more closely at the decisions involved in the analysis and understand the story behind those decisions. If there appeared to be a problem with terminating people of color or women, for example, could each individual decision be justified? In other words, look beyond the results of the analysis, understand what’s behind the numbers, and be certain that the decisions can be justified.

My response to Martin’s question about business decisions being reduced to data analysis is no. While data does play a role in decision making and relevant data should be considered, business leaders must use their critical thinking skills, interpret the data, and apply it to the problem or issue at hand. Are there other factors involved that cannot be quantified? Data is important, but other factors are equally important and need to be considered.

Martin makes some interesting points in his disagreement. You can read them in his article about business decisions.  

As we discuss in the latest edition of The Big Book of HR, data and analytics are becoming increasingly important to decision making. However, maintaining a high touch philosophy is imperative to keep the human in human resources. That means understanding the facts behind the numbers when making decisions, especially decisions about people.

Whenever I talk about statistics, I always think about Mark Twain’s quote: “There are three kinds of lies: Lies, Damned Lies, and Statistics.”