So, we can be a little geeky here at Hawkeye. And while the topic of percentiles sounds pretty dry, it’s actually something everyone in business should know a little bit about. And we promise, we’ll make it easy and fun to understand. By the way, we’re just impressed that you clicked on a post about percentiles! That might mean your inner geek needs some attention.
While we do love a good statistics lesson, we’ll forgo an in-depth discussion of percentiles here. Let’s just say that they’re a quick and easy way of understanding where you rank against everyone else. Percentiles are based on a one-hundred point scale and tell you what percentage of other businesses rank below you. So, if a report tells you that your client satisfaction is in the 80th percentile, that means that you scored better than 80% of all organizations on that same measure. If that same report said your client satisfaction is in the 10th percentile, that would mean that you only did better than 10% of other organizations.
As anyone who ever took a class that was graded on a curve knows, your score on a test matters, but so does everyone else’s. So, if you got a 50 on that Statistics test, but everyone else got 20s, 30s, and 40s, you might still snag an “A” for the course. In that case, if you had the high score at 50, you’d be at the 100th percentile. In other words, you scored better than 100% of the class.
So, what does all this have to do with business? Actually, a lot. One important application is in customer and employee satisfaction. If you average 9.0 on a 10 point scale in customer satisfaction, you’d probably be pretty proud. But, what if that 9.0 equates to the 25th percentile? Yikes! You’d only be doing better than 25% of other businesses; 75% of other businesses are scoring better than 9.0. What looked like a great score suddenly looks a little different. The opposite can be true too. Imagine a survey in which you get a low score, let’s say 5.0 out of 10, but a high percentile. A great example of that might be an employee survey on satisfaction with pay. A score of 5.0 could still be in the 90th percentile if no one is elated about their pay (and who every says that they’re paid enough?).
Understanding both your score and where you rank against others is not only important to your improvement efforts, but it might also be critical to your bottom line. For hospitals, percentile rankings are already used to help determine reimbursement levels for payments from Medicare. And guess what happened within two years of implementation of that program? It drove performance to near perfection on many measures. In other words, anything less than perfect drops to the bottom of the percentile rankings. So, you can get a 99 on the test, but if everyone else got a 100, you might still get an “F.”
Leaders need to know not only how their own business is doing, but also where that performance stands against others. Neither piece of information stands alone. You need both to truly understand your business. So, if you’re ready to decipher all that data from your last employee or customer survey and use it to make some real meaningful improvements, contact Hawkeye Business Solutions at 540.232.9920 or firstname.lastname@example.org.