Many organisations have award system to recognise best performers. Some have awards even at functional or departmental level. Most common is awards in sales. It could be star salesman for month, for quarter, for year etc.
Evaluating nominations is time consuming and panel is in sometimes in hurry to declare winner. Deciding winner for Sales is considered to be much simpler as after all, it is all about numbers.
When you declare outstanding salesman of month/quarter/year what do you look at? Who got maximum sales or visually (graphs) that looks like winner or you do statistical analysis?
Panel rarely gets into statistical analysis as telling potential winner that his performance is not outstanding based on statistical analysis is difficult and no manager wants to displease his team member.
Look at example below, salesman A stands out in terms of numbers ( even visually) and should be declared salesman of the quarter. But is the performance really outstanding compared to others or is it just more than others?
For performance to be outstanding it should be statistically significant. One such method is use of ANOVA (Analysis of Variance) for analysing sales performance of all salesmen. The analysis will tell you if performance was really significant. In our case it is not (note calculated F value is less than F critical).
So how many units should salesman A sell to make his performance significant? – Just more unit i.e. 943 units!