What are the leading causes of Spreadsheet errors?
The leading causes of spreadsheet errors are:
- Human incapability of doing complex cognitive tasks with accuracy, this is a limitation in human capability and this contributes partly to the errors that are caused in spreadsheets
- Lack of disciplined development practices is one of the most common reasons why spreadsheet contains errors. Many organization has policies in general about end user development in general, much less spreadsheet development
- Many developers build the models and hardwire it to one end result they are working without considering the constraints or different possible scenarios. This ultimately leads to the fact that the model doesn’t work for any other input variables other than the one that is being used to.
- Another common reason of spreadsheet errors is due to the overconfidence of the developers in the accuracy of the spreadsheets. They don’t spend time to test the spreadsheet for any possible errors
- We could also say innocence (in a sense of not knowing the excel capabilities) as one of the common reasons why spreadsheets has errors, people tend to learn from friends and coworkers without any proper training on Excel and its capabilities which ultimately lead in unstructured spreadsheet development
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Why these errors are typically not detected?
- Primary reason for missing out these errors is that there is no adoption of the standard development cycle phases, many developers directly jump in and do the development without putting any thoughts and scenarios and once the development is done there is very little or no effort put in to test what is developed with different decision parameters.
- Secondly since there is no standard approach used in the overall spreadsheet development, the possibility of standard audit mechanisms to identify those errors is difficult. Even though many know there is a lot of potential errors in spreadsheet since the human cognition limit our brains to process complex cognition, we tend to miss out.
- Thirdly, both companies and individuals don’t find a need to adopt standard development practices and hence the potential of following the life cycle is less ultimately leading to non-detection of the spreadsheet errors.
What we can do?
Does Panko believe that errors can be eliminated? Why or why not? Panko believes the years of human error research have shown there is simply no way to eliminate errors completely; rather we can reduce errors by adopting a few best practices. Human error research indicates that human error is tenacious because people are not terribly good at detecting and correcting errors. Most of the error detection even when done cell by cell only approach 90% of mechanical and pointing errors in short formulas, whereas the logical errors, mechanical errors in the longer formulas and omission errors, detection rates in spreadsheet code inspection is far lower. Given the tenacity of errors even with intensive code inspection we should not be complacent in any kind of error detection which falls short of massive testing to reduce the errors in the spreadsheets.
According to the article, what specific kinds of things should be done to reduce spreadsheet errors? Even though we cannot completely eliminate spreadsheet errors, there are a few good methods we can adopt in order to reduce the errors.
- Cell protection is one of the simplest ways to prevent at least one type of error that is hardwiring. When doing hardwiring the developer clearly understands where the input cells are and is likely to enter it correctly. But when another user tends to use the spreadsheet they tend to click the cells with formula and more likely to do mistakes of pointing the formulas to wrong cells. By doing cell protection, users are only allowed to key in using specific input cells whereas the other cells with formula or results are protected from editing.
- Another trivial method is to have two sets of input sections, using which we can highlight differences between them to detect errors. This process is traditionally termed as verification where the user is able to get a feel of the errors while having the two input data sets is same and different.
- Another common seen activity in spreadsheet development is looking the outputs for reasonableness, where users understand the results than the numbers in the spreadsheets. By doing a reasonable examination of results some errors can be reduced.
- Adopting good development practices in spreadsheet development will help in reducing errors largely, as the developers go through the analysis, design, build, test process with standard methods they are more likely to uncover errors and potentially reduce them.
- Lot of time is spent on Testing in software development process. Testing has two stages one is the execution testing and the other is code inspection. In Spreadsheet development the testing is mostly eliminated and hence the chance of errors is higher. Hence strong guidelines on the testing and audit methods to reveal errors should be used to reduce errors.
Store 24 (A) – managing employee retention
The first question in the case, posed by Doucette, relates to whether employee tenure is a driver of store level financial performance.
Based on Exhibit 1 data, there appears to be a correlation between the staff tenure and the financial performance, however we would need to further investigate based on a more representative sample size. What is obvious is that store level performance is driven by multiple factors and the decision on retention programs should not be based the staff tenure only and more factors should be evaluated. Looking at the top 10 performing stores, the average tenure is 4 times longer but at the same time we have some high performers with short tenure. Looking at the lowest 10 performing stores, the common thing is the short tenure for the crew members (1-6 months) and the managers (1- 24 months), and this is natural due lack of field experience but raises some questions on those who have a longer tenure.
The second question, posed by Gordon, is to determine how important tenure is in explaining financial performance, relative to site location factors.
Based on Exhibit 3 data, we realize that even when the site locations are favorable for the store, the financial performance is not strong due to the short tenure of the staff and especially the managers (some had no experience at all). We need to further understand the absence of Managers (Zero tenure) in certain stores as this may have a detrimental effect on the store financial performance; Leadership and hands on experience are key in managing people, setting the vision and delivering on targets. Also, having such setups in vital locations can have a negative impact on staff in terms dealing with customer’s complaints, service delivery speed and managing expectations.
This also negatively affects the customer experience and direct customers to other competitors for better service, and hence regaining market position becomes very hard. Stores should have a mix of staff tenure to ensure experience sharing and maintain financial performance. Based on our preliminary findings, shops that are open for 24 hours seem to be less profitable than the shops that are not. We believe that low customer volumes during after-hours may not justify the costs of operations.
The third question, posed by Hart, is quite difficult. Hart wants to know if the relationship between tenure and performance varies with tenure level.
Based on Exhibit 1 data, we can see stores with high level of tenure have similar financial performances, our initial assumption is that the relationship is not linear and will returns will start to diminish after a certain level of tenure (approximately 6-24 months). In these cases, we recommend considering other data such as: The staff current wages/bonuses versus tenure and its effect on the overall financials. Career promotions in relation to tenure.
Staff satisfaction surveys (job and financial related surveys). Benchmarking incentive plans with other competitors. Attrition rate and reasons behind it (taken from exit interviews). Training and development programs
Based upon your analysis, what type of employee retention program do you recommend Store24 implement? We would recommend a multi-dimensional program. A deeper analysis of each of the performance-contributing factors should to determine the optimal program: Non-financial effect programs:
Job/store rotation between staff especially for managers, this will help managers to take on new challenges to improve the business and implement best practices taken from their previous experience. Involving staff in internal best practice sessions, where staff from various stores meet to discuss and set store best practices and participate in improving the company SOPs and quality standards. This will increase the staffs’ sense of involvement and value to the company. Succession planning programs to identify and prepare future managers. Regular/refresher training programs for staff on customer service, stock management, compliance, etc. Store Benchmarking and related incentives.
Financial related programs: Review the wages and bonuses compared to the market and see if there is any need for adjustments. Improving incentive plans for the staff with long tenure only.
What are the most takeaways for you [as a group] from this case?
- Incomplete or snapshots of data can be misleading and can lead to wrong decision making.
- Advance planning and time management for decision making and related analysis should be taken into consideration.
- The importance of data analytics in supporting corporate decision making. The quality and quantity of provided data needs to be neutral, relevant and comprehensive.
- The data analyst needs to clearly understand upper management sentiments and require CEMEX is one of the world's largest building materials suppliers and cement producers.
Founded in Mexico in 1906. They supply cement to CEMEX has operations extending throughout the world, with production facilities pning 50 countries in North America, the Caribbean, South America, Europe, Asia, and Africa. CEMEX’s holds and controls the number 1 rank market shares in almost all countries they are in. this ensures them profit from their customers which are global construction firms or even individuals building their home. CEMEX is the has the largest market share. CEMEX has already established itself as a well known and reliable brand in terms of their product that why their product is heavily preferred by their customers whether firms or individual. CEMEX also acquires companies to extend its market coverage all over the world and it is successful because of its post merger integration and their CEMEX way. CEMEX standardized business processes, technology, and organizational structure across all countries while simultaneously granting countries certain operational flexibility.
CEMEX is very adept at looking/ identifying potential opportunities in developing countries they look for companies in developing countries in which they can acquire. CEMEX has their PMI and CEMEX way that brings their effective and proven strategies to newly acquired companies while getting strategies from the company that can be applied and set as a standard in the CEMEX way. CEMEX always recognizes the need for improvement. It applies TQM or total quality management which strives for continuous improvement in the organization and it also performs internal and external benchmarking to identify the effective strategies of the company acquired and also apply the cemex standard. CEMEX looks ways to operate efficiently to increase revenue by reducing the cost.
An important decision when trying to determine the overall competitive marketing strategy is place. Place includes company activities that make the product available to the consumers. CEMEX is a global company that is based in various countries all around the globe. It increases its market coverage by acquiring companies in other countries and applying the proven CEMEX way to the company and getting proven effective strategies that can be applied to the organization. In the past years CEMEX has gone to acquire many companies in other countries and it has been successful because of its PMI and CEMEX way which sets the company a single standard way of doing things CEMEX centralizes other companies and looks on the business as a whole and applying continuous improvement and innovation making the effort to have a common culture or common processes.
CEMEX has shown itself as being very capable of growth and global expansion. They are very good at setting the standards and applying the same strategy to the whole organization. Middle level managers also proved to be very capable because they are the best and brightest within CEMEX. They have the legitimacy to propose and advocate for changes in the firms operation and they are low enough in the organization that they can identify and evaluate different ways of doing things. CEMEX learned that alongside transferring best practices that had been standardized throughout the company, it made a concerted effort to learn best practices from acquired companies, implementing them when appropriate. This made CEMEX more capable in increasing their market coverage to other countries because they now have proven standards and practices that they could integrate to the acquired company. CEMEX’s management is very good at internal benchmarking and continuous improvement. CEMEX is very good at getting good managers and assigning them to different areas of the company including CEMEX way and PMI.
CEMEX has core competencies in its CEMEX way and PMI which applies standardizes proven standards and practices to other acquired companies and learn best practices form them. CEMEX way is the core best business practice with which the company conducted business throughout all its locations. Another core competency is their ability to find opportunities in other countries, opportunities to acquire and increase their market coverage they are very good at finding companies that are suitable for them and beneficial for them to acquire. Another competency is how efficient they are , coming from the continuous improvement and standardization of practices and standards. They also continue to improve because they continue to learn best practices from acquired companies, implementing them when appropriate. CEMEX is very adept at applying proven practices and standards. ments and translate that carefully when generating data and preparing reports. e) In the business world, correlations and dependencies can be very complex and data analysis should be taken very seriously; all relevant factors have to be taken into consideration.
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