Spreadsheets are widely used to manipulate and analyze data in a company. That’s probably why Excel has millions of users. However, there are major disadvantages to using spreadsheets when it comes to communicating data.
While spreadsheets offer users a convenient way to collect, monitor, and report on data, they have several challenging drawbacks.
Let’s learn more about these disadvantages and the different options we have to present reports and track the information we want to monitor or view.
Importance of good data communication
Let’s start by clarifying what we mean by “data communication”, as it can mean many things to different people.
When we talk about data communication, we mean communicating your company’s most important performance metrics to the entire team. Why is this important? What is the impact of data communication?
- Employees want their bosses to share more information about business performance
- Many employees leave a company for the simple fact that they do not know information about the company’s performance and direction.
- When company information is shared, it has a significant positive impact on everyone’s performance.
Is an Excel report a good tool to visualize your business information?
4 disadvantages of using spreadsheets
Currently, most companies continue to communicate data using spreadsheets.
Now that we know that communicating data to employees in a digestible way helps improve your business performance, and that many companies still use spreadsheets, for example for a sales dashboard in Excel, what makes spreadsheets? so bad for data communication in companies?
Here are the top 4 reasons why spreadsheets are NOT the tool for communicating business performance data:
1. Your team can’t identify the most important metrics
Spreadsheets are full of numbers. That it has a lot of numbers is actually part of the reason why everyone uses Excel: they are great for manipulating and analyzing large volumes of data. However, it’s also a big part of the reason why it doesn’t work when it comes to data communication .
Sending your team a spreadsheet full of numbers is like letting them walk into a minefield full of data. With so much data it is difficult to identify which are the most important metrics and also which are the key movements.
The disadvantages of using spreadsheets are obvious. First, it makes it difficult for your team to identify the impact of their work on KPI movements for the business.
Second, the volume of data can easily lead to misinterpretation of data, and ultimately your team will take incorrect actions based on that misinterpretation.
2. Visualizations lead to misinterpretation
The purpose of visualization is understanding, not images. However, many people ignore this great tip when using spreadsheets for data visualization.
When people use spreadsheets to visualize data, they try to draw pretty pictures instead of providing information.
First of all, they use 3D graphics. Using 3D graphics distorts the reality of data by making it difficult to identify actual data points.
The same data is interpreted very differently when you view it in 2D vs 3D. While 3D graphs may look more attractive, your team will misinterpret the data and make incorrect decisions when using them.
Second, the sheer volume of visualization options in Excel can lead to the use of visualizations that cloud the meaning behind the data.
3. Only you or a select group has access to spreadsheets
Another disadvantage of using spreadsheets is that they are not eminently shareable . This is improving today with tools like Dropbox, Google Drive and OneDrive, which allow multiple members of the same team to collaborate on the same file.
For many companies, spreadsheets are still locked away on management teams’ computers, creating an “information is power” culture.
Meanwhile, many of the world’s fastest-growing companies, like Buffer and Shopify, are moving in the opposite direction and adopting a culture of transparency where employees can see everything in terms of company performance.
This has two distinct advantages. Firstly, team members can always see the company’s performance, meaning they can prioritize their actions more effectively and ultimately help drive company performance.
Second, the collective trust felt among employees leads to the development of norms of high responsibility and the willingness to be accountable for an organization’s performance leads directly to better sales and customer service.
Being transparent and building trust will help drive growth, so stop limiting yourself to those spreadsheets and start sharing data to build trust!
4. They are not easy to share
Ideally, you can email it once a week.
Most employees are communicated with company performance data via email. Communicating data in spreadsheets and sending it via email is far from ideal due to the sheer volume and number of emails in people’s inboxes.
This type of data communication is confusing rather than completely transparent.
Additionally, (despite being a communication channel) email does not encourage conversation about data. It is sent, read and forgotten. To build a truly transparent and data-driven culture, it’s important to present a KPI report in a way that encourages your team to discuss the data and formulate hypotheses based on it.