What the Data Literacy Skills Gap is Costing Your Business

Businesses today face a number of highly complex problems — connecting with consumers, streamlining operations, estimating future markets — and rely on data to solve them. 

With data being collected and used on a larger scale than ever before, it's imperative that every sector of a company is equipped to understand data that is relevant to them. McKinsey expects that by 2025 nearly all employees will be utilizing data to optimize their work. 

But before that can happen, employers need to address the gap in data literacy.

Data literacy is the ability to read and understand data and use that information to gain insights, communicate ideas, and take actionable steps toward goals. The data literacy skills gap refers to employees who are less equipped to address and use this valuable tool in the workplace. 

Now more than ever, data literacy is a mission-critical skill to help businesses make informed decisions. A data literacy skills gap can lead to a misunderstanding of what gathered data is truly revealing and influence leaders and individuals to make the wrong decisions for their future. 

A Forrester study commissioned by Tableau found that in the U.S., 84% of decision-makers expect at least basic data literacy from their team members, while just 51% of employees say their company has offered them basic data literacy training. And while 90% of company leaders believe data literacy is key to their success, just 25% of employees feel confident in their data literacy skills. 

In today's complex, competitive, and increasingly data-driven environment, a gap in data literacy is a problem that businesses can't afford. Below, we outline five ways the data literacy skills gap is costing your business—and what you can do to start to close that skills gap today. 

1. Data Misinterpretation and Inaccuracy

Poor data quality can lead to inaccurate results, which can have costly consequences for businesses. Gartner found that inaccurate data costs companies nearly $15 million annually, and almost 60% of businesses aren't measuring the fiscal impact of their poor-quality data. 

Businesses can collect data, but unless people in the company know how to effectively interpret and utilize that data, they're just buying noise. 

Additionally, interpretation is key. Perhaps team members know what certain data means mathematically, but interpreting it in terms of human behavior is a different matter. Closing the data literacy skills gap means that more of your employees will be better equipped to interpret what data is saying and create informed data-based action.

2.  Missed Opportunities to Leverage Data for Strategic Decision-Making

Today's obstacles arrive quickly, and decisions about navigating them must keep up. Not investing in data literacy means your leaders won't possess the growing amount of information needed to successfully clear hurdles in a world that is constantly speeding up. In order for company leaders to understand what they need to achieve sustainable growth, know what customers want, and see what employees need to be more productive, they must embrace, understand, and leverage valuable data to make the most informed decisions possible. 

Many tools are available to combine data and strategic decision-making. Leaders and employees alike can use these tools to help break down the importance of available data and make decisions based on facts over hunches. The one hitch to all this is that data literacy skills gaps hinder the use of these tools. 

Businesses need technology and humanity to work together to understand how to turn data into opportunities. For example, employees who can interpret data effectively can use the insight gained from analyzing data sets to customize customer experiences based on what makes them happiest. But for companies with data literacy skills gaps, employees who could offer great insights may never find the inspiration if they're unable to understand vital data.

3. Reduced Efficiency and Agility

The data literacy skills gap can also impact the efficiency of data-driven processes. When employees do not understand data, they will have to seek assistance from other team members — perhaps an office data advocate — which ties up two team members when only one should be necessary. This costs businesses precious time and money.

For example, if only specific departments and teams know how to use a company's CRM — customer relationship management — tool, accessing its valuable information requires extra time and effort from other departments, lowering the company's overall efficiency and costing it money in terms of wasted time.

4.  Lower Employee Engagement and Productivity

The Bureau of Labor Statistics found that from the third quarter of 2021 to the third quarter of 2022, business productivity is down 1.3%. While many claim "people just don't want to work anymore," the evidence suggests otherwise. 

Employees want jobs where they know they'll have a future — room for growth. This means that companies need to invest in their employees just as they expect their employees to invest in them. Remember, Forrester found that in the U.S., 84% of decision-makers expect at least basic data literacy from their team members, while just 51% of employees say their company has offered them basic data literacy training. Additionally, 79% of employees say they're more likely to stay at a company that sufficiently trains them in data literacy. 

This data says that employers who don't offer their team members training in an ever-evolving environment can expect decreased engagement due to a lack of interest shown by company leaders. This, in turn, reduces productivity.

5. Increased Complexity and Cost of Data Management

As the volume and variety of data increase, it becomes increasingly difficult for employees to understand its meaning. Employees who are upskilled in data literacy are more likely to understand what they read when reading a report by their peers or superiors. They can also more easily create visualizations that represent complex information effectively and interpret those visualizations correctly when talking with nontechnical colleagues or customers.

Additionally, the more prevalent data becomes in informing businesses' moves, the more it will cost to gather, organize, and interpret the valuable information within. Businesses that close the data literacy skills gap within their company will be more equipped to deal with this change as it evolves.

It's Time to Close the Data Literacy Skills Gap

The only way to prepare for the future is to begin taking steps to embrace it now. Businesses will continue increased data reliance in the future, so data literacy is vital for companies who want to remain competitive as the business world evolves.

Correlation One helps enterprises close that data literacy skills gap to develop talent for the jobs of tomorrow. We future-proof teams through global programs like our Data Science for All (DS4A) initiative, custom enterprise training, and data competitions.

Help your employees thrive in the data-driven business world by increasing data literacy through Correlation One. Reach out to learn more. 

Publish date: January 26, 2023