From a statistical point of view why a company might want to report its mean salary in one situation and its median salary in another?
A company might choose to report its mean salary in one situation and its median salary in another for various reasons. One of the main reasons is to provide different perspectives on the salary distribution within the company.
The mean salary, also known as the average, is calculated by summing up all the individual salaries and dividing it by the total number of employees. It provides a measure of the central tendency of the salary distribution. The mean is sensitive to extreme values, such as very high or very low salaries. If a company has a few employees with extremely high salaries, reporting the mean might give a skewed representation of the average salary. In such cases, reporting the mean could potentially mislead the audience about the typical salary within the company.
On the other hand, the median salary represents the middle value in a sorted list of salaries. It is not influenced by extreme values or outliers, making it a more robust measure of the central tendency. If the distribution of salaries in a company is highly skewed, reporting the median can provide a more accurate representation of the typical salary. By focusing on the median, a company can avoid the potential distortion caused by outliers or skewed data.
In summary, a company might choose to report the mean salary when the salary distribution is fairly symmetric and does not have extreme values. This gives a sense of the average salary. Conversely, when the salary distribution is skewed or contains outliers, reporting the median salary provides a better understanding of the typical salary within the company.