Learn the standard deviation formula, how to calculate it, and its importance in data analysis. Step-by-step guide with examples.

First, let's look at what a standard deviation is measuring. Consider two small businesses with four employees each. In one business, two employees make $19 an hour and the other two make $21.

standard deviation number lines. Business Insider/Andy Kiersz In both companies, the average wage is $20 an hour, but the distribution of hourly wages is clearly different.