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MEASUREMENT AND STATISTICAL ISSUES IN HUMAN RESOURCE MANAGEMENT A Primer for the Non-Expert Timothy A. Judge Department of Management Mendoza College of Business University of Notre Dame ©Timothy A. Judge, 2013 MEASUREMENT AND STATISTICAL ISSUES IN HUMAN RESOURCE MANAGEMENT A Primer for the Non-Expert OUTLINE I. INTRODUCTION Importance of Measurement Importance of Statistical Analysis II. FUNDAMENTALS OF STATISTICAL ANALYSIS Central Tendency Dispersion Standard Scores Normal Distribution Hypothesis Testing Errors Correlation Regression Multiple Regression III. PROBLEMS IN ESTABLISHING CAUSALITY Page 2 Page 5 Page 29 IV. MEASURING INDIVIDUAL DIFFERENCES Page 30 V. Page 45 Reliability Standard Error of Measurement Validity of Measures Criterion-Related Validity Content Validity Face Validity Construct Validity Cross-Validation Validity Generalization CONFIRMATORY RESEARCH Decision Analysis Utility Analysis Meta-Analysis VI. COMPUTER PACKAGES Page 54 VII. SUMMARY Page 55 Measurement and Statistics Primer Page 2 of 57 I. INTRODUCTION After many years of saving, Jack had accumulated enough cash to buy a local ice cream shop. One of Jack's first tasks was to figure out how to staff the shop. Being a novice at this, Jack consulted his friend, Margaret, owner of the local hardware store. Margaret advised Jack that she used the interview to get "the most knowledgeable people possible," and recommended it to Jack because her people had "generally worked out well." While Jack greatly respected Margaret's advice, upon reflection several questions came to mind. Given that there are several qualities important to a good ice cream shop employee, how does one go about identifying and measuring the best indicators of those qualities? Does Margaret's use of the interview mean that it meets Jack's requirements? Jack also wondered that if he used the interview, how confident could he be that his judgments would be the same as someone else's? Jack also needed to hire a store manager. What characteristics would he need to look for in a strong leader? Finally, how could Jack test if his chosen method of selecting employees was effective or ineffective? Jack also had another set of decisions to make. How could he determine if the wage he offers differs greatly from the relevant labor market? Jack has heard that entry-level employees often engage in counterproductive behaviors—stealing, showing up late, taking off early, giving free ice cream to friends, etc. By what means could he predict employees’ tendencies to engage in these behaviors in advance? How could these relationships be compared with findings from other organizations? By what means could Jack evaluate the effectiveness of a training and development program? © Timothy A. Judge, 2013 Measurement and Statistics Primer Page 3 of 57 Finally, how can Jack ensure that his human resource decisions are fair and nondiscriminatory? Jack was unsure how to go about answering these questions. These questions faced by Jack are just a few of the issues confronting managers of human resources every day. While answering each question requires knowledge of the specific practice under consideration, it is also essential that the manager understand the measurement and analytical issues underlying each question. Without measurement and statistical analysis, evaluation of practices must be as subjective as Margaret's answer to Jack's question. The purpose of this primer is to introduce you to the measurement concepts and statistical tools essential to answer the questions facing managers of human resources, a few of which were presented above. Importance of Measurement Imagine a world in which measurement of individual differences did not exist, except within the mind of each individual. Every person would have his or her own measure of a man or woman, but the standard would dwell solely within the opinions and values of the individual. Inferences made about, and debates over, the characteristics of individuals would be entirely subjective. Efforts to understand and predict could not be undertaken because no knowledge would be generally held. Further, because each individual would have his or her own set of standards and measurements, general knowledge about people would be difficult to achieve. Accepted standards of measurement provide a common metric against which differences between individuals can be judged. To be sure, there is still room for subjectivity and dis

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