How Can Managers Design ‘good’ Performance Measures in Organisations?

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Concurrent validity testing is a method of criterion validation in which the strength of the correlation between the measure and a previously validated measure is assessed (nap 2007). Shapiro et ell (1999) conducted concurrent validity testing on the Hopkins Verbal Learning Test (HVLT), a diagnostic test designed for detecting dementia. The study examined the correlation between patients scores in the HVLT and other validated tests of memory and cognitive function such as the California Verbal Learning Test (CVLT). Shapiro et ell (1999) concluded that the correlation between the HVLT and other existing tests were statistically significant, hence providing validation that the measures within the HVLT test are similarly valid to other tests previously examined. This method of Criterion validation’s principal shortfall is that if the previously validated test is not valid itself, the new measure may be similarly invalid. Within an organisational context a similar error could lead to the implementation of a poor performance measure, it is therefore essential managers do not rely on concurrent validity testing alone but perform it in conjunction with other validation methods.

In conclusion, by designing and continually assessing an organisations performance measures for construct validity, managers are able to ensure that decision making is conducted on information that accurately fulfils its intended purpose. Managers may face difficulty doing so due to a lack of understanding around the desired purpose of the performance measure or simply the lack of data needed to successfully test the validity of the measure. Due to this risk of management error, it is imperative that organisations implement a wide range of content and criterion validation. The examples of Criteria Corp, College Board and the studies by Shapiro Michels, illustrate how these methods of validation testing can be used to design and continue to maintain valid performance measures within an organisation.