# Parametric Tests and Non-Parametric Tests for Human Resources

16/02/2024

Statistical Tests play a crucial role in analyzing data related to various HR functions like recruitment, employee satisfaction, performance evaluations, and training outcomes. These analyses often involve making comparisons or understanding relationships within the data. Statistical tests are broadly categorized into parametric and non-parametric tests, each suitable for different types of data and assumptions.

Parametric Tests

Parametric tests are statistical analysis techniques that assume the data follows a certain distribution, typically a normal distribution. They are used when the data meets specific criteria, including interval or ratio scale, normal distribution, and homogeneity of variance. Parametric tests are powerful and provide more precise outcomes when their assumptions are met.

Common Parametric Tests in HR:

• t-test:

Used to compare the means of two groups (e.g., comparing the average performance scores of two departments).

• ANOVA (Analysis of Variance):

Allows comparison of means among three or more groups (e.g., evaluating job satisfaction across different job levels).

• Linear Regression:

Assesses the relationship between two continuous variables (e.g., the relationship between training hours and job performance).

• Pearson Correlation:

Measures the strength and direction of the relationship between two continuous variables (e.g., the correlation between employee satisfaction and retention rates).

Non-Parametric Tests

Non-parametric tests, also known as distribution-free tests, do not assume your data follows a specific distribution. These tests are more flexible and can be used with ordinal data or when the assumptions for parametric tests are not met, such as when data does not follow a normal distribution or when sample sizes are small.

Common Non-Parametric Tests in HR:

• Mann-Whitney U Test:

Comparable to the t-test but for two independent samples where assumptions of normality are not met. It can be used to compare satisfaction levels between two teams.

• Wilcoxon Signed-Rank Test:

Used for comparing two related samples or repeated measurements on a single sample to assess differences in median (e.g., before and after analysis of a training program on employee skills).

• Kruskal-Wallis H Test:

An alternative to ANOVA for comparing more than two groups when the data does not meet parametric assumptions (e.g., comparing engagement levels across multiple departments).

• Spearman’s Rank Correlation:

Measures the strength and direction of association between two ranked variables (e.g., ranking of employees by performance and by satisfaction).

Choosing Between Parametric and Non-Parametric Tests

The choice between parametric and non-parametric tests in HR research depends on several factors:

• Data Level:

Parametric tests are typically used for interval or ratio data, while non-parametric tests are suitable for ordinal or nominal data.

• Distribution Assumption:

If the data follows a normal distribution and other assumptions (e.g., homogeneity of variances) are met, parametric tests are preferred for their statistical power. If these assumptions are violated, non-parametric tests are more appropriate.

• Sample Size:

Parametric tests generally require larger sample sizes. Non-parametric tests can be more suitable for smaller samples.

Application in HR

Understanding and choosing the appropriate statistical test is crucial in HR analytics for making informed decisions. For instance, when evaluating the effectiveness of a new training program, an HR analyst might use a t-test or Mann-Whitney U Test depending on the data distribution. Similarly, understanding employee engagement across different departments might involve ANOVA or Kruskal-Wallis tests based on the data’s nature.

 Parametric Tests Non-Parametric Tests 1 Assume normal distribution No distribution assumption 2 Interval/ratio data needed Nominal/ordinal data acceptable 3 More statistical power Less statistical power 4 Sensitive to outliers Less sensitive to outliers 5 Larger sample sizes preferred Suitable for small samples 6 Homogeneity of variance required No variance homogeneity requirement 7 Linear relationships Any relationship type 8 Examples: t-test, ANOVA Examples: Mann-Whitney, Kruskal-Wallis 9 Assumes equal variances Does not assume equal variances 10 Parametric confidence intervals Non-parametric confidence intervals 11 Requires precise measurements Can work with ranks or scores 12 More assumptions to check Fewer assumptions to check 13 Can predict outcomes Describes data 14 Often involves estimation of parameters Often involves median or mode 15 Generally faster computation Computation may be more complex