In HRM, criterion-related validity is associated with the extent to which one measure is related to one outcome. It is used to assess that if a test showcases some specific set of abilities. This is a type of validity that is used to determine the relationship between a predictor and a criterion. The strength of relationship, or correlation is measured with the criterion-related validity coefficient. To use criterion-related validity for any test, the first step is to calibrate it with respect to a known standard.
For example, this type of validity can be used as a test of measure of work performance in a departmental store. Some indicators of employee performance can be absence, ratings given by supervisor, length of employee service, number of errors made and laziness. To validate the relationship between employee performance and any of the above mentioned criterion, the supervisor will have to choose one of the criterion, and then show a statistically significant relation between the work performance and the criterion, say the number of errors made in a year. Another example would be the relationship displayed by the test scores of candidates with their leadership traits in a test for being an effective manager.
Criterion related validity is further classified into either concurrent validity or predictive validity. Under concurrent validity, the comparison between the measure and outcome is made simultaneously. That is, it is a measure of the relationship between the criterion and the result at a particular point in time. On the contrary, predictive validity attempts to derive a relationship between the measure and outcome at a future point of time.
It is important to realise the minute difference between the two and use the correct validity as per the situation. For example, comparison of geometry exam scores in an institute with grades in the course can help to determine the relationship between the extents to which test score is related to class performance in geometry. This is concurrent validity. An example of predictive validity would be an exit poll that tries to measure the future voting intentions.