Annex E. Composite Indexes for Human Resources Management Practices
The composite indexes presented in Government at a Glance summarise discrete, qualitative information on key aspects of human resources management (HRM) practices. Composite indexes are developed and utilised because they can often help examine trends and findings as opposed to assessing several variables individually. However, their interpretation should be made with caution, and only after understanding what they are meant to measure and how they are generated.
The OECD has taken several steps to avoid and address the common problems associated with composite indexes. The HRM composites presented in Chapter 4 and Chapter 7 of this publication adhere to the steps identified in the Handbook on Constructing Composite Indicators (Nardo et al., 2008) that are necessary for the meaningful construction of composite or synthetic indexes:
Each composite index is based on a theoretical framework representing an agreed upon concept in the area it covers. The variables composing the indexes are selected based on their relevance to the concept by a group of experts within the OECD and in consultation with country delegates to the Public Employment and Management Working Party.
The survey questions used to create the indexes are the same across countries, ensuring they are comparable.
Various statistical tools - such as factor analysis and the computation of Cronbach's alpha - were employed to establish that the variables composing each index are correlated and represent the same underlying concept.
Different methods for imputing missing values have been explored.
All sub-indicators and variables were normalised for comparability.
To build the composites, all sub-indicators were aggregated using a linear method according to the accepted methodology.
Sensitivity analysis was carried out in order to establish the robustness of the indicators to different weighting options (e.g. equal weighting, factor weights and expert weights).
It is important to note that the HRM indexes do not purport to measure the overall quality of human resource management systems. To do so would require a much stronger conceptual foundation and normative assumptions. Rather, the composite indexes presented in Government at a Glance are descriptive in nature, and have been given titles to reflect this.