Validity of the strategic management simulations to predict real‐world productivity

Abstract

AbstractThe performance of individual businesses and the economy as a whole hinges on the productivity of human capital, yet measuring productivity at an individual level has proved difficult. The Strategic Management Simulation (SMS) methodology comprises several decision‐making assessment tools that have been used for several decades to estimate real‐world productivity. Performance on productivity measures using a shorter version of the SMS methodology was gathered from a sample of 111 knowledge workers from major corporations in the U.S. and compared with their income level. In linear models, every percentile increase in SMS performance was associated with a $791–$1,113 increase in income in each of the four domains of decision‐making performance provided by the SMS tool. The models had R2’s ranging from 0.65 to 0.75, indicating high levels of correlation between SMS performance and income levels. This study is the first to show linear relationships between SMS performance and other indicators of productivity, indicating that the SMS is a valid predictor of productivity and that SMS scores can be used to predict job satisfaction and performance.