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I have Adverse Impact. What do I do now?

June 7, 2011

As discussed in the previous blog, having adverse impact against a protected group does not mean that your selection processes are “bad” or discriminatory. There are many factors that affect adverse impact, including the applicant pool, minimum standards, sample size and the formula that is used to determine if it exists.

The existence of adverse impact opens the door to potential legal challenges.  Two government agencies, the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP), act as the investigatory and enforcement agencies that examine unfair hiring practice allegations. The list below describes suggestions for ensuring that you have the information needed to better understand adverse impact and defend your selection practices.

  •  Analyze the Hiring Funnel – One of the first steps to take is to determine where the adverse impact exists.  Most selection systems include multiple hurdles or phases.  Do you have adverse impact at one or more stages of the selection process? Or, is your adverse impact only at the end of the funnel?   By calculating pass rates at each stage you can hone in on which selection tool(s) is contributing to the adverse impact.  Once you know this, you can then make decisions about what to do next.

  • Review Pass Rates/Cut Scores – Adverse impact is calculated from the pass rates of the majority and minority groups. Therefore, if your pass rates change, so do the adverse impact ratios. If you have adverse impact, review your pass rates at each stage and determine if you have the ideal candidate flow from one stage to the next.  Any changes that are made should be guided by the selection tools’ relationship to the job and should be applied consistently to all candidates moving forward.

  • Review Validation Evidence – Any tool or process that is used to make a hiring decision must have a clear linkage to the job.  If you have adverse impact, make sure that you have all of the documentation you need to show the linkages.  A good, up to date job analysis should be in place.  Then, review the hiring process and confirm that all of the competencies being measured are related to job performance. If you are using an assessment as part of your selection process, a well done content or criterion-related validation study provides strong evidence to defend it in a court of law.

  • Examine Alternative Tools – The Uniform Guidelines on Employee Selection Procedures (1978) recommends the use of selection instruments that are valid and have the least amount of adverse impact.  If an alternative selection tool exists with equal validity and less adverse impact, that tool should be used. If you have adverse impact, you should investigate alternative selection tools.

  • Ensure Process Consistency – Once you have reviewed your selection processes and feel comfortable with every tool that you are using and have evidence to support them, it is important that everyone is consistent in its application. It doesn’t matter how much evidence you have to support the process if the process is not used consistently.  If there are any exceptions, make sure to document them and have clear rationale.

  • Seek Legal Advice – If your organization has adverse impact and you are concerned about your legal risk, seek legal advice.  The existence of adverse impact increases the chances of being investigated, but doesn’t mean that you are guilty of any wrongdoing. Organizations that have well designed selection procedures and clear validation evidence are less likely to be taken to court and are much more likely to win even if they are.

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Amie Lawrence, Ph.D. Amie Lawrence, Ph.D. is the Director of Global Innovation at PSI and an expert in the design, development, and validation of psychological assessment tools. She runs an innovation lab that is responsible for establishing PSI’s assessment technology roadmap and strategy. An integral member of PSI since 2000, Amie has led the development of numerous global assessments, including personality, situational judgment, cognitive, and interactive work simulations.