How to Assess Adverse Impact

December 17, 2022
Devyn Mikell
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Diversity is one of the top priorities for recruiters. In McKinsey’s 2020 report ‘Diversity Wins: How Inclusion Matters,” the data shows that more diverse companies consistently outperform less diverse peers in terms of profitability and innovation. But how do you assess the diversity of your workforce?

Well, to answer that question, you only need to take a look at your hiring process. Also it’s important to note that systemic oppression, unconscious bias, and unfair recruitment practices have adversely impacted minority groups for years. Recruiters should be constantly looking for ways to help address these issues in how they source and hire new talent.

What is Adverse Impact?

The U.S. Employment Opportunity Commission defines adverse impact in hiring as business practices that create a substantially different rate of selection that disadvantages a given protected group. These practices are, for the most part, unintentional. However, biases and problematic practices can find their way into any hiring process. As a result, workplace diversity suffers.

Adverse impact can appear in many ways. For example, imagine a company that frequently requires a disproportionate number of background checks for a given minority group. Meanwhile, the majority group of candidates experiences few background checks. In this, we see adverse impact caused by unfair hiring practices.

Unfortunately, adverse impact is often less obvious than in this example. That’s why we’re going to look at how to assess adverse impact in your hiring practices.

Calculate the adverse impact in your hiring here.

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How Do You Assess Adverse Impact?

Assessing adverse impact is essential for maintaining a diverse workforce as it allows you to identify unfair labor practices. The most common system to achieve this is known as the four-fifths rule.

The fourth-fifths rule states that if the selection rate for a group is less than 80% of the majority, adverse impact is present.

Here’s how it works:

  1. Identify the minority in question — An organization must first consider what group may be affected by the adverse impact. This could be based on race, gender, religion, or another protected status.
  1. Divide hires by applicants for this group —  Count the number of hires made from this group and divide that by the applicants.
  1. Repeat for the majority group — Do the same for the majority group hires.
  1. Divide the quotients — You will then divide the quotient from the protected group by that of the majority.

Should the resulting number be less than 80%, adverse impact is considered present. Should this happen, it’s time to analyze your hiring process and determine what is causing this issue.

For many, this means creating a more accessible hiring process.

Strive for Accessibility

One of the greatest sources of adverse impact is poor accessibility. After all, how can you reach all qualified candidates equally if they cannot reach you?

A fair hiring process must be readily accessible to every candidate that applies. That means using the right tools for the most candidates. To that end, consider on-demand phone interviews to help mitigate bias in your recruitment efforts and create a more accessible interview.

By utilizing Qualifi’s on-demand phone interviews, you enable candidates to approach the interview at a time of their convenience and through a widely available medium; 97% of Americans today own a cell phone.

That’s why Qualifi levels the playing field for every candidate and helps recruiters reduce adverse impact in their hiring practices.

Read here for more on what you can do to mitigate bias in your hiring process.