Show
I still remember the first performance review I ever got, even though it’s been almost 50 years since Ray Moeller, my first boss at GE, called me into his office and handed me a document that he called a “performance appraisal.”
Managing Your Boss Course Learn More & See All Courses
Despite your best efforts, your HR practices may be unfair to certain groups of people. To eliminate unfairness as much as possible, it’s important that you can recognize adverse impact. In this article, we’ll take a closer look at adverse impact; what is it, and why it is important to avoid. We’ll also share 9 ways to avoid adverse impact on your HR practices. Here goes! Contents What is adverse impact? A definitionIn the US, the EEOC (Equal Employment Opportunity Commission defines adverse impact as follows: “a substantially different rate of selection in hiring, promotion or other employment decision which works to the disadvantage of members of a race, sex, or ethnic group.” Adverse impact can occur in various employment practices including hiring, learning and development, promotion, transfer, and performance appraisals. It can happen in one specific part of, for instance, the selection process, or during the entire practice. Most of the time, adverse impact is an unwanted or unanticipated consequence of an employment practice. An often-named example is that of a company conducting background checks for one group of candidates (A) but not for another (B). While they may honestly believe that there is a logical reason for this practice, it can result in adverse impact if it turns out that more qualified candidates from group A are eliminated following this background check and that more candidates from group B are hired.
Related (free) resource ahead! Continue reading below ↓
Download our FREE guide to find out how you can gather the data you need to help your organization become more inclusive Why it is important to minimize adverse impactThere are various reasons why it is important to try and avoid adverse impact in your HR practices as much as possible, including:
9 Ways to avoid adverse impact in your HR practices1. Understand the four-fifths ruleIn order to avoid adverse impact in your employment practices, you first need to understand when there’s considered to be a case of adverse impact. In the US, they’ve adopted the Uniform Guidelines on Employee Selection Procedures for this. These Guidelines aim to ‘establish uniform standards for the use of selection procedures by employers and to address adverse impact, validation, and record-keeping requirements.’ The Uniform Guidelines have established a way to determine whether or not there is adverse impact in an employment procedure; the 4/5ths or 80 percent rule. Put simply, the selection rate of protected groups – which include race, sex, age (40 and over), religion, disability status, and veteran status – should be 80% or more of the selection rate of non-protected groups to avoid adverse impact against the former. SHRM does a great job explaining how to calculate adverse impact, here’s a simple example: The image shows that you should, for example, calculate this when you’re selecting people for termination. Other situations in which you should apply the four-fifths calculation method can be when candidates move from the first to the second interview round or when you’re making promotion decisions. 2. Conduct a thorough job analysisBefore a job advert gets posted, an objective job analysis needs to be done. In order to avoid adverse impact in your job analysis – and then in other employment practices like the ones mentioned below – it is crucial that your selection criteria are always directly related to the job in question and nothing else.
Online & Self-Paced Certification
Diversity, Equity, Ideally, a job analysis is conducted by a combination of employees, (hiring) managers and/or recruiters and HR professionals. The goals of a job analysis can vary but include:
3. Write inclusive job descriptionsThe way your job adverts are written, meaning the words and language used in them, have a direct impact on the people you attract – or don’t attract. An augmented writing tool like Textio uses data and machine learning to help companies optimize their job adverts (and all their other written communication). As such, it can help you choose language that appeals to, for example, candidates who highly value inclusion. It can also help you ensure your job adverts are appealing to a wide variety of people. Your choice of words has an impact on the types of candidates that apply.There are two kinds of interviews, the unstructured and structured interview. In a structured interview, a standardized set of questions is used. This provides the interviewer with a uniform method of recording information and standardizing the rating of the applicant’s qualifications hence minimizing the risk of adverse impact. In scientific literature, the structured interview has proven to be almost twice as reliable as the unstructured interview (Schmidt & Hunter, 1998). The structured interview enables the interviewer to accurately compare candidates and to make the best decision purely on data. Besides having standardized questions, a common method used in interviews is the STAR method. This method offers a structured way to retrieve information from the candidate. STAR is an acronym for Situation, Task, Action, Result. Using this method to test for the key competencies of the job is highly recommended. Indeed, asking multiple candidates the same question enables you to easily compare how much experience they have in these key competencies from their previous jobs. 5. Share best practicesIn most companies, it’s likely that there is more than one person involved in the hiring process. In order to minimize adverse impact on your recruitment practices, you need to make sure that everyone is on board; the recruitment team, hiring managers, management, leadership, etc. and that you regularly share best practices on how to reduce adverse impact.
Do you have the competencies needed to remain relevant? Take the 5 minute assessment to find out! Start Free AssessmentThere are various ways to go about this, including:
6. Use an interview guideAn interview guide is a document that enables organizations to structure the way they conduct their candidate interviews. It helps interviewers to know what to ask about and in what order and it ensures a candidate experience that is the same for all applicants. The benefits of using an interview guide during the hiring process go beyond just structuring the interviews themselves. Other benefits include:
7. Use valid and defensible assessmentsUsing assessments in your selection process can be a great way to reduce bias and adverse impact. There are, however, a few things to be wary of:
Just like hiring decision, promotion decisions are also covered by employment and non-discrimination laws. In other words, your promotion practices should comply with, in the US, the Uniform Guidelines we mentioned earlier. A few tips to help you ensure that you avoid adverse impact in your promotion decisions:
9. Avoid adverse impact in layoffsAdverse impact can occur at any stage of the employee life cycle, including at the very end. If you need to let people go, for instance as a consequence of the COVID-19 pandemic, make sure that no protected groups are disproportionately impacted. Review your termination and layoff processes and use the four-fifths rule to determine whether or not there is adverse impact in one of these processes. If it turns out, for example, that older employees are being let go more than younger individuals, you’ll need to change your process in order to eliminate the adverse impact of your practice. FAQWhat is adverse impact? Adverse impact refers to a significantly different rate of selection in hiring, promotion, or other employment practices which puts members of a race, gender, or ethnic group at a disadvantage. Why is it important to avoid adverse impact? There are various reasons why it is important to try and avoid adverse impact in your HR practices as much as possible: to build a more diverse and inclusive workforce, to ensure fair hiring (and other HR) practices, and to comply with legal requirements. How to avoid adverse impact in HR practices? There are different ways to avoid adverse impact in your HR practices, including: understanding the four-fifths rule, conducting a thorough job analysis, writing inclusive job adverts, creating a solid promotion policy, avoiding adverse impact in your layoffs, and using validated assessments. |