Adverse Impact: What It Is and How You Can Minimise It

Creating a business that is both inclusive and diverse is essential in today’s world. It can improve business outcomes, profitability and create happier, more engaged workplaces. But while some hiring processes may appear to be inclusive on the surface, recruiters need to analyse them to ensure they result in giving candidates equal opportunities. In this article, we’ll introduce you to the concept of adverse impact and how it affects your recruitment process.

What is Adverse Impact?

Adverse impact, sometimes known as disparate impact, is when a practice, policy or decision subconsciously impacts a certain group in a negative way. It can be manifested in many different employment practices, such as interviews, promotions, layoffs, background checks, training, and pre-employment assessments. In recruiting, an adverse impact is a form of hiring discrimination that is indirect and can be ingrained into a hiring process. Often, it’s a classic second-order effect, where we solve one problem but end up unintentionally creating another one that’s often even worse. It can therefore go unnoticed, but nevertheless can seriously limit opportunities for certain protected groups.

Why is Avoiding It Is Important?

Adverse impact is often a result of systematic discrimination either within a company or, on a larger scale, society. As a recruitment professional, it is extremely important that you are hyper-conscious of any underlying discrimination in your hiring practices. Read more about reducing hiring discrimination here. 

There are many reasons why you should try your best to avoid adverse impact. First and foremost, any form of discrimination is an unethical practice for any organisation, and it can negatively impact your company’s work culture. Regardless of race, gender or class, everyone deserves equal opportunities for job positions within your company.

Avoiding disparate impact in your recruitment process is also important for legal reasons. Hiring discrimination lawsuits can be costly, time-consuming, and devastating to your company’s reputation. The EEOC (the US Equal Employment Opportunity Commission) is responsible for investigating cases of potential discrimination by ensuring that companies’ hiring processes are in line with the Uniform Guidelines on Employee Selection Procedures. Being compliant with the Uniform Guidelines, plus any local laws is the best way to support legal defensibility for your company.

From a business perspective, avoiding disparate impact can also improve diversity in your workplace. Diversity recruiting is a great way to gain different perspectives on problem-solving and improve organisational work culture. If your hiring process is being affected by it you could be unwillingly preventing your company from reaching its maximum potential.

How to Minimise Adverse Impact

Here are a few strategies to avoid discrimination in your recruitment process:

1. Define the job position objectively

It is important when hiring to analyse the job position as objectively as possible. Define what criteria is absolutely essential for the candidate to have for the role. Focusing solely on the required skills and abilities needed for the role will assist you in having a diverse applicant pool to choose from. Having criteria in your job descriptions that aren’t directly linked to the role itself will make you susceptible to adverse impact. 

2. Keep the ⅘ rule in mind

The ⅘ rule is a general rule of thumb in avoiding adverse impact. The rule states that if the selection rate of a certain group is at least 80% less than the selection rate for the highest group, then disparate impact may be affecting the selection process. While the EEOC does not use the ⅘ rule as an objective standard, it is a strong indicator of whether or not your company is subconsciously discriminating against a given group.

3. Use Technology for blind candidate selection 

If your company collects demographic data from your applicants, such as race, sex or ethnicity, or if it’s self-evident from resumes then it can be useful to use software that can remove this data. 

4. Evaluate your Candidate Assessments

As a recruitment professional, you must examine your pre-employment assessments in terms of disparate impact. Your assessments should be tailored in such a way that all demographic groups are equally capable of scoring well on the test. Keep in mind that different groups have different backgrounds and different ways of thinking, so your assessment should not favour one way of thinking over another.

Assessments that ask the candidate to explain how they would solve problems or act in situations at work are often really useful as they illustrate exactly how the candidate would act in the role. These are called realistic job assessments and they are useful in removing hiring bias.

Find out how you can use ThriveMap to develop your own Realistic Job Assessments

5. Collect Data 

Collect data from every process so that you can evaluate your practices. Analyse the type of applicants you are reaching, receiving, and taking forward. Use this data to ensure you are reaching a diverse audience. You can also use this data to track how applicants are doing at each stage of your recruitment process and use the ⅘ rule to ensure there is no disparate impact along the way. If a certain group of applicants are being significantly lost in certain stages, you must investigate this and find out why.

6. Keep Records

It’s best to keep a digital record of every applicant you have had in your recruitment funnel and why you did or didn’t advance them in the recruitment process. This will help you evaluate the effectiveness of each step and see if any stage is vulnerable to discrimination. These records will be valuable in self-evaluation, but they will also provide you with evidence if you are ever challenged on your practices.

7. Standardize your hiring process.

We are all naturally drawn to people who are similar to us, but this tendency can lead to unconscious bias in recruitment. Hiring managers (and assessors in assessment centres) should be trained in equal opportunities, diversity, employment law, and interviewing skills to overcome any unconscious biases that may occur in the recruitment process. Interviewers should ask structured, competency-based questions to avoid any unethical or illegal questions from being asked. Using a standardized, structured hiring process will promote a more objective recruitment mindset.

Closing

The most diverse companies in the world are also some of the most successful. Not only does a diverse group of employees lead to thriving work cultures, but they can bring a wide variety of perspectives that will ultimately lead your company to success. Though it may be unintentional, adverse impact can have a catastrophic effect on a company, so be sure to take the necessary precautions to ensure you have an inclusive recruitment strategy!

Want help constructing a more inclusive recruitment plan for your business? Request a demo and learn more about how ThriveMap can improve your company’s recruitment strategy!