What is Adverse Impact? – 7 Ways to Reduce It In Hiring

Recognizing adverse impact in your recruitment process revolves around the practices to find out unconscious or conscious bias or unfairness in hiring, so you can take the right steps to mitigate adverse impacts.

From ages, people are recruited in the organizations for channelizing business operations and ensuring business progression. Implementing a fair and inclusive recruitment process has always been considered an important thing. No recruitment process is ideal without fairness and inclusiveness. But adverse impact occurs if a recruitment process is intentionally or unintentionally, not fair, and inclusive.

All in all, the adverse impact is the negative aspect of any recruitment process. In this post, we will decipher what is the adverse effect on recruitment, why measuring it in an organization is essential, and what the best ways are to reduce it. So, let us get started-

What is an Adverse Impact?

Adverse impact comes about when the recruitment panelists become biased towards the particular candidature during the selection procedure consciously or unconsciously. They try to protect the specific candidate or class off fairness.

The adverse impact can also happen in company groups that are set for decision-making.

According to the Equal Employment Opportunity Commission (EEOC), adverse impact (also understood as disparate impact) can be defined as-

“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 is expected within the companies.

Favoritism and discrimination have ignited an adverse impact very well.

Companies’ various decisions become unfair with this impact like hiring procedures, promotional decisions, layoffs, training and development, transfer, etc.  It may look fair from the outside, but it contains discrimination. Adverse impact protects the specific classes of age, ethnicity, gender, sexuality, etc. intentionally or unintentionally.

Hence, it can cause alienation of the other group of people that are a result of poor hiring practices. Adverse impact is usually the repercussion of specific practice anticipated most of the time during the hiring process.

Now, after being aware of what is adverse impact, you might be thinking that if it can be unintentionally, then why the companies measure it. So, let us understand that as well-

Why is the Adverse Impact Measured?

Adverse impact is the negative aspect of the selection procedure in companies. There are many judgments given on the adverse impact by the courts in the preceding years.

The Supreme Court in the U.S. passed a judgment in 1971 that, if the company is practising the adverse impact of protecting some of the classes, it should give the excellent testament of its selection process basis.

According to their job profiles, the company has to submit the reasonable relatedness of such employees to the court. This historic judgment laid the pillar of fairness in the U.S., which was followed by some more countries.

The measurement of adverse impact is needed for the positive progression of the company and nation.

The practice of un-bias processes within the companies provided a much better workplace for all employees. The fairness practice removed the potential of adverse impact from the companies and presented an alternative method of fair recruitment procedures.

Sustainable social growth is based upon the inclusive and unfair existence of every member. Measuring adverse impact in an organization is the one key step towards such a sustainable existence of society.

Measuring the Adverse Impact- Four Fifth Rule

Adverse impact in any situation is harmful and not trustable at all. So, it is indispensable to measure the adverse impact before it becomes too late. There is one impactful and straightforward method of measuring an adverse impact on your company’s hiring process. It is known as the four-fifths rule.

In simple terms, the four-fifths rule helps you measure the rate at which your company’s recruitment board is hiring specific groups or classes. The four-fifths rule looks somewhat like a riddle but is not that complex. Let us put the rule in words of EEOC (U.S. Equal Employment Opportunity Commission).

According to EEOC, the different agencies will adopt a rule at which they have to generally consider a selection rate for any class, including sex, caste, race, ethnic people, etc. This selection rate should be less than four-fifths (4/5ths) or eighty percent of the highest rate surviving group selection rate. This evaluated rate would be different from the actual rates in the company.  The final selection rate will form the actual rates at which hiring procedures are made.

The four-fifths rule is not entirely legal. But an adoption to curb the negative impact rates in the country. By enforcing this rule, many agencies could look after adverse impact’s serious discrepancies. The four-fifths rule is formulated to set all companies under a general thumb rule or rate.

So, to measure the adverse rate with the four-fifths rule, you have to look at your company’s hiring rates first.

Then figure out at what percentage the minority groups and non-minority groups are hired at the company.

Take both percentages in hand, and factor them together while checking the minority rate is over 80% or not of the non-minority rate. This 80% is the four-fifths of that high selection rate.

Hence, the adverse impact gets measured by the four-fifths rule.

Ways to Reduce the Adverse Impact – How to Minimize Adverse Impact

Every recruitment board admits that its onboarding process is very fair and consistent.

Every candidate has to go through the same hiring process, and there is no hint of biasedness in their procedures. But the important thing is that discrimination doesn’t have to be conscious every time.

It can impact the process adversely through unconscious means also. Current scenario witnesses many such unconscious discrimination that takes a toll on the onboarding process. At this point, you have to take the right steps to reduce or avoid the adverse impact on your company.

Let us find out together the ways to reduce the adverse impact as low as possible.

1. By ensuring a fair enough hiring process

To reduce the adverse impact, the first thing that comes to mind is the hiring process’s fairness. Every recruiting board wants to have a single fair process for hiring individuals.

This hiring process is the current playing field of candidates where they have to showcase their talents. The recruiter should look seriously over the onboarding process for providing equal opportunities to everyone, irrespective of their caste, race, gender, etc. there should be no biasedness and discrimination.

At this step, as a recruiter, you have to identify and mitigate the adverse impact in your organization for betterment.

2. By supporting the legal defensibility of the recruitment board

It is seen that ensuring a fair hiring process is not enough. To avoid adverse impact, you should be sure about the legal defensibility of your hiring process.

Being aware of the local laws and the ability to defend your selection process justifies your recruitment defensibility. This practice, in turn, protects both the company and the employees.

Legal support is essential for any company to reduce its adverse impact.

3. By improving diversity at the workplace of organizations

Diversity is defined as a variety of different things in one place. In the workplace, the investments in diversity and inclusions are regarded as a boon for the company.

All diverse companies do well in every sphere of business than non-diverse companies. Diversity also supports the company’s financial performance and employee engagement. Diverse companies are way too good at innovation and decision-making.

The adverse impact is also low for diversity driven companies. It is a wise step to add diversity and inclusions to your company for excellent progression.

4. By conducting an objective job profile analysis

To determine the specific requirements of a job profile is to analyze the objectives of concerned recruitment. By doing so, you can get a perfect overview of the job profile that you are intended to onboard.

There are some specific requirements for every job that should be studied beforehand for better hiring.  As a recruiter, make sure that you don’t miss anything related to the job profile. Just analyze the required skills and onboard candidates accordingly.

Your selection criteria should be strictly job oriented and job-focused only. It should not have any discriminative factors. Ensure every candidate based on his or her skills and competencies to reduce the negative impact potentials.

5. By implementing a four-fifths rule to measure the adverse impact in the hiring process

By following the four-fifths rule is a perfect option for identifying adverse impacts in your recruitment process. The rule is effective and comprises of fair selection rate to determine the adverse impact.

In simple words, the four-fifths rule states that the general selection rate of protected groups should be 80% of the non-protected groups. It reduces the adverse impact on organizations against minority candidatures.

6. By tracking the application and pass rates of your organizations

Another effective way to reduce the adverse impact is to keep track of your organization’s applications and pass rates. Learn what your audiences are when you post a recruitment advertisement.

It makes you more involved in the hiring process, and you get to know all about your applicants. Always ask the right questions through the EEO surveys. Questions should be like: “Are you targeting a diverse audience for job openings?”, “Are you getting the applications from all diverse groups?” etc.

Then you can track the application rates for your concerning job openings.  Tracking the rates minimizes the potentials of adverse impact effectively.

You can also use the 80% rule for figuring out the impact rate and then take steps accordingly. Use the above information to articulate transparency to your hiring process.

7. By training your team on transparent practices of hiring

In this way, you can genuinely minimize adverse impacts from your hiring procedures. Train all your fellow teammates to implement transparent methods of the recruitment process.

It is crucial to train all board members about leadership and other skills of identifying adverse impact. By this, the members can quickly mitigate the hiring procedures’ adverse impact, making it more reliable and transparent.

Train your teammates in an effective way of identifying unconscious bias during the hiring process. Moreover, also train them to improve their interview skills. Make sure your teammates have a standardized and clear process of recruitment to prevent the chances of adverse impact.

Final Thoughts!

The adverse impact can be conscious and unconscious, depending on the current condition. The companies should come forward to minimize the adverse impacts, as it hinders the progression of the company.

There are several ways by which adverse impact can be reduced.

All companies and organizations should have standardized reforms for combating adverse impacts. As a recruiter, you should practice fair hiring procedures to cancel out the potentials of adverse impact.

Now, on the concluding note, if we ask you to define what is adverse impact, how would you define it?

Have you ever faced any adverse impact during recruitment?