Adverse Impact Analysis Services
Analyzing transactions is a crucial part of affirmative action planning. Adverse impact analyses are one of the most data intensive areas of affirmative action and an area of significant risk for OFCCP settlements.
With OutSolve at your side, you are able to produce proactive and audit related reports for new hires, promotions, terminations, and customized management reports to meet your business requirements.
To work with OutSolve on your Adverse Impact Analysis, please contact us.
Adverse Impact Analysis Explained
The Compliance Adverse Impact Analysis (AIA) tool is used to measure the “rule-of-thumb” disparity in new hire selection, employee promotions or terminations by comparing two distinct selection ratios. For the AAP, the selected groups are hires versus applicants, terminations versus those available for termination, and promotions versus those available for promotion. The report analyzes these transactions to determine if any race or gender group is adversely affected by a company’s selection decisions. For OFCCP Compliance standards and audits, OutSolve utilizes the 4/5ths rule as described in the Uniform Guidelines on Employee Selection Procedures and other statistical tests (e.g., 2 SD) based on court rulings that compare selection rates to the available pools that may exist inside the company (for promotions) or externally as identified by the AAP percentages of those in the area that have the necessary skills.
Adverse impact indicated as ‘Yes’ does not automatically indicate discrimination. When there is adverse impact a contractor must research selections with impact and document findings and resolutions. It is obligatory to research any instance where adverse impact occurs and attempt to remedy or explain the potential problem. In some instances, the reason for adverse impact indicated as ‘Yes’ is due to data discrepancies while in others the statistical gap may be due to legitimate factors such as a validated test. Regardless of the cause readers must know that OFCCP will fully investigate instances of adverse impact found in submitted data.
Typically, the time period used for the Adverse Impact Analysis is the year prior to the current affirmative action plan. Some contractors elect to perform quarterly or semi-annual Adverse Impact Analyses in an attempt to identify problem areas before a full yearly cycle has passed.
OutSolve also uses more powerful statistical tests usually used/accepted by the EEOC for proactive reviews. These go beyond the “rules of thumb” associated with compliance. Fisher’s Exact, Chi-Square, Cohen’s d and others are used by our Industrial Psychologist to identify problem areas that need attention.
If you have the available archival data, we recommend that we identify adverse impact in each step of your selection funnel by disposition code, and by requisition (instead of by position for a whole year). If you are interested in a proactive review of your hiring, promotion, and involuntary turnover processes and outcomes, don’t hesitate to call us or CONTACT US NOW!