What is Adverse Impact and why as an HR person you should care.
Adverse impact relevant to any hiring plan, as it can appear without warning or intent. Beyond simply the intent to discriminant against a particular class (gender, ethnicity, etc.), adverse impact occurs when a measure used for decision-making (be it an assessment or performance appraisal) produces biased results. Adverse impact can be damaging to a company in several ways. First, the company is going to be less able to hire top diverse talent, as some aspect of the hiring plan is removing applicants based on a protected class, may result in the company may not perform as well. Second, adverse impact opens up an organization to discrimination litigation. One might respond that so long as the measure is valid, what does it matter? However, detection and minimization of adverse impact is important even for valid tests.
Beyond the legal risks, the main adverse impact is important is because the tests and assessments you are using to provide accurate measurements may demonstrate cultural bias on their items. Even while effective test developers remove biased items through DIF analysis, it may still be insufficient. For instance, while general mental ability (IQ) tests are wonderful predictors of job performance, they are notoriously biased. Methods exist to mitigate the impact of such problematic predictor, but they will be discussed at a later time. For now, it is important that when choosing an assessment for hiring purposes, you examine the validity report and the question and test level statistics. Make sure to ask your vendor for help in understanding the statistical values and what they indicate.
Examining the validity report should be simple if the test developers wrote it well. There should be a section for describing the evidence for validity, including construct, content, and predictive validity. These forms of validity provide information regarding whether the assessment is an effective measure, as well as if the assessment is recommended for your specific needs.
Understanding whether a test displays adverse impact will help keep a company out of trouble and hire the best available. If one examines the validity report and test development material one can ensure they will avoid any problems caused by a hiring system that exhibits adverse impact.
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