Understanding Adverse Impact

Undeniably, a more diverse team contributes a lot to an organisation. A diverse workforce can improve your company culture, bring in more revenue, and help you take your brand to a global scale. With so many benefits, it is necessary to monitor if your organisation contributes to bringing fewer diverse candidates. This is where the adverse impact metric comes in.


A lot goes behind crafting a hiring policy for your organisation. Many aspects might affect the protected class. To overcome such issues and ensure that you hire without bias, you need to measure the adverse impact metric.

When the adverse impact of your company policies is not checked, you are bound to face issues with your company’s branding, business practices, and advertising. Therefore, it is essential to understand the adverse impact metrics and bring in the necessary changes for your organisation.


Adverse Impact Definition

Any policies or hiring practices in an organisation show a bias towards a candidate based on their age, race, and sex and do not offer them equal opportunity.

One important thing to notice is that adverse impacts can occur in various stages of employment. It can happen in hiring, appraisals, development, performance reviews, and promotions. 

In most cases, an adverse impact is unintended due to a new hiring policy or a discrepancy in the job advert.


How to Calculate Adverse Impact

To calculate the adverse impact on your company policies or the recruitment in your organisation, use the 4/5 rule.

For instance, consider a male and female candidate ratio for a job role.

Assume that 15 male candidates applied for the role, out of which 10 were selected for the job. While on the other hand, 10 female applicants were used for the job, and only 5 were selected.

The male selection rate is 0.33, and the female selection rate is 0.5

Now choose the group that is most favoured and least favoured. Divide the least favoured by the most favoured employees. 

In this case, 0.5/0.33 = 0.15

This indicates that there is a 15% of adverse impact on the selection process. Anything less than 80% is considered to have a diverse impact.


Tips to Avoid Adverse Impact in Hiring

Staying mindful of the adverse impact can help you hire a diverse group of candidates. A diverse workforce  helps you tackle all the problems from a different perspective. The following are some tips to help you stay mindful of your practices for various stages of the employee lifecycle:

Tips to avoid adverse impact in hiring


Conduct a Job Analysis

Before posting a job advert on various job boards, you need to understand everything about the job. This is where you prepare a thorough job analysis for your open roles. Understanding the job can help you build a precise job description with no unrealistic requirements.

For instance, you might not understand the experience requirement for a specific job. Without a job analysis, the required experience level might discourage younger candidates and some older candidates from applying for the job.

A job analysis will also provide valuable insight on the training required from the employers for the employees and help you reduce the adverse impact on your hiring practices. This can also make it easier for them to train the employees and bridge the skill gaps.


Craft Inclusive Job Descriptions

A candidate will likely first look at the descriptions of the job advert and then decide to apply for the role. This is why crafting an inclusive job description is necessary. The language you use in the job descriptions may directly impact the candidates you attract.

Be sure that your description does not contain words and phrases that use gender-coded words or discriminatory language for a specific protected class.

The job descriptions will have a considerable impact on the adverse impact. Also, stay mindful of using words that refer to experienced candidates. Encourage candidates with the mandatory skills to apply for the job role. Any other skills you might require and are good to have, mention them separately.


Recruit from a Diverse Source

The best way to reduce your adverse impact is to choose a more diverse set of candidates for your recruitment funnel. This can help you bring in more candidates from different protected classes to your workforce even after the recruitment stages.

To help you recruit diverse candidates, a simple initiative, like hiring a recruiter from the protected class, can help you. Even the job boards you use to promote your jobs can impact the candidates who apply for the jobs.

Stay mindful of geo-targeting for your job ads and the candidates the advert targets. It will contribute as a source for your adverse impact.


Go for the Structured Interview Model

For the interview process, you can either choose a structured interview process or an unstructured interview process. In the former, you prepare the questions in advance and ask all the candidates the same questions in the same order. In the latter, you do not have such questions and ask questions depending on the candidate.

To reduce adverse impact, you must adopt a structured interview model for your hiring. In a structured interview, the interviewer can assess the candidates based on their answers, since all candidates are questioned in the same manner. This does not allow any unconscious bias to creep in.

This helps you quickly compare the candidates and select them based on the predefined scoring system. Only the candidate’s performance matters in a structured interview, and there is no place for their caste, age, sex, and ethnicity to play any role in the decision-making process.


Build a Solid Promotion Policy

Adverse impact is also found when many employees are up against a promotion. To ensure that the promotion process does not favour any of the employees or hinder the career growth of anyone from the protected class, you need to build a promotion policy that is bias-free.

The promotion policy should have a robust assessment method to ensure that no bias creeps into it. When the manager assesses the employee, they should not show any favouritism. 

Establish proper communication of the requirements of the appraisal policies so that the employees can understand them. If any of the employees feel wronged, have a grievance session in place for such instances.


Stay Mindful of Layoffs

Layoffs can occur for a multitude of reasons, the company might downsize, a global pandemic can occur, or the organisation might go through some tough times. In such instances, as an employer, you need to choose the employees to lay off. A layoff is never an easy task, but it is necessary to keep the company afloat.

At such times, ensure that none of the protected classes are mistreated. This means that when you lay off the employees, have a complete analysis of their performances, and then decide on the employees to terminate.

To check for adverse impact in the most common instances, you can see if many older employees are being let go compared to younger employees. Likewise, see if more women employees are terminated compared to men employees.



To ensure that there is no adverse impact, you need to constantly keep track of this metric and devise ways to make every process in your organisation bias-free. Constant monitoring is required to ensure that there is no bias against any protected classes. To build a good brand for your company, you must treat all your employees fairly at every stage of their relationship with the company.



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