Adverse Impact refers to practices in employment, education, or other areas that appear neutral but result in a disproportionate effect on a protected group. In HR, it indicates when a seemingly fair company policy unintentionally discriminates against certain individuals based on race, gender, age, or other protected characteristics.

Within the HR context, adverse impact signifies a situation where hiring, promotions, training opportunities, or other employment practices favor one group over another unfairly. This can happen even if there was no intent to discriminate. Understanding and mitigating adverse impact is essential to ensure equal opportunity and compliance with anti-discrimination laws.

Why It Matters

Adverse impact is significant because it affects the fairness and legal compliance of HR processes. Employers must identify and remedy policies or practices that cause adverse impact to maintain a diverse and equitable workplace. Moreover, failure to address adverse impact can lead to legal challenges, reputational damage, and loss of talent.

How do companies measure adverse impact? A common method is the four-fifths rule, which compares the success rates of different groups. If a particular group's selection rate is less than 80% of the highest group's rate, adverse impact may be occurring.

FAQ

What is an example of adverse impact? A company that hires mostly male candidates for a manual labor job, resulting in fewer female employees, could be experiencing adverse impact if the hiring criteria are not relevantly linked to job performance.

How can adverse impact be avoided? Conduct regular audits of hiring and employment practices, use validated selection tools, and provide training specifically designed to eliminate biases.