Assignment 2 Adverse Impact

Scenario

You were just hired as a Human Resource Manager at Stewart Incorporated! Stewart Incorporated is a retailing conglomerate that own 20 medium-sized stores located throughout Oregon and Washington. Stewart’s major customers are primarily middle- to upper- class families that purchase sportswear, dresswear, and fashion accessories. In business for 85 years, the company has developed a fine reputation in the communities in which its stores are located.

Stewart’s has a long-standing belief that their success as a retailing firm depends on the competencies and efforts of each employee. As such, they hire only people with sales experience and have an excellent training program as well.  In addition, this commitment to personnel led  the company to implementing a very expensive computerized human resource information system (HRIS). Through the use of the HRIS, the company has automated record keeping on everything from job titles, demographics, and attendance to sales levels for each employee.

Unfortunately, profit and sales are not what the company would like them to be. This situation of lack of growth is unusual for Stewarts’. Until recently the store has enjoyed a steady growth in profit and sales, but now money is tight and you have to work within a constrained budget. You expect that various issues will arise in your position as Human Resource Manager, but since you received an excellent business education from a prestigious school and have a positive attitude, you are confident that you have the knowledge and skills to solve problems as they arise.

EQUAL EMPLOYMENT OPPORTUNITY AND LEGAL COMPLIANCE

 One of your first assignments at Stewart Incorporated is to critically review its staffing practices. Recently, some of the job applicants have complained that the selection procedure for the entry- level salesperson position is discriminatory. In response, you decided to evaluate the current staffing practices using the Uniform Guidelines on Employee Selection Procedures issued by the Equal Employment Opportunity Commission (see http://www.uniformguidelines.com). These guidelines indicate how organizations should evaluate their selection rates using the four- fifths rule and also specify the standards that organizations should use to validate their selection procedures.

The Selection Process:

Selection for the entry-level salesperson position involves a two-step multiple-hurdle process. Applicants are first required to pass a cognitive ability test, a test similar but somewhat easier than the Scholastic Aptitude Test (SAT). The test is made up of twenty-five verbal items and twenty-five quantitative items. Candidates are required to receive a passing score of 70% (35 of the 50 items correct) in order to be eligible for the second step of the selection process, the interview. During the interview, a three-member panel of supervisors asks each applicant questions about how they would deal with hypothetical situations which might be encountered on the job. The interviews typically last one-half an hour. At the end of the interview, the three interviewers rate the candidate on ten dimensions such as attitude, motivation, communication, etc. Candidates receiving high scores on most of the dimensions pass the interview.  After passing a reference and security check, candidates are hired and asked to report to training.

Determination of Adverse Impact:

You   know   that   the   Uniform   Guidelines   suggest   that   employers   make   adverse impact determinations at least once a year. Although records have been kept, Stewart Incorporated has not calculated the selection ratios at all in the past three years. You feel that the first thing that should be done is to do these calculations. The data to be used for the calculations is provided below.

Part 1

Data from the Cognitive Ability Test

 

Group	Number Who Who Took the Test	Number Who Passed
Caucasians	282	134
African Americans	36	10
Hispanics	102	44
Asian Americans	0	—
Native Americans	0	—
Men	385	170
Women	35	18
TOTAL	420	188

Part 2

Data from the Interview

	Group	Number Interviewed	Number Who Passed
Caucasians		112	87
African Americans		8	5
Hispanics		40	22
Asian Americans		0	—
Native Americans		0	—
Men		148	109
Women		12	5
TOTAL		160	114

 Now it is your responsibility to complete an evaluation of the organization’s selection procedures by answering the following   questions.

QUESTIONS

For the given data, is there any evidence of adverse impact against any race, sex, or ethnic group (provide all of your calculations with your answer). If so, against which protected group?

 If the total selection process for a job has no adverse impact, should the individual components of the selection system be evaluated for adverse impact? Why or why not?

If there is evidence of adverse impact in selection, what kind of action should be taken?