Adverse Impact Analysis
In week 4, you completed a Markov Analysis for a bank. To further that, this week you will look at that same organization in regards to its Affirmative Action Plan. Because your organization has many government contracts and is an FDIC insured institution, staffing must be done consistent with the OFCCP affirmative action requirements. By reviewing staffing records you can analyze whether there is disparity in outcomes for different groups of employees. The Uniform Guideline on Employee Selection states that “a selection rate for any race, sex, or ethnic group which is less than four-fifths (4/5) (or eighty percent) of the rate for the group with the highest rate will generally be regarded by the Federal enforcement agencies as evidence of adverse impact, while a greater than four-fifths rate will generally not be regarded by Federal enforcement agencies as evidence of adverse impact.” In order to calculate the 4/5 rule, you must know the availability of workers in the labor market to determine if intentional or unintentional discrimination in hiring and promotions will need to be addressed through affirmative action planning.
The analysis that you will see below is based on a group of branches located in the metro area of Washington, D.C. The primary concern for representation data is in the groups of tellers, customer service representatives, assistant branch managers, and branch managers.
For the discussion that follows, you will need to refer to Table 1 and Table 2 below. Table 1 shows the branches’ current employee availability data, and the second provides a template for comparing incumbency to availability. For definitions related to Affirmative Action, you may want to refer to the following website: http://www.gerstco.com/website/glossary.php. For example there is a good definition of incumbency to availability found on this webpage.
One misconception of affirmative action is that employers are required to meet a quota for hiring of minorities. In fact, from this activity you will see that the goal is for the company to reflect the labor market where the organization is located. In our example, the branches are located in the Metro Washington, D.C. area. To complete the analysis, information about the availability of minorities and females for your jobs must be obtained.
Data from the Census are used to determine how many people in a certain region are available to do the job (including those currently employed in similar jobs). The census data for the current analysis comes from the Bureau of the Census EEO data tool (http://www.census.gov/eeo2000/index.html), which was specifically designed by the government for the purpose of conducting EEO analyses.
The appropriate data can be found through the following steps:
Tellers, Retail Sales, First Line Supervisors of Retail Sales, and General and Operational Managers should be used for this analysis.
To determine the availability for each job category, the raw statistics for percentage of female and minority employees are multiplied by the value weight, and then these weighted statistics are added together within each job category. The value weight is the percentages assigned to each of the factors within a job group. In this case study the factors are external and internal hires and the value weight reflects the percentage of employees that come from each method or factor. For example, historically, 65% of customer service representative are hired from the internal pool of employees, while 35% come from outside hires. All of the tellers have historically been hired externally.
The availability data are taken from Table 1 and then used for determining if some demographic groups are underrepresented in the workforce of the branch and also for developing placement goals. A shortage exists if there is a discrepancy between the current workforce and the available workforce as calculated by the ratio of the current workforce divided by the current workforce. If the incumbency percent is below 80% (4/5’s), the bank will need to establish a goal of adding more employees in the groups that are underrepresented. To estimate this proportion, the incumbency (or current population of employees) for females is divided by the availability for females based on the Census data, and the incumbency for minorities is divided by the availability for minorities.
Based on the data provided you should answer the following questions:
