Enter the rate at which the most represented group is selected to determine the rate at which the less-represented group needs to be selected in order to avoid adverse impact.

Adverse Impact Formula

The following formula is used to calculate the rate at which the less-represented group needs to be selected in order to avoid evidence of adverse impact. 

AI () = SR(M) * (4/5)
  • Where AI (%) is selection rate a less-represented group must be selected at to avoid evidence of adverse impact.
  • SR(M) is the selection rate of the majority group (%).

To calculate the adverse impact, multiply the selection rate of the majority group by (4/5).

What is adverse impact?

Definition:

Adverse impact, also known as the four-fifths (4/5) rule, is a term used to determine if a company is hiring lower-represented groups (i.e. women/minorities) at a lower rate than the majority groups, (i.e. white/male).

The four-fifths term (4/5) says that the lesser-represented groups should be hired at least 80% of the rate of the majority.

How to calculate adverse impact?

Example Problem:

The following example problem outlines how to calculate an adverse impact.

First, determine the rate at which the majority group is being selected or hired.

In this example, we are looking at a company that hires mainly white males. The acceptance rate of these applicants is found to be 75%.

Next, use the formula above to determine the minimum rate the less-represented groups should be hired at.

AI (%) = SR(M) * (4/5)

AI (%) = 75* (4/5)

AI (%) = 60%