Tanglewood Case 5: Disparate Impact Analysis

Tanglewood Case 5: Disparate Impact Analysis Recruitment and Selection HRM 450 Current Needs Assessment Tanglewood prides itself on encouragement of diversity in the workplace. All hiring and promotion decisions should be made on the basis of character and quality of work. The ensuing lawsuit brings about a need to analyze Tanglewood’s selection strategies to ensure these practices are not hindering the promotion of diversity. In order to do this, it is necessary to study the flow and concentration statistics of the organization.

Flow statistics are calculated by comparing the number of people hired and promoted in the organization with the total number of people that apply. These statistics are then divided into different groups (i. e. race, gender). The selection rates of the different groups are compared to determine if there is a significant difference in selection between the groups. An example of this would be to look at the number of total white applicants and the percentage of those applicants that were hired.

Then, look at the total number of African American applicants and the percentage of those applicants that were hired. These two percentages must then be compared. A useful comparison of these percentages would require that the number of African Americans selected equal 80% or the number of white employees hired. This is known as the four-fifth’s rule. The Uniform Guidelines on Employee Selection Procedures (UGESP) requires that all organizations keep records that will allow for calculation and comparison of these statistics.

The UGESP also requires that the four-fifth’s rule be calculated in all organizations. If is it shown that “a selection rate for any…group is less than four-fifths (4/5) (or eighty percent) of the rate of for the group with the highest rate” then this will usually be considered to be evidence of adverse impact. Adverse (or disparate) impact occurs when staffing practices have potential discriminatory impact on individuals because of sex, race, religion, disability, national origin or age. Although the four-fifths rule is really nly a guideline, any digression from this rule should be thoroughly examined. It is also important to note that although the discrimination is not intentional, it may be occurring all the same and could possibly be deemed illegal. Along with the flow statistics of the selection processes in the organization, it is necessary to examine the concentration statistics among different groups in Tanglewood. Concentration statistics inspect the total number of individuals employed in a certain position as compared to the number of individuals from different race groups employed in a certain position.

For example, it is useful to look at the percentage of white employees employed in the position of Store Manager compared to the total number of Store Managers. Then, look at the percentage of African Americans employed in the Store Manager position compared to the total number of Store Managers. Also, it is useful to examine the percentage of African American employees employed in upper management positions as compared to the percentage of African Americans employed in the lower positions such as Store Associate.

Although there are no specific legal guidelines for the analysis of concentration statistics, it is important to explore them as a means of determining any possible unintentional discrimination in selection practices. Current Organizational Statistics After careful examination of the Tanglewood’s flow statistics, there is evidence this organization may be involved in selection practices that have disparate impact on some minority groups. The following selection statistics are provided to show instances of violation of the four-fifths rule. Store AssociatesTotal WhiteTotal Non-WhiteAfrican-American Selection Ratio23. 0%22. 79%24. 00%24. 00% Shift LeaderTotalWhiteTotal Non-WhiteAfrican-America External15. 88%16. 31%13. 88%5. 88% (36%) Internal31. 65%32. 45%28. 03%13. 89% (42%) Dept. ManagerTotal WhiteTotal Non-WhiteAfrican-American External7. 57%7. 64%7. 14%6. 82% Internal21. 05%21. 22%20%14. 29% (67%) Asst. Store ManagerTotalWhiteTotal Non-WhiteAfrican- American External11. 11%13. 33%0% (0%)0% (0%) Internal25. 00%27. 78%11. 11% (40%)25% Store ManagerTotalWhiteTotal Non-WhiteAfrican- American External10. 42%7. 69%22. 22%0% (0%) Internal16. 05%13. 64%26. 67%0% (0%)

The selection rates of each category (white, non-white, etc…) are indicated in the column corresponding to whether the employees were hired from outside the organization (external) or promoted from within (internal). In order to calculate the four-fifth’s rule, it is necessary to examine these percentages. The first step is to divide the selection ratio of the minority group by the selection ratio of the majority group. For example, in order examine the four-fifth’s rule in regards to African American employees hired externally in the Shift Leader position, divide that selection ratio (5. 8%) by the selection ratio of white employees hired externally to the same position (16. 31%). .0588 ? .1631 = . 36 This indicates that the number of African Americans hired externally for the Shift Leader position is only 36% of the amount of white individuals hired externally for the same position. The number should be around 80% in order to fulfill the four-fifth’s rule. In performing these calculations across all positions, there is evidence that points to disparate impact throughout several positions. The instances in which disparate impact evidence is present are represented in the preceding chart.

The percentage in parentheses beside the selection ratio is the percentage obtained by applying the four-fifth’s rule. The four-fifth’s rule was not satisfied for African Americans hired both externally and internally for the Shift Leader position. It was also not fulfilled for African Americans in the position of Department Managers hired internally. The Assistant Store Manager position showed disparate impact evidence for both African Americans and Non-White employees. The Store Manager position had no African Americans filling these positions.

It is important to note that the terms ‘white’ and ‘African-American’ refer to employees that are Non-Hispanic. The computations for concentration statistics also indicate there may be unintentional discrimination occurring in the promotion practices of the Tanglewood organization. There seems to be a much higher concentration of white employees in the upper management positions as compared to African Americans in upper management. The concentration of certain classes is computed by dividing the number of persons in a certain class for any position by the total number of individuals employed in that position.

For example, the percentage of Shift Leaders that are African American is 1. 81%. This can be compared to the percentage of Shift Leaders that are white, which is 84. 06%. It is also useful to compare percentages of lower level employees that African American to the number of upper level employees that are African American. In the following charts, these numbers have been calculated: Store AssociatesWhiteNon-WhiteAfrican American 83. 59%16. 41%3. 44% Shift Leader WhiteNon-WhiteAfrican-American 84. 06%15. 94%1. 81% Asst. Store ManagerWhiteNon-WhiteAfrican-American 92. 75%7. 25%2. 9% Store ManagerWhiteNon-WhiteAfrican-American 69. 57%30. 43%0% Total StoreWhiteNon-WhiteAfrican-American 84. 11%15. 89%3. 06% This table indicates that there are serious deficiencies of African-American workers in the upper level management positions at Tanglewood. Again, though there are no specific legal guidelines regarding concentration statistics, it would be in Tanglewood’s own best interest to investigate the cause of these discrepancies. It appears as though the organization should look into not only its initial selection strategies, but also the promotion practices used.

Addressing Eaglette-Schubert According to the information presented in the case, Eaglette-Schubert is building a case against Tanglewood based on disparate impact. There are very few details of specific actions or behaviors that would suggest that Tanglewood is intentionally discriminating against minority employees. However, since Eaglette-Schubert is not arguing disparate treatment, but is arguing disparate impact, there is no need to prove that the discrimination was intentional, but simply that a difference exists between employment practices for majority groups and those in protected classes.

Eaglette-Schubert is using the argument of homophily to base the disparate impact case on. Homophily is the phenomenon in which people seek to be around those people that are similar to themselves. It is often argued that companies are more prone to homophily in social networks when there is a heavy reliance on internal company networks, such as that of Tanglewood. An internal network is utilized at Tanglewood to find new employees through employee referrals, and to promote individuals within the organization.

Promotion within the organization involves managers encouraging certain employees that show promise to apply for available promotions, and those that are recommended by supervisors have a strong advantage over those that do not. The argument is that this internal network process is closed to minority groups because of the concept of homophily in social networks. The statistics point to Tanglewood having disparate impact discrimination for African Americans in the positions of shift leader, department manager, assistant store manager and store manager.

In court Tanglewood would have the burden of proof that its practices are job related and consistent with business necessity. Since this will be hard to prove, as other selection methods could be used in the place of the current discriminatory methods. As a result, Tanglewood should try to end the dispute through a consent decree. A consent decree is a voluntary, court-approved agreement between the plaintiff and the defendant. This decree may contain an agreement to alt certain discriminatory practice and an agreement to employ certain remedies. Tanglewood should also establish goals for future hiring and promotion activities to correct the underutilization. By seeking an out of court settlement, Tanglewood will decrease the amount of publicity and attention that this situation will cause. Written Statement for Tanglewood to Make It is important for Tanglewood to carefully consider any statement that is going to be put in writing because it could serve as evidence in court.

Tanglewood should state that the company is committed to the openness, inclusiveness, and encouragement of diversity within the organization. It should be mentioned that Tanner Emerson and Thurston Wood tried to build the company on a model of inclusiveness, which judges individuals solely on the basis of work and character. Finally, Tanglewood should state that the company wants to take any possible steps to ensure that the company is not employing any practices that defy the goal of embracing diversity within the organization.

Putting the organization’s commitment to diversity into writing may not help with the case of disparate impact, but it will let the employees and the general public know of Tanglewood’s sincere dedication to have a diverse workforce. Achieving EEO Outcomes In order to better achieve EEO outcomes in the future, Tanglewood should make some changes to its recruiting procedures. This can be achieved by implementing a strategy that incorporates all of the following aspects: Study – know the laws and standards, remove barriers to EEO, identify technical assistance prospects.

The laws that Tanglewood should follow are: •Title VII of the Civil Rights Act of 1964 (Title VII), which prohibits employment discrimination based on race, color, religion, sex, or national origin; •The Equal Pay Act of 1963 (EPA), which protects men and women who perform substantially equal work in the same establishment from sex-based wage discrimination; •The Age Discrimination in Employment Act of 1967 (ADEA), which protects individuals who are 40 years of age or older; •Title I and Title V of the Americans with Disabilities Act of 1990 (ADA), hich prohibit employment discrimination against qualified individuals with disabilities in the private sector, and in state and local governments; •Sections 501 and 505 of the Rehabilitation Act of 1973, which prohibit discrimination against qualified individuals with disabilities who work in the federal government; and •The Civil Rights Act of 1991, which, among other things, provides monetary damages in cases of intentional employment discrimination. Plan – formulate strategies for successful EEO results.

Tanglewood could utilize a plan that is used by GTE, in which it targets activities such as career fairs and open houses where a diverse student population is key factor. Tanglewood could also use a strategy done by PriceWaterhouse, which recruits woman and people of color from approximately 250 colleges and universities throughout the country. PriceWaterhouse also forms partnerships with organizations and programs committed to supporting diversity. Lead – have senior, middle, and lower management champion the cause and provide actual leadership for implementation.

Tanglewood needs to make sure that management is committed to supporting diversity so that they know how to get the rest of the company on board. Tanglewood could implement a strategy by Turner Construction, in which it puts forth effort into developing a future recruitment resource pool through its mentor/mentee program. This shows that the company is committed to diversity even in the long run and Tanglewood’s management should implement this strategy in order to make sure that the company is always committed to diversity.

Encourage – identify and reward proper actions by managers, supervisors, and employees. After Tanglewood’s management gets the rest of the company on board with being committed to diversity, they can continue to develop this by rewarding employees who show they are committed to supporting diversity. For example, GTE gives bonuses for referrals that result in hire. Notice – take notice of the impact of your practices, monitor and assess progress, ensure that unfairness does not occur.

Tanglewood always need to evaluate its methods so that the company is always pursuing diversity. It could implement a plan by GTE in which its’ multifaceted professional recruitment strategy in assessed annually. No matter how often the assessment is performed, it is a necessity to make sure Tanglewood’s recruiting methods are always supporting diversity. Discussion – communicate and reinforce the EEO message. Tanglewood should always be able to effectively communicate its vision in being committed to diversity.

For example, GTE gives out monthly reports made of progress and results. As long as Tanglewood employees always know what’s going on in the company, they will feel valued and will be loyal to the company. Inclusion – bring all employees and groups into the process. This again goes along with effectively communicating. Tanglewood should implement a team environment so that everyone is working together toward the common goal of being committed to diversity. Dedication – assign needed resources, do not be afraid of bumps on the road.

Tanglewood should be able to look to the future and anticipate problems so that it will know how to fix them in order to stay in accordance with EEO laws. Promotion and Career Development Procedures From the beginning, the Tanglewood culture has emphasized strong employee participation. Tanglewood believes in a workforce of committed, qualified individuals who will help carry the Tanglewood philosophy into the future. All employees are part of the core work force because Tanglewood believes a core work force is essential for the organization’s values and culture that it seeks to develop and maintain.

Because of Tanglewood’s desire to maintain a core work force, it has been more inclined to promote and develop internally. Any company that focuses largely on internal promotion and development runs the risk of furthering any disparate impact that may already exist within the company. Therefore, Tanglewood should focus on the Equal Employment Opportunity Commission’s “Best Practices” list. This list was compiled after looking at many organizations and from them identifying the best practices of promotion and development for equal employment opportunity.

Some changes Tanglewood can make to its promotion and development procedures are: •Revise its job posting policy—since Tanglewood consistently hires from within, the company needs to clearly state in its job posting policy that diversity is a consideration when filling jobs and will remain an important factor in workforce selection. This will let current employees know that the company is trying to correct and prevent future disparate impact upon minorities and that in order to do that, it may need to hire externally even though it had always hired from within. It is important to let the current employees know the reasoning behind changing he internal promotion method. The employees need to except the change, and in order to accept it, they must understand it. •Develop career development programs—these programs could aide the employees in reaching his or her full career potential by seeking out and eliminating any potential barriers to equal employment opportunities that may exist. •Training and development programs—these would be programs that would educate the employees on computers and information systems, as well as industry training. By educating all employees, this would limit the potential for disparate impact that a protected class might face. Employee development programs—these programs would cover executive training, diversity training, management development courses, team building, and conflict resolution classes. These programs would encourage the development and sensitivity to diversity within the organization by training all employees on the importance of diversity and how to manage it. Disparate impact is a serious problem within organizations that needs to be constantly monitored. If Tanglewood utilizes the Equal Employment Opportunity Commission’s “best practices” guide, it will be less susceptible to claims of disparate impact throughout the company.

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