University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Doctoral Dissertations Graduate School 8-2004 Reducing Adverse Impact While Maintaining Validity: Finding the Balance Between Competing Employee Selection Goals John Ashley Henderson University of Tennessee - Knoxville Follow this and additional works at: https://trace.tennessee.edu/utk_graddiss Part of the Industrial and Organizational Psychology Commons Recommended Citation Henderson, John Ashley, "Reducing Adverse Impact While Maintaining Validity: Finding the Balance Between Competing Employee Selection Goals. " PhD diss., University of Tennessee, 2004. https://trace.tennessee.edu/utk_graddiss/2269 This Dissertation is brought to you for free and open access by the Graduate School at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. To the Graduate Council: I am submitting herewith a dissertation written by John Ashley Henderson entitled "Reducing Adverse Impact While Maintaining Validity: Finding the Balance Between Competing Employee Selection Goals." I have examined the final electronic copy of this dissertation for form and content and recommend that it be accepted in partial fulfillment of the equirr ements for the degree of Doctor of Philosophy, with a major in Industrial and Organizational Psychology. Robert T. Ladd, Major Professor We have read this dissertation and recommend its acceptance: Lawrence James, Michael Lane Morris, Chanaka Edirisinghe Accepted for the Council: Carolyn R. Hodges Vice Provost and Dean of the Graduate School (Original signatures are on file with official studentecor r ds.) To the Graduate Council: I am submitting herewith a dissertation written by John Ashley Henderson entitled “Reducing Adverse Impact While Maintaining Validity: Finding the Balance Between Competing Employee Selection Goals.” I have examined the electronic copy of this dissertation for form and content and recommend that it be accepted in partial fulfillment of the requirements for the degree of Doctor of Philosophy, with a major in Industrial and Organizational Psychology. Robert T. Ladd, Major Professor We have read this dissertation and recommend its acceptance: Lawrence James Michael Lane Morris Chanaka Edirisinghe Accepted for the Council: Anne Mayhew Vice Chancellor and Dean of Graduate Studies (Original signatures are on file with official student records.) REDUCING ADVERSE IMPACT WHILE MAINTAINING VALIDITY: FINDING THE BALANCE BETWEEN COMPETING EMPLOYEE SELECTION GOALS A Dissertation Presented for the Doctor of Philosophy Degree The University of Tennessee, Knoxville John Ashley Henderson August 2004 Copyright 2004 by John Ashley Henderson All rights reserved ii DEDICATION This dissertation, as well as the entirety of my education, is dedicated to my loving wife, Greta Ann Henderson. She has remained steadfast in her support of my pursuits, and without her love, comfort, and tolerance, I would have lost my way long ago. My thankfulness for her sharing her life is immeasurable. iii ACKNOWLEDGMENTS As the culmination of my educational experience at the University of Tennessee, this dissertation would have not been possible if not for the assistance, teaching, and support from a number of individuals. The faculty and staff of the Industrial and Organizational Psychology program have been absolutely wonderful and have benefited me in too many ways to note. However, I would like to acknowledge two individuals in particular. I would like to thank Dr. Mike Rush for constantly challenging me to become a better writer and a more complete researcher. Your critical analyses have been invaluable. I would also like to thank Ms. June Trbovich not only for her commitment to the students but also for her consistent support and sympathy when the road became a little rough. June, there will never be another like you, and that is a shame. My wife and I would like to express gratitude toward our families as well. You have both represented beacons of support – financially, emotionally, and spiritually. I am forever grateful. While I would also like to thank my peers and fellow students in both Chattanooga and Knoxville, there are simply too many to note. Jen, Stephen, Kate, Laura, James, Mark, Dave, and everyone else, you know who you are, and hopefully, you know what you’ve meant to me. A special thanks is reserved for Dr. Ken Carson. Without your teachings, encouragement, and confidence in my ability, I would never have embarked on this journey. Dr. Lane Morris and Dr. Chanaka Edirisinghe, from my dissertation committee, I appreciate your insights, comments, and suggestions. Both of you have contributed to this iv project in unique ways, and this has resulted in a higher quality and more comprehensible product. Thank you for your time and effort, and I hope to repay your generosity someday. Dr. Larry James also deserves special mention. Along with your incredible insights on almost all of the subjects within our field, you have taught me to think creatively while always enjoining the basics tenets of good science. In fact, I consider myself a scientist because of your contributions, and for that, I am in your debt. Finally, I would like to acknowledge my dissertation chair and mentor, Dr. Robert Ladd. I will never be able to sufficiently relate the personal benefits I have received from our relationship as professor and student, nor will I even begin to describe the long- lasting impact of your advice and friendship. Whether it involved improving my critical thinking skills, advancing this research, or simply teaching me to make better decisions, your efforts have resulted in me becoming a better researcher, scientist, consultant, statistician, and person. Unfortunately, I fear that this will have to remain a debt never fully paid, but I will always looking for ways to make a dent. Thank you. v ABSTRACT Adverse (or disparate) impact has probably represented one of the most persistent and pervasive problems in employee selection. Innumerable approaches to eliminating its presence have been attempted, but most have been met with limited success. To date, this success has been measured in only slight reductions in adverse impact unless substantial losses in validity are accepted. While a number of reasons for these results have been advanced, this research asserted that part of the problem originated in the narrow perspective with which employee selection is often defined. This narrow perspective has resulted in a singular focus on validity with insufficient attention allocated to multiple criteria. The purpose of the present research was to expand upon an earlier study (Henderson & Ladd, 2001) that introduced a methodology (constrained estimation) that incorporated multiple objectives into the decision-making process associated with employee selection. Specifically, the goals of the methodology included reducing adverse impact while maintaining validity. In order to test the efficacy of this methodology, constrained estimation was applied to both Monte Carlo data as well as archival data obtained from an assessment project conducted from 1992 to 1993. It was also compared to two commonly used predictor weighting methodologies – Ordinary Least Squares regression and Unit Weighting. Results suggested that constrained estimation was moderately successful in reducing, but not eliminating, adverse impact while maintaining validity. Implications, limitations, and suggestions for future research are discussed. vi TABLE OF CONTENTS CHAPTER PAGE I. INTRODUCTION ............................................................................................. 1 II. REVIEW OF THE LITERATURE.................................................................... 10 The Role of Cognitive Ability............................................................................ 12 Reducing Adverse Impact.................................................................................. 17 Procedural/Administrative Methods........................................................... 17 Alternative Predictors................................................................................. 21 Expanding the Criterion Domain................................................................ 23 Predictor Combinations.............................................................................. 24 The Pervasiveness of Adverse Impact ............................................................... 27 New Perspective................................................................................................. 29 Multiple Criteria................................................................................................. 30 Optimization & Constrained Estimation............................................................ 32 Constrained Estimation............................................................................... 33 Constrained Estimation Pilot Study............................................................ 38 Research Questions & Predictions..................................................................... 42 Predictions................................................................................................... 43 III. METHODOLOGY............................................................................................. 48 Overview...........................................................................................................