An Imperfect Analysis: Promotions and Terminations

As a part of a complete proactive affirmative action program, it is a best practice to conduct disparity (a.k.a. adverse impact) analyses for promotions and terminations personnel activity. Conducting these analytics is not only important in regard to identifying potential issues in the workforce, but also because OFCCP will analyze promotions and terminations data during an OFCCP audit.

A common question that arises when examining promotions and terminations activity is: what should be used for the “pool” total, or denominator, in the analysis? This question is much more difficult than defining an applicant pool for analyses, where the pool is determined by those candidates who meet the definition of “applicant” by the Internet Applicant Regulation. OFCCP provides minimal guidance to contractors in determining how to set up the pools for their promotion and termination analyses. The Federal Contractor Compliance Manual (FCCM) indicates that the “probable candidate pool should be identified” when completing promotion and termination analyses. Although vague, this guidance is essentially advising that the pools used for these analyses mirror reality for the given situation. In many instances the pool could be a 1:1 ratio for promotions and terminations (e.g., inline progression promotions or terminations that were the result of a voluntary resignation). In other instances, there is a defined pool (e.g., competitive promotions or a reduction in force) that changes for each selection. Given the volume of personnel activity that contractors experience, it would likely be an extremely time consuming process to track these data and define appropriate pools for each and every analysis.

Although not a perfect analysis, a solution (and common industry practice) is to use the prior year job group employee counts as the “pool” amount, or denominator, for a proactive disparity analysis. Although using the prior year roster snapshot as the pool does not mirror exact reality, it does provide a “ballpark” for contractors to use in effectively monitoring their personnel decisions. However, using the prior year employee counts does not solve all of the above mentioned issues. The reality of human resources is that our workforce changes every day. Throughout the 12 months of an affirmative action cycle, employees across job groups are hired, terminated, promoted, laterally transferred, demoted, go on leave, and/or relocate to a different company location. Given the amount of movement, or “turn and churn” that happens at a location throughout the affirmative action plan year, this practice may not allow for a feasible statistical analysis. For example, let’s examine two hypothetical scenarios where the prior year job group totals are used for the pool of promotions or terminations in an AAP job group.

In the first example, for the minority population, it is mathematically impossible to divide the selected amount (1) by the pool amount (0). The reason as to why there was a zero in the pool amount is because at the start of the plan year, there were no minorities in this job group. However, throughout the plan year, the normal “turn and churn” that happens at an organization occurred.

The second example proves a similar point for non-minorities and males. It is mathematically impossible to divide 5 (the number of terminations) by 4 (the pool amount, or the amount in the prior year job group).

In situations such as these, it may be both theoretically and mathematically appropriate to make adjustments to the pool amount to ensure an appropriate analysis can be conducted, as well as to attempt to mirror the reality of normal personnel movements that occur in an organization.

Although using the prior year counts does not allow for a perfect analysis, when using adjustments it does allow for a contractor to monitor their personnel activity and identify problem areas. In addition to making adjustments, there are some best practice refinements that contractors can make to their analyses to improve their monitoring, including:

• Break out termination analyses into voluntary and involuntary
• Conduct a separate analysis for any termination decisions that are a reduction in force where the pool is defined. (Note, these pools should be created, and analyses conducted, under attorney-client privilege)
• Break out competitive and non-competitive (i.e., inline progression) promotions from each other. Or track competitive promotions (and their pools) in the applicant tracking system
• It may be appropriate to conduct an analysis based on time. For example, how long does it take for females to get promoted compared to males in the same job group?

by Joanna Colosimo, M.A., Senior Consultant and Amanda Shapiro, M.S., Consultant, DCI Consulting Group