Using the 4/5ths Rule as an Outcome in Regression Analyses: A Demonstrative Simulation

The adverse impact associated with personnel practices is an important issue for personnel psychologists. The purpose of this simulation study is to demonstrate the consequences of using the 4/5ths rule and the adverse impact ratio in analyses designed to predict adverse impact from human resource management (HRM) strategies. Results show that increasing (1) the total number of selections made and (2) the minority representation in the candidate pool may influence adverse impact differently depending on how adverse impact is measured. Specifically, using the 4/5ths rule as an outcome in logistic regression analyses led to unexpected findings regarding the effectiveness of HRM strategies designed to reduce adverse impact. On the other hand, using the adverse impact ratio as an outcome in linear regression analyses produced to intuitive findings.