Wednesday, August 7, 2013

From What Distance is Discrimination Acceptable?

Some 60% of American workers earn hourly wages. Of these, about half change jobs each year, so firms that employ lots of entry-level workers, such as call centers, supermarkets, home improvement stores and fast-food chains, have to vet million of applications every year.

Xerox Evolv(ing)

A recent article in MIT Technology Review reports that Xerox is screening tens of thousands of applicants for low-wage jobs in its call centers using software from a startup company called EvolvAccording to its website, Evolv “is a workforce science software company that harnesses big data, predictive analytics and cloud computing to help businesses improve workplace productivity and profitability” and its customers include 20 of the Fortune 100.

Working with Xerox, Evolv found that one of the best predictors that a customer-service employee will stick with a job is that he lives nearby and can get to work easily.  As Evolv states in its Q3 2013 Workforce Performance Report:
The distance that employees live from work affects how long they choose to stay at a job. Unsurprisingly, employees that live 0-5 miles from their place of work have the longest median tenure. They remain at their jobs 20% longer than employees with the shortest median tenure.
Although it still sells photocopiers, Xerox has also become one of the world’s largest outsourcing companies. It provides services like running customer service centers, handling health claims, and processing credit-card applications that brought in $11.5 billion in revenue last year.

That business relies on a huge workforce of 54,000 customer service agents, and because of high attrition in hourly jobs, Xerox will have to replace 20,000 of them this year, says Teri Morse, vice president for recruiting at Xerox Services.

The Dictatorship of Data

Morse says Xerox today won’t even look at resumes of those who score in the “red” category of Evolv’s initial behavioral assessment, a 30-minute online exam that workers fill out at home. Early on, while piloting the system, Morse says Xerox still hired against the advice of the data. Now, she says, “people who do poorly we no longer hire.”

We are more susceptible than we may think to the “dictatorship of data” — that is, to letting the data govern us in ways that may do as much harm as good. The threat is that we will let ourselves be mindlessly bound by the output of our analyses even when we have reasonable grounds for suspecting something is amiss. Or that we will become obsessed with collecting facts and figures for data’s sake. Or that we will attribute a degree of truth to the data which it does not deserve.
For more and more companies, like Xerox, the hiring boss is an algorithm. Jobs that were once filled on the basis of work history and interviews are left to personality tests and data analysis. The new hiring tools are part of a broader effort to gather and analyze employee data.

The risks to employers of utilizing online personality tests in their employment application process have been set out in a number of prior posts, including What Are the Issues, Courts Find Tests to be Illegal, The Next Asbestor? The Next FLSA?, Damages and Indemnification Challenges to Employers, and Welcomed as Customers; Rejected as Employers. The remainder of this post sets out the employment discrimination litigation risks to employers (and society) of blindly following the "insights" of Kenexa and Evolv in distance from job site and housing mobility.

Interestingly, while Evolv now touts the distance from job insight for use by its clients, the company expressed a different view in a 2012 Wall Street Journal article, which reads;
Evolv is cautious about exploiting some of the relationships it turns up for fear of violating equal opportunity laws. While it has found employees who live farther from call-center jobs are more likely to quit, it doesn't use that information in its scoring in the U.S. because it could be linked to race.
From What Distance is Discrimination Acceptable?

Kenexa, purchased by IBM in December 2012, will test approximately 40 million applicants this year for thousands of clients. Kenexa believes that a lengthy commute raises the risk of attrition in call-center and fast-food jobs. It asks applicants for call-center and fast-food jobs to describe their commute by picking options ranging from "less than 10 minutes" to "more than 45 minutes."

The longer the commute, the lower their recommendation score for these jobs, says Jeff Weekley, who oversees the assessments.Applicants also can be asked how long they have been at their current address and how many times they have moved. People who move more frequently "have a higher likelihood of leaving," Mr. Weekley said.

Painting with the broad brush of distance from job site, commute time and moving frequency results in well-qualified applicants being excluded, applicants who might have ended up being among the longest tenured of employees. The Kenexa and Evolv findings are generalized correlations (i.e., persons living closer to the job site tend to have longer tenure than persons living farther from the job site). The insights say nothing about any particular applicant.

As a consequence, employers will pass over qualified applicants solely because they live (or don't live) in certain areas. Not only does the employer do a disservice to itself and the applicant, they increase the risk of employment litigation, with its consequent costs. 

Distance From Jobsite

A recent New York Time article, "In Climbing Income Ladder, Location Matters," reads, in part:
Stacey Calvin spends almost as much time commuting to her job — on a bus, two trains and another bus — as she does working part-time at a day care center.  ...
Her nearly four-hour round-trip [job commute] stems largely from the economic geography of Atlanta, which is one of America’s most affluent metropolitan areas yet also one of the most physically divided by income. The low-income neighborhoods here often stretch for miles, with rows of houses and low-slung apartments, interrupted by the occasional strip mall, and lacking much in the way of good-paying jobs
This geography appears to play a major role in making Atlanta one of the metropolitan areas where it is most difficult for lower-income households to rise into the middle class and beyond, according to a new study that other researchers are calling the most detailed portrait yet of income mobility in the United States.
The dearth of good-paying jobs in low-income neighborhoods means that residents of those neighborhoods have a longer commute. The 2010 Census showed that poverty rates are significantly higher for blacks and Hispanics. Consequently, hiring decisions predicated on distance from job site, intentionally or not, discriminate against certain races.

Housing Mobility

As shown in the table below, poor and near-poor families tend to move much more frequently than their higher income neighbors and the general population.

According to a 2011 study by the Center for Public Housing, entitled "Should I Stay or Should I Go? Exploring the Effects of Housing Instability and Mobility on Children," a wide range of often complex forces appears to drive frequent mobility, and residential instability in general — the formation and dissolution of households, an inability to afford one’s housing costs, the loss of employment, the lack of a safety net, lack of quality housing or a safer neighborhood.

Correlation Is Not Causation

When two variables, A and B, are found to be correlated, there are several possibilities:

1. A causes B
2. B causes A
3. A causes B at the same time as B causes A (a self-reinforcing       system)
4. Some third factor causes both A and B

The correlation is simple coincidence. It is wrong to assume any of these possibilities.

Kenexa, Evolv and their clients, however, assume that A (proximity to job site) causes B (reduced attrition and better performance). That assumption leads them to disfavor otherwise qualified applicants who do not live within a five-mile radius.

The correlation could also demonstrate B (reduced attrition and better performance) is caused by C (proximity of job site to applicants homes). Instead of being a hiring insight, the correlation might function better as being a job site location insight. Given the relative immobility of persons and companies, locating a job site (call center, etc.) close to communities with high numbers of lower-income persons could lead to a more sustainable competitive advantage.

Per Kenexa, the correlation between (A) persons who move and (B) shorter job tenure is that A causes B. However, per the 2011 study by the Center of Public Housing, it may well be that (B) shorter job tenure causes (B) persons to move. As shown in the table below, taken from the 2011 study, more than 76% of involuntary moves were a result of job loss.

Although data does give rise to information and insight, they are not the same. Data's value to business relies on human intelligence, on how well managers and leaders formulate questions and interpret results. More data doesn't mean you will get "proportionately" more information. In fact, the more data you have, the less information you gain as a proportion of the data (concepts of marginal utility, signal to noise and diminishing returns).

Maybe It's the Work, Not the Workforce, That Need Analysis ...

Some 60% of American workers earn hourly wages. Of these, about half change jobs each year. The cost to U.S. businesses of worker attrition and lost productivity is $350 billion annually. How much is that?

What should an employer do? Increase starting pay? Since most people work, at least in part, for the money - giving them more money might encourage them to stay longer and work harder. It seems to work reasonably well with corporate executives.  Top executive compensation averaged $9.4 million last year at the 50 largest employers of low-wage workers.

What do many employers do? Retain "workforce science" companies like Evolv and Kenexa to administer personality tests and analyze applicant data in order to address the employee turnover issue.

As noted above, working with Xerox, Evolv found that one predictor that a customer-service employee will stick with a job is that s/he lives nearby and can get to work easily. Kenexa had a similar "insight," and added that people who move more frequently have a higher likelihood of leaving.

Are there any groups of people who might live farther from the work site and may move more frequently than others? Yes, lower-income persons, disproportionately women, black, Hispanic and the mentally ill. They can't afford to live where the jobs are and move more frequently because of an inability to afford housing or the loss of employment.

So, not only are low-income persons poorly paid, many are electronically redlined from hiring consideration. What type of “workforce science” fails to take into account the most important variable (pay) and yet offers “solutions” based on this flawed science?

Are Employer Referral Programs Encouraging Discriminatory Hiring Practices?

According to Evolv, it recently “used rich data on hundreds of thousands of employees to demonstrate that referred workers show measurably better productivity and retention.” The research showed that 65 percent of companies have a referral program and 36 percent filled their last opening through an employee referral. A primary insight from Evolv is that, when it comes to retention, referred workers were around 13 percent less likely to quit.

As noted above, previous insights of Evolv and Kenexa – distance from work and housing mobility – lead to workforce selection processes that discriminate against blacks and Hispanics. Combining the employer referral program insight with the distance from work and housing mobility insights likely exacerbates the discriminatory impact of workforce science and its use in the hiring process.

About 40 percent of white Americans and about 25 percent of non-white Americans are surrounded exclusively by friends of their own race, according to an ongoing Reuters/Ipsos poll. Even looking at a broader circle of acquaintances to include coworkers as well as friends and relatives, 30 percent of Americans are not mixing with others of a different race, the poll showed.

The workforce insights regarding distance from job and employee mobility results in fewer blacks and Hispanics being hired. Consequently, if 36% of job openings are filled by referrals from employees and 30% of those employees do not have friends or relatives of another race, blacks and Hispanics will be underrepresented in the workforce hired as a result of referrals.

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