Chapter 3 Analyzing Promotion Data: Applying the 80% (4/5ths) Rule

Tom Kelly, HR Director of Mega Savings Food Stores was concerned by a conversation he had with Larry Jones, an employee in the companys distribution warehouse. Jones complained that black employees were being passed over for promotions in favor white employees who had less experience and seniority. Jones went on to explain that he had resigned his position in the meat department of the warehouse because despite his experience and job performance, he felt that he would not get promoted. He explained that he had been passed over for promotion three times since he started working in the company.

After Jones left his office, Kelly immediate began to investigate Jones claim. He called in Mark Walters, his personnel assistant and explained the conversation just completed with Jones. Kelly told Mark, The last thing I want is a discrimination suit, so I want you to gather data on promotions that have occurred in the last couple of years in our warehouse operations. Also, gather promotion information on our stores. Here are the names of three black employees given to me by Jones. Pull their files and try to get any facts on what happened with their promotion applications. Mark replied, I dont think it will be too difficult to pull together this information, but Ill have to talk with some of our department managers and supervisors. Kelly suggested that Mark should also interview the three black employees.

Background

Mega Savings Food Stores is a regional chain of supermarkets located in the Midwest. The company operates a centrally located warehouse, a bakery, and runs its own transportation system. The mail office, distribution warehouse, and a dozen stores are located in central Missouri. Presently, the company employs 2,200 people. According to recent census data, the labor force in the area is 22% black. The company has plans to refurbish its stores and to open four additional stores over the next two years. Kelly has expanded his staff to better manage the companys HR needs.

The distribution warehouse has five departments: grocery, meat, frozen food, produce and transportation. Each department has two shifts. The starting times of various employees on the same shifts are staggered. Both receiving and shipping functions are carried out at the warehouse. Order puller, order selector, order pickers, and picker are synonymous terms for the same job. A warehouse crew leader is a working supervisor, who assigns duties, but also performs the same duties as subordinates. Manager positions in the stores consist of assistant produce manager, produce manager, grocery manager trainee, relief grocery manager, deli manager, relief assistant manager, assistant manager, head cashier, and assistant head cashier.

Human Resource Practices

When Kelly was hired six months ago, the President explained that because of the physical dispersion of the stores human resource polices were centralized with a great deal of responsibility placed on the district managers. Promotion recommendations and decisions were made by supervisors of the different departments in the warehouse. To be promoted to a warehouse crew leader, an employee had to be on the same shift and in the same department as the opening. The factors used in promotion decision at the warehouse are character, integrity, good sound morals, correct attitude and initiative. Company leaders believe the supervisors are in the best position to judge whether or not an employee was promotable. Written performance appraisals were limited to office employees, merchandisers, and store managers. At the retail stores, store supervisors made promotion recommendations to the district manager. Promotions were limited to persons recommended by the store managers. The district manager agrees with the store managers 90 to 95 percent of the time. The district manager decided who would be promoted, transferred, demoted, hired, or terminated for all positions up to the department head. Job vacancies were not routinely posted. Employees could be transferred from store to store as needed.

Kelly recalled a recent conversation he had with a district manager, Mary Smith who said, We really dont need to post jobs since each district manager is aware of openings in his or her district and which employees are ready for promotion. Further, an employee doesnt have to ask in order to be considered for a promotion. Although we dont have a written performance appraisal system, the job performance of an employee is conveyed by word of mouth from one level to supervision to another.

After Data Analysis

Kelly received the reports from Walters on promotions in the warehouse and the stores over the past two years (see Exhibit 1). Mark also prepared summaries of what happened to the other three employees and Jones. As Kelly read through the report, he wondered what changes would be needed at the company. He certainly didnt want to have another conversation like the one with Jones two weeks ago.

Exhibit 1:
MEMO TO:	Tom Kelly
FROM:	Mark Walters
RE:	Promotions

I have collected the data you requested on promotions in the warehouse and in the stores over the past two years. I have also summarized what I learned about Jones situation and the other three employees Jones identified.

Promotion Rates 2021-2022

		Total Employees	Total Promotions	Promotion Rates
Unit		White	Black	White	Black	White	Black
Warehouse &	2022	1,603	284	171	21	10.66%	7.39%
Stores
Warehouse &	2021	1,414	291	122	27	8.62%	9.27%
Stores
Warehouse	2022	411	173	42	13	10.21%	7.50%
Warehouse	2021	223	192	18	21	8.07%	10.90%
Stores	2022	1,192	111	129	8	10.80%	7.20%
Stores	2021	1,191	99	104	6	8.73%	6.10%

Note: in 2022 African Americans were 9% of the workforce and 5.8% were promoted. In 2021, 94.6% of managers were white and in 2022 94.7% of managers were white.

Todd Gurley was hired as a produce clerk in June 2018. He originally applied for a management position. He had three years of grocery store management experience including 6 months in produce management at another grocery chain. Gurley worked in two stores between June 2018 and April 2022. On several occasions, Gurley asked his district manager and his store manager about promotion to vacant produce manager positions. The first vacancy was filled in October 2019 by Bob Walker, a produce clerk, who was white and had worked in the company 18 months when he was promoted. Walker had no management experience. The following year, Walker was promoted again and was replaced by another white employee in November 2020. This employee, Sally Field, was a produce clerk and worked as an assistant produce manager for six months. Gurley was not considered for either position.

Kenneth Durden was hired by the company at the warehouse in September 2019 as a maintenance (sanitation) employee. His duties included forklift driving, sorting damaged product, and rebuilding pallets. His prior work experience included supervisory duties and self-employment. Durden trained a white employee, Neal Marcy who was hired in May 2020. Marcy was promoted to crew leader in the department July 2020. Before Marcy was hired, Durden asked his supervisor for the crew leader job, to which Marcy was promoted. The supervisor told Durden that he would never be a crew leader as long as he was his supervisor. Of course, the supervisor denies saying this. According to Durden, his supervisors repeated told him that he had both excellent attendance and performance. On August 2021, a junior white employee (James White) with less company experience than Durden was promoted to a sanitation crew leader position for the same shift and in the same department where Darden worked. According to the supervisor, White was better qualified because of his previous work experience.

Vivica Fox was hired by Mega Savings Food Stores on July 6, 2019, as a frozen food picker. Her next position was frozen food loader. Fox was trained to act as a fill-in crew leader, and in fact did fill in as a crew leader until Ricky Anderson (white) was hired. Fox trained Anderson in the duties of a fill-in crew leader. Anderson was offered a full-time crew leader position, which he refused. Fox was never offered the job. Fox had previously informed company managers of her prior shift leader experience in a textile mill.

Larry Jones was employed by the company on April 1, 2018, at the warehouse in the meat department. Milk, dairy, and meat are all in the same department. Jones job prior to April 2019 included milk picking, unloading, and forklift driving. In the spring of 2019, a crew leader told Jones that he was up for promotion to crew leader in the department. Terry Gibbs (white employee) received the job on June 1, 2019. Gibbs was initially hired in January 2018, resigned in late February 2018 and was rehired in November 2018. Jones had more company and department experience than Gibbs; however, Jones was never considered for the position. Gibbs sole duty was picking meat and Jones supervised Gibbs when Jones served as fill-in crew leader prior to Gibbs promotion. The supervisor asserted that Gibbs had broader departmental experience than Jones. Since that time, two other employees in the meat department with less seniority and experience have been promoted over Jones.

Instructions: Based on information in chapter 3 and the chapter lectures, answer the following questions.

Clearly number your responses, provide detailed answers and cite your sources of information.

Clarify the differences between disparate treatment and disparate impact. Define and explain each type of discrimination. (5 points)

Describe the evidence that must be provided to establish both types of cases (Hint: McDonald Douglas vs Greene and Griggs vs Duke Power) (10 points, 5 points each)

Calculate the promotion rates for all units for both years and using the unit promotion rates pf each unit with the 4/5ths rule applied, state if the evidence suggests adverse. Submit all calculations for grading. (10 points)

Promotion Rates 2021-2022

		Promotion Rates	Show calculations of	Evidence of
		Record the Correct %	Adverse Impact?
		4/5ths Rule
Unit		White	Black	Yes or No
All Units Total	2022
All Units Total	2021
Warehouse &	2022	10.66%	7.39%
Stores
Warehouse &	2021	8.62%	9.27%
Stores
Warehouse	2022	10.21%	7.50%
Warehouse	2021	8.07%	10.90%
Stores	2022	10.80%	7.20%
Stores	2021	8.73%	6.10%

If you found evidence of adverse impact describe what steps you will take next? (5 points)

Offer Kelly at least four recommendations for improving the promotion processes in the company. Would you continue to let the district managers make promotion decisions on their own? (5 points)